Howard William Hall & Anor v HM Attorney General & Anor

On 4 March 2026, I heard and allowed this claim for a vesting order for the freehold of property known as 92-96 Leighton Ave, Leigh on Sea, Essex SS7 1QA (the Building). I now give these brief written reasons for that decision so that the claimants can produce them to third parties as necessary. The claimants are Mr and Mrs Hall (the Halls). They rely on the fact that between them, they own the three flats which comprise the Building. All on 999 year leases. The freehold was not registered. The evidence, in the form of correspondence in 1999 from the Insolvency Service, is that the Official Receiver disclaimed the freehold at that time following the bankruptcy of the freehold owner and original lessor, Mr G F Westhorp. That correspondence indicated that the leaseholders in the Building could apply for a vesting order. That is what the Halls now do.

The Halls are unrepresented. They see the claim as entirely straightforward. But it is not. Such cases can present real difficulties of analysis. Significant examples of such difficulties are: the decision of Stanley Burnton QC, as he then was, in Scmlla Properties Ltd v Gesso Properties (BV) Ltd [1995] BCC 793, a case of disclaimer of freehold on the corporate insolvency of the landlord; and very recently, the High Court decision in Lulham v Crown Estate Commissioners [2025] EWHC 1572 (Ch), where a claim by lessees to a vesting order for a freehold disclaimed by the Crown failed. The Crown Estate Commissioners were joined to the proceedings by order made by me following the transfer of this case out of the High Court. They have not opposed the claim. I must therefore do my best to decide what is a difficult claim with only very limited help. I have decided a vesting order can and should be made.

There is a statutory basis for a vesting order to be made in respect of a freehold estate disclaimed in a bankruptcy. It is to be found in s.320 of the Insolvency Act 1986, which is in these terms:

This section and the next apply where the trustee has disclaimed property under section 315.

An application may be made to the court under this section by—

any person who claims an interest in the disclaimed property,

any person who is under any liability in respect of the disclaimed property, not being a liability discharged by the disclaimer, or

where the disclaimed property is property in a dwelling house, any person who at the time when the [ bankruptcy application was made or (as the case may be) the] bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

Subject as follows in this section and the next, the court may, on an application under this section, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to—

a person entitled to it or a trustee for such a person,

a person subject to such a liability as is mentioned in subsection (2)(b) or a trustee for such a person, or

where the disclaimed property is property in a dwelling house, any person who at the time when the [ bankruptcy application was made or (as the case may be) the] bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

The court shall not make an order by virtue of subsection (3)(b) except where it appears to the court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

The effect of any order under this section shall be taken into account in assessing for the purposes of section 315(5) the extent of any loss or damage sustained by any person in consequence of the disclaimer.

An order under this section vesting property in any person need not be completed by any conveyance, assignment or transfer.”

It can be seen from Scmlla that disclaimer of a freehold by a liquidator under s.178 of the 1986 Act results automatically in escheat to the Crown and puts an end to the freehold, but that injustice may be avoided by making a vesting order under s.181 of the 1986 Act. The leaseholds carved out of the freehold survive. While Scmlla was a case of corporate insolvency, therefore engaging ss.178 and 181 of the 1986 Act, ss.315 and 320 dealing with disclaimers in personal insolvency are in like terms.

The question therefore becomes whether a vesting order may properly be made under s.320 in favour of the Halls. They rely on the fact that they are the leaseholders of the three flats comprised in the Building.

I consider that does provide a solid foundation for a vesting order to be made. My reasons for that conclusion are these.

There is yet another provision in similar terms to ss.181 and ss.320 of the 1986 Act. That is s.1017 of the Companies Act 2006. It applies where there is disclaimer by the Crown of property (including freeholds) vested in it as bona vacantia following dissolution of a company and is in these terms:

The court may on application by a person who–

claims an interest in the disclaimed property, or

is under a liability in respect of the disclaimed property that is not discharged by the disclaimer,

An order under this section is an order for the vesting of the disclaimed property in, or its delivery to–

a person entitled to it (or a trustee for such a person), or

a person subject to such a liability as is mentioned in subsection (1)(b) (or a trustee for such a person).

An order under subsection (2)(b) may only be made where it appears to the court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

An order under this section may be made on such terms as the court thinks fit.

On a vesting order being made under this section, the property comprised in it vests in the person named in that behalf in the order without conveyance, assignment or transfer.”

The correct approach, under that similar provision, to a claim by a person said to have an interest in the disclaimed property, was described in this way by the Court of Appeal in Leon v AG [2019] EWCA Civ 2047 at [23]: “The judge was, in my view, right to say that the question was ‘does the interest claimed by the applicant entitle him to the property’. Entitlement to the property does not here mean an absolute entitlement. If it did, it would not be necessary to have subsection (2)(a). Rather, it means that the court will make a vesting order in favour of the person whose interest in the disclaimed property is such as, in the judgment of the court, to entitle the applicant to the property in the circumstances of the case.”

Applying that approach, the Halls’ leases do, in my judgment, entitle them to the freehold estate in the Building in the circumstances of this case. That is by reason of s.1 of the Leasehold Reform, Housing and Urban Development Act 1993. It is sufficient to quote s.1(1):

This Chapter has effect for the purpose of conferring on qualifying tenants of flats contained in premises to which this Chapter applies on the relevant date the right, exercisable subject to and in accordance with this Chapter, to have the freehold of those premises acquired on their behalf—

by a person or persons appointed by them for the purpose, and

at a price determined in accordance with this Chapter;

That section gives the Halls a right to acquire the freehold. In that regard, the Building contains two or more flats held by qualifying tenants, being tenants under long leases, and at least two-thirds of the flats are held by qualifying tenants. While operating the 1993 Act would, had there been an existing freeholder (even one who could not be found or their identity ascertained – see s.26 of the 1993 Act), involve further steps, I do not consider that is a bar to a vesting order. The option relied on in Quadracolour Limited v Crown Estate Commissioners [2013] EWHC 4842 (Ch) as giving the necessary entitlement to the property involved further steps. A vesting order was nevertheless made, that time under s.181 Law of Property Act 1925. Accordingly, it is my judgment that section 1 of the 1993 Act, and the scheme springing from it, provide a sound basis for a vesting order under s.320 of the 1986 Act in favour of the Halls.

I do not consider this answer inconsistent with the reasoning in Lulham. Lulham was a case of lessees of flats seeking a vesting order of the freehold. It was decided that no vesting order was available under s.1017(1)(a) and (2)(a) of the 2006 Act. But the bases of that decision were, first, that the fact the lessees had been directors and shareholders of the freehold owning company did not amount to an interest entitling them to the property, and second, that having the benefit of the landlord’s covenants was also not a sufficient interest. The decision did not consider the 1993 Act. There is no indication it was argued.

Nor do I consider that the claim falls foul of s.94 of the 1993 Act which excludes from the scope of collective enfranchisement “a lease from the Crown”. Three points. One, the leases of the Halls were not granted by the Crown, nor have they ever been held of the Crown. Stanley Burnton QC explained in Scmlla at 805C that, “On escheat, the freehold does not pass to the Crown, but determines. (To this extent, s. 8(3) of the Crown Estate Act 1961 is imprecisely drafted.) The Crown does not, by virtue of escheat alone, assume the liabilities of the freeholder to, for example, lessees of the freehold. Following escheat, there is no privity of contract between lessees and the Crown; the Crown is not a successor in title of the freeholder and does not derive title under him (cf s. 79 of the Law of Property Act 1925); and the Crown's seignory is not the reversionary estate immediately expectant on the term granted by the freeholder or his predecessor in title (cfs. 142 of the Law of Property Act 1925).” Two, the claim by the Halls is not a claim under the 1993 Act. Rather, it is instead the possibility of a claim under the 1993 Act had the freehold not been disclaimed which provides the foundation for a claim under s.320 of the 1986 Act. Three, the Crown has not objected to the claim for a vesting order, whether on the basis the Building is Crown land or otherwise.

Finally, I consider the discretion should be exercised to make the vesting order. It is unsatisfactory that there should be no freehold of the Building in existence. And while a sum is likely to have been payable for the freehold had the 1993 Act been operated, it is likely on the evidence only to have been an extremely modest sum, such that the vesting order does not involve any great windfall for the Halls. In that regard, the leases are very long ones, being for 999 years (with the terms commencing in 1966 and 1967), such that the reversion on them can be expected to be of insignificant value.