David William Dixon & Anor. v The Crown Estate Commissioners

By a Part 8 Claim Form, issued in the Business and Property Courts in Manchester on 20 May 2022, the claimants, Mr David William Dixon and his cousin, Mr Keith Leslie Dixon, seek orders vesting freehold properties at (1) 6 Rodham Terrace, Stanley, County Durham, which is comprised in registered title no DU 262770 (Rodham Terrace), in the first claimant, and (2) 25 Little Corby Road, Little Corby, Carlisle, which is comprised in registered title no CU 27867 (Little Corby Road), in the second claimant. The relief is sought under s. 181 of the Law of Property Act 1925 and s. 44 (ii) (c) of the Trustee Act 1925. The evidence in support of the claim is contained in the witness statement of the first claimant, dated 9 May 2022, made with the authority of his co-claimant, together with exhibits DWD 1 – 19.

The claim follows on from the striking-off and dissolution of the registered proprietor of the two properties, Dixon Prestige Homes Limited (the company). Prior to its dissolution (on 15 June 2010), the first claimant had been a 49% shareholder in the company, and the remaining 51% of the shares had been held by the second claimant. Both claimants had been directors of the company until 14 May 2007 when the second claimant resigned with a view to relocating his residence overseas; and the first claimant’s daughter, Ms Paula Dixon, was appointed a co-director with the first claimant (and as the company secretary) in place of the second claimant. On 29 March and 26 April 2021 the Crown gave notice (under s. 1013 of the Companies Act 2006) disclaiming any interest in Little Corby Road and Rodham Terrace respectively which might have vested in the Crown as bona vacantia under s. 1012 of that Act, whereupon such interest vested in the defendants, the Crown Estate Commissioners (the Commissioners), a statutory corporation, by way of escheat.

By letter dated 22 July 2022, the Commissioners’ solicitors, Burges Salmon, have written to the claimants’ solicitors, Bendles LLP, acknowledging receipt of the Claim Form and confirming that the Commissioners do not oppose (whilst not supporting) the claim and will not be represented at the hearing. The letter explains that

As foreshadowed by this letter, the Commissioners did not appear, and were not represented, at the hearing before me. As a result, the first claimant has not been cross-examined on his witness statement, which stands as his unchallenged evidence. The claimants were represented by Mr Richard Oughton (of counsel), who has produced a detailed, and helpful, written skeleton argument, dated 7 July 2022, which was originally prepared for the case management hearing which had taken place before District Judge Matharu on 13 October 2022, pursuant to which this final hearing was listed before me on 16 November 2022. Mr Oughton recognises that even though the Commissioners do not actively oppose the relief sought by the claimants, the court must be satisfied that the claimants are entitled to that relief.

The claimants were builders and property developers, generally operating in the Carlisle area, who caused the company to be incorporated in 2002. The company successfully completed several high class residential developments and generated profits which led to it having substantial cash assets. The company also purchased the two properties, Rodham Terrace (for £43,000) in November 2003 and Little Corby Road (for £216,000) in December 2007. Both properties were at all times free of mortgage and were let to residential tenants. From about June 2006 until September 2008 there were amicable discussions between the claimants about separating their interests in the company. The second claimant was about to retire abroad and he was intending to become non-resident for tax purposes. To this end, the claimants consulted Mr David Allen, who acted both as their accountant and as the accountant for the company. Mr Allen advised the claimants (entirely correctly) about the various options available to them. The claimants eventually elected to have the company wound up, with the assets to be distributed to them in specie. The company was entirely solvent and it had no debts. A distribution upon a winding up would not lead to any charge to income tax to the shareholders in respect of the sums distributed, but it would lead to a disposal of the shares in the company for the purposes of capital gains tax (CGT). Whilst the first claimant would pay CGT, the second claimant would not because he was non-resident.

On the basis of the company’s unaudited abbreviated accounts, prepared by David Allen & Co, for the year ended 30 September 2008, and after accounting for the claimants’ loan accounts, the total value of the second claimant’s interest in the company was £538,858.60 whilst the first claimant was entitled to £393,408.59. As explained by the first claimant at paragraph 10 of his witness statement, it was agreed that: (1) the second claimant’s entitlement would be satisfied by Little Corby Road, valued at £219,105.22, and cash of £319,753.38; whilst (2) the first claimant would receive Rodham Terrace, valued at £122,307.55, and cash of £271,101.04. These sums are evidenced by the contemporaneous estimated distribution schedule prepared by Mr Allen at DWD 14.

The subsequent history of events is related at paragraphs 11 (and following) of the first claimant’s witness statement. The claimants’ mutual understanding was that the distribution was lawfully effected on or soon after 30 September 2008 when the second claimant received £319,753.38, and the first claimant received £271,101.04, in cash from the company; and they both believed that Little Corby Road and Rodham Terrace had been transferred to the second and first claimants respectively. Both claimants relied upon the assurances of Mr Allen that this was indeed what had happened. In the belief that there had been a valid distribution of capital from the company, the first claimant paid CGT of £45,452.88 for the tax year ending 5 April 2009. The second claimant paid no CGT upon his distribution of capital from the company because he was not resident within the United Kingdom.

In the belief that the company had no assets, on 18 January 2010 the first claimant and his daughter, as the company’s directors, made an application (in Form DS01) applying for the company to be struck off the Register of Companies in accordance with s. 1003 of the Companies Act 2006. On 2 March 2010, the Registrar of Companies gave formal notice to the company’s directors that unless cause was shown to the contrary, at the expiration of three months the name of the company would be struck off the register and the company would be dissolved. The Company was duly dissolved on 15 June 2010.

It has since come to the claimants’ attention that two serious errors were made in relation to the dealings with the company. The first is that no resolution was ever passed for a members' voluntary winding-up and no liquidator was ever appointed. Indeed, none of the requirements for a winding-up were ever satisfied. The claimants had relied upon Mr Allen and his accountancy practice; and they had assumed that the correct procedures had been followed at all times. When they consulted their present solicitors about the two properties in 2021, both Bendles and counsel initially proceeded upon the basis that there had been a voluntary winding-up but that the relevant documentation was simply not to hand. It was only in December 2021, when counsel did a search on the internet of the company's file on the Companies' House web-site, that it was discovered that the correct procedures for a voluntary winding-up had not been followed at all.

The second error is that neither Rodham Terrace nor Little Corby Road were ever transferred out of the name of the company, which remained the registered proprietor of each property at HM Land Registry. Again, the claimants had relied upon Mr Allen and his practice; and they had assumed that the correct procedures to transfer ownership had been followed at all times. After September 2008, the second claimant had treated Little Corby Road as being owned by him personally; and the first claimant had treated Rodham Terrace as being owned by D. & P. Dixon Land and Properties Limited, which was a company he had set with his daughter, Paula. Rodham Terrace was shown in the accounts of D. & P. Dixon Land and Properties Limited as being owned by that company. Both properties were let on residential tenancies. The second claimant paid income tax on the rent of Little Corby Road, and D. & P. Dixon Land and Properties Limited paid corporation tax on the rent of Rodham Terrace. The problem only came to light in late 2020, when D. & P. Dixon Land and Properties Limited negotiated the sale of Rodham Terrace, and it was found that the registered proprietor remained the company.

The claimants believe that the effect of the dissolution of the company was that the legal title to the two properties vested in the Crown pursuant to s. 1012 of the Companies Act 2006. They instructed Bendles LLP, as their solicitors, to act for them in relation to recovering title to the two properties. Bendles corresponded with the Treasury Solicitor, who had not been previously aware that the legal title to the two properties had passed to the Crown as bona vacantia. As a result of being informed that the legal title to the two properties was bona vacantia, the Treasury Solicitor decided to disclaim the two properties, pursuant to s. 1013 of the Companies Act 2006. This was against the claimants’ wishes. On 29 March 2021, the Treasury Solicitor disclaimed Little Corby Road; and on 26 April 2021 the Treasury Solicitor disclaimed Rodham Terrace. After the disclaimers, the legal title to each property vested in the Crown Estate Commissioners.

The claimants invite the court to make orders under s. 181 of the Law of Property Act 1925 and s. 44 (ii) (c) of the Trustee Act 1925 vesting Rodham Terrace in the first claimant and Little Corby Road in the second claimant. The claimants have been advised that they may need to show a proprietary interest in each property for the purposes of making such an order. At all times after 30 September 2008 the claimants had believed that each of the two properties had been distributed to them as part of their respective entitlements to the company’s assets. They had held that belief as a result of what Mr Allen had told them; and they had relied upon him totally. At paragraph 17 of his witness statement, the first claimant asserts that the claimants acted to their detriment in reliance upon their belief in that: (1) the second claimant had allowed the first claimant to receive £96,798 more than he had received from the company because they had both believed that the first claimant would receive a more valuable property; (2) the first claimant paid CGT for the tax year ending 5 April 2009 upon the basis that he had received a capital distribution from the company, and he further used up a significant part of his entrepreneurs' allowance; (3) the claimants caused the company to be dissolved in the belief that it had no assets; and (4) the claimants did not apply within the six years allowed by s. 1030 (4) of the Companies Act 2006 for the company to be restored to the register because they had believed that the company had no assets because the two properties had already been transferred to themselves.

During the course of oral submissions, I pointed out to Mr Oughton that the assertion noted at sub-paragraph (1) above that the second claimant had allowed the first claimant to receive £96,798 more than he had received from the company because they both believed that the first claimant would receive a more valuable property is not consistent with the evidence that is before the court. Mr Oughton acknowledged that this was so; but he pointed out that on any view, the claimants had each received cash sums that had been calculated on the assumption that they would each receive properties of different values. By my calculations, the second claimant should have received some 57.8% of the company’s net assets, and the first claimant the remaining 42.2%; but, in cash terms, they in fact received some 54.12% and 45.88% respectively.

The first claimant notes in his witness statement that one possible analysis of what happened in September 2008 was that the company made a ‘distribution’ to its shareholders which was potentially subject to income tax at that time. He indicates that the claimants intend to instruct their solicitors to write to HMRC to draw attention to the claimants’ possible liability for tax in relation to the distribution of assets from the company in 2008, and to their contention that HMRC is out of time for making any assessment. The claimants are prepared to offer an undertaking to the court, within 28 days from the date of any order, to inform HM Revenue and Customs in writing that: (a) there was no valid winding-up of the company on 30 September 2008 or at all; (b) there may have been a distribution to the claimants within the meaning of s. 1000 of the Corporation Tax Act 2010 (or its predecessor section) on or about 30 September 2008, with a consequent potential liability of the claimants to income tax; provided that nothing in that undertaking should prevent the claimants from relying upon any limitation period properly available to them.

By s. 1012 (1) of the Companies Act 2006, when the company was dissolved on 15 June 2010, all its property and rights were deemed to be bona vacantia and accordingly belonged to the Crown and vested and might be dealt with as such. However, there is an express exception in respect of “property held by the company in trust for another person”. When the Treasury Solicitor disclaimed the two properties, in March and April 2021 by notices executed under s. 1013 of the 2006 Act, any interest in them previously held by the Crown as bona vacantia became vested in the Commissioners by way of ‘escheat’.

Mr Oughton explains that escheat is the way in which certain estates in land return to the Crown in the event of land being ownerless or the owner ceasing to exist; and that one of the ways in which an escheat arises is when the Crown disclaims property which has vested in it as bona vacantia in accordance with s. 1013 of the 2006 Act. This causes the property to ‘boomerangs back’ to the Commissioners; but, as Mr Oughton points out, there is method in this apparent madness because the Commissioners are under fewer obligations in relation to the land than the Crown when taking as bona vacantia. Mr Oughton also explains that when property passes by escheat, the Commissioners take subject to all incumbrances, including trusts.

I have no doubt that these propositions are well-founded. As Lewison LJ explained (when delivering the leading judgment in Pennistone Holdings Ltd v Rock Ferry Waterfront Trust [2021] EWCA Civ 1029 at [18-22]):

The editors of Ruoff & Roper on the Law and Practice of Registered Conveyancing discuss the law of escheat at para 40.009. They note that:

I note that by s. 8 (3) of the Crown Estate Act 1961, where land escheats to the Crown (or one of the Royal Duchies), it vests accordingly, “and may be dealt with, and any proceedings may be taken in relation to it, without the title by escheat being found of record by inquisition or otherwise.”

The judgment of Mr Stanley Burnton QC (sitting as a deputy judge of the Chancery Division) in Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793 contains (at 806B-808C) a learned discussion of the effect of escheat on subordinate interests. The deputy judge recognised the logic of the submission that the effect of escheat was to determine all subordinate interests:

This analysis has been accepted, in later cases, as an authoritative statement of the law. Apart from Lewison LJ’s observations at [22] of Pennistone, in his judgment in UBS Global Asset Management (UK) Ltd v Crown Estate Commissioners [2011] EWHC 3368 (Ch) at [8] Roth J stated that when land owned by an overseas company escheats to the Crown on its dissolution, the Crown takes the land subject to subordinate interests, referencing Mr Stanley Burnton QC’s “very helpful discussion of escheat considering a range of old authorities” in Scmlla. More recently, in Pall Mall 3 Limited v Network Rail [2021] EWHC 1835 (Ch) at [60], Chief ICCJ Briggs said that the deputy judge in Scmlla had “provided reasoning that has stood good for more than 25 years”, including his conclusion (at [66 (4)]) that “subordinate interests in the land survive escheat”.

I therefore hold that where there is an escheat to the Crown (or, where the land falls within their boundaries, to one of the Royal Duchies of Lancaster or Cornwall) as mesne lord, subordinate interests, of whatsoever nature, survive.

The claimants seek vesting orders under s. 181 of the Law of Property Act 1925 and s. 44 (ii) (c) of the Trustee Act 1925. S.181 is headed ‘Dissolution of a corporation’. It provides that:

Mr Oughton referred me to a number of authorities which, he submits, establish, at the level of the High Court, that a vesting order cannot be made under either s. 181 or s. 44 (ii) (c) unless the applicant can establish some legally enforceable right to the land. Whilst I consider that this submission is correct, it requires some further elaboration.

The leading authority on the making of vesting orders is the first-instance decision of Jenkins J in Re Strathblaine Estates Ltd [1948] Ch 229. A solvent company, which had agreed with its shareholders to distribute among them in specie certain properties which it owned, was voluntarily wound up and dissolved but, due to inadvertence, no steps had been taken to execute the necessary conveyances to the shareholders. On an application by the shareholders for a vesting order, and after hearing full argument from Mr Harold Lightman for the applicants and Mr Harold Danckwerts (later Danckwerts LJ) for the Attorney-General, Jenkins J held that as the company had become a trustee of the properties for the shareholders (because of the agreement to divide the company’s unsold properties amongst them), a vesting order should be made under the provisions of s. 44 (ii) (c) of the Trustee Act 1925; and that s. 181 of the Law of Property Act 1925 had no application. Mr Oughton points out that the facts in that case were similar to those of the present case, save that the signed minutes of the directors’ and shareholders’ meetings, relating to the agreement to divide the company’s unsold properties amongst the shareholders, were held to constitute sufficient written evidence to satisfy the requirements of s. 53 of the Law of Property Act 1925: see the argument of Mr Lightman at 229 and the judgment of Jenkins J at 230.

The arguments of counsel, and the judgment of Jenkins J, discuss the inter-relationship between s. 181 of the Law of Property Act 1925 and s. 44 (ii) (c) of the Trustee Act 1925. S. 181 had been enacted under what was said to have been the misapprehension, current in 1925 but later criticised by the Court of Appeal, that when a company in possession of a legal estate is dissolved, that legal estate comes to an end and so has to be revived. Counsel for the Attorney-General explained in argument (at 229-230):

However, I would reject any wider implications of the decision in Re Strathblaine Estates Ltd and, in particular, any suggestion that it effectively deprives s. 181 of any real application or that it renders it a dead letter. The decision was considered by Mr Stanley Burnton QC in Scmlla at 800-801 in the course of considering, and accepting, the submission that escheat determines the freehold estate in the relevant land. The deputy judge noted that Re Strathblaine Estates Ltd, and observations in the earlier case of Re Wells [1933] Ch 29, by Lord Hanworth MR at 47 and Romer LJ at 60 and following, appeared to be the only authorities for the survival of a freehold interest following escheat to the Crown. The deputy judge commented that in Re Wells the point had not been before the Court of Appeal: the case had concerned leaseholds rather than freeholds, and bona vacantia rather than escheat. The court had been concerned to reject the suggestion that on the dissolution of a company, its freeholds and leaseholds reverted to the grantor; and authorities on the question whether a freehold survived escheat had not been relevant and were not cited. In Re Strathblaine Estates Ltd the authorities on escheat had not been examined, presumably because the case had concerned the properties of a company which had been dissolved, and were therefore deemed to be bona vacantia. Jenkins J had been similarly concerned to reject the theory that land held by a dissolved company reverted to the grantor. He held that the freeholds of the dissolved company had vested in the Crown as bona vacantia; and there was no submission before him that the effect of such vesting had been to determine the freeholds; nor did he consider whether the effect of a freehold passing to the Crown might be to determine it. Mr Stanley Burnton QC said that he accorded great weight to this decision of Jenkins J, particularly since it had stood for some time and formed the basis of the practice of the court in relation to the freeholds of dissolved companies; and he acknowledged that Parliament may have had this decision in mind when enacting later Companies and Insolvency Acts. However, in the face of the authorities, the deputy judge did not think that Jenkins J’s decision that freeholds survived the dissolution of the freehold owner could stand in relation to a freehold disclaimed under s. 178 of the Insolvency Act 1986. Likewise, I do not consider that the case can stand as authority for the proposition that a freehold estate survives escheat to the Commissioners following a disclaimer under s. 1013 of the Companies Act 2006.

The researches of Mr Oughton have discovered that Re Strathblaine Estates Ltd has recently been followed by the High Court of the Republic of Ireland in Re Clariant AG and Clariant Plastics & Coatings (Ireland) Ltd [2020] IEHC 211 on similar facts to the present case. An Irish company in liquidation had agreed to transfer land to its sole shareholder but, through inadvertence, no transfer of the land had been executed before the company was dissolved. A vesting order was made in favour of the ultimate intended beneficiary. Again, there was an express finding that there was sufficient written evidence of the creation of a trust to satisfy the Irish equivalent of s. 53 of the Law of Property Act 1925: see [7].

Mr Oughton has also referred me to the recent decision of Master Clark in Lizzium Ltd v The Crown Estate Commissioners [2021] EWHC 941 (Ch). That was an application for a vesting order under s. 181 of the Law of Property Act 1925 in respect of land owned by Clairvale Ltd (the second claimant), a company incorporated in Gibraltar, which had vested in the Crown by way of escheat when it was dissolved. Clairvale had intended to transfer the land to the first claimant, Lizzium Ltd, but there was no evidence of any legally enforceable agreement. Subsequently Clairvale Ltd. was restored to the register in Gibraltar. Because the original legal landowner had been restored to the register, and was a party to the claim, there were two possible candidates for a vesting order (unlike the instant case, where the company remains dissolved and it is too late for it to be restored to the register). Master Clark made an order under s. 181 of the Law of Property Act 1925 vesting the land in the restored Clairvale; but she refused to make any order in favour of Lizzium because that company had no legal entitlement to the land and so would not “have been entitled to the estate which determined had it remained a subsisting estate” within s. 181.

At [52-57] Master Clark said this:

As the decision of a Master, the case of Lizzium is strictly not binding upon me since I am sitting as a Judge of the High Court; but I see no reason to differ from the conclusion reached by Master Clark. I would, however, point out that the decision was expressly directed to the language of s. 181 of the Law of Property Act 1925 rather than the terms of s. 44 (ii) (c) of the Trustee Act 1925.

Mr Oughton acknowledges that before s. 44 (ii) (c) can be engaged, a trust must have existed at the time of the company’s dissolution. As Roth J observed, in the UBS case (at [10]):

Where no trust exists at the time of dissolution, a vesting order can only be made under s. 181 of the Law of Property Act 1925, as happened in the UBS case. There the issue was what should happen when the grantee of an option to purchase freehold land in England owned by an overseas company found, when it sought to exercise the option, that the overseas company had been dissolved. Roth J was not satisfied that the option agreement meant that the dissolved company could be regarded as a trustee falling within the scope of s. 44 (ii) (c) of the Trustee Act 1925. However, he went on to hold that s. 181 of the Law of Property Act 1925 covered the situation. The freehold estate of the overseas company had ceased to exist when the land vested in the Crown by escheat on the company’s dissolution; and this therefore engaged the jurisdiction of the court to create a corresponding estate by making a vesting order under s. 181.

A vesting order under s. 181 was also made by Mr Jeremy Cousins QC (sitting as a Judge of the Chancery Division) in Quadracolour Ltd v Crown Estate Commissioners [2013] EWHC 4842 (Ch) where the facts were similar to those in the UBS case, save that the owner of the land was a company registered within this jurisdiction rather than an overseas company. On the company’s dissolution, the land had vested in the Crown as bona vacantia (under the statutory predecessor of s. 1012 of the Companies Act 2006). Some 7 ½ years later, the Crown gave notice of disclaimer under s. 1013 of the 2006 Act, thereby causing the land to escheat to the Commissioners. At [34] Mr Cousins QC recognised that the position was not quite as straightforward as it had been in the UBS case because the owner of the land was not an overseas company and, therefore, no escheat arose when it was dissolved. However, subsequently there was an escheat (on the disclaimer) and, therefore, the position was, for all practical purposes, entirely comparable to the position in the UBS case. Mr Cousins QC agreed with Roth J’s conclusion in that case that there was no basis for holding that the land was held subject to any trust; but since it was perfectly clear that the legal estate which had previously vested in the dissolved company had determined, the jurisdiction under s. 181 was engaged. Although the deputy judge did not directly address the lapse of some 7 ½ years between the dissolution and the disclaimer (which gave rise to the escheat, and thus the determination of the legal estate), he clearly saw this as no obstacle to the potential application of s. 181. In my judgment, he was right to do so because, without recourse to s. 181, there would have been no jurisdiction to make any vesting order in respect of the land.

From this review of the authorities, I derive the following propositions:

In the present case, the legal entitlement upon which Mr Oughton relies in support of the claimants’ application for vesting orders in their favour is a claim by way of proprietary estoppel. I therefore turn to the law governing such claims.

Mr Oughton relies upon the statement of the three elements required to establish an equity arising by proprietary estoppel at paragraphs 15-007 and following of Megarry & Wade: The Law of Real Property (9^th edn): (1) encouragement or acquiescence, (2) detrimental reliance, and (3) unconscionability. In a case of active encouragement (such as the present), Mr Oughton submits that it is no bar to the equity arising that both the landowner (in this case, the company) and the claimants acted under a mistaken assumption as to their respective rights. He points to the following observations of Clauson LJ in Re Eaves [1940] Ch 109 at 117-118:

Mr Oughton relies upon the following matters to establish the proprietary estoppel:

Mr Oughton recognised that the detriments identified at sub-paragraphs (c) and (d) above are more substantial than those at (a) and (b), where there might have been countervailing benefits. Mr Oughton also acknowledges that (d) arose after the dissolution of the company; but he submits that post-dissolution detriment which adds to pre-existing detriment can assist in establishing a proprietary estoppel.

Mr Oughton points out that in the present case there can be no uncertainty about the proper approach to the remedy to be awarded to the claimants, once the court finds that a proprietary estoppel has been established, because enforcing the expectation created by the company and compensating for the detriment suffered by the claimants both lead to the same result: the court should satisfy the resulting equity by declaring that the claimants are the true owners of their respective properties, and by vesting legal title in them accordingly.

Mr Oughton also submits that once a proprietary estoppel has been established, the Commissioners are to be treated as holding the legal estate in the two properties upon trust for the claimants. Proprietary estoppel is an equitable remedy; and the only way of giving effect to the claimants’ equitable entitlement is by holding that the Commissioners hold the legal estate in the respective properties for the claimants beneficially.

Finally, Mr Oughton submits that there can be no bar to the grant of relief by way of proprietary estoppel. The company was solvent and had sufficient distributable reserves to enable a distribution in specie of its assets to be made to the claimants, who were its only two shareholders, and had both agreed to that course. Mr Oughton acknowledges that there was never any valid winding-up of the company; but the claimants had proceeded in the honest belief that they had been acting entirely properly, accounting to HM Revenue and Customs for any CGT properly payable, and they had been let down by their professional accountant, Mr Allen. Mr Oughton recognises that if the transaction were to be retrospectively re-analysed as the payment of a dividend by the company to the claimant shareholders, then there would have been a liability to income tax in the hands of the recipients, which would have been chargeable to the second claimant, despite his non-resident tax status, as well as the first claimant, and at a higher rate than the CGT accounted for by the first claimant. However, neither claimant had any knowledge of any facts that might have rendered them liable for such income tax. Mr Oughton has emphasised that the claimants are willing to undertake to the court to report any possible unpaid liability for income tax to HM Revenue and Customs, but subject to their right to rely upon any available limitation period applicable on the basis of carelessness, as opposed to deliberate wrongdoing (on the basis that the claimants only discovered that there had been no valid winding-up of the company as recently December 2021).

I accept Mr Oughton’s submissions. I find that the claimants have established all the necessary elements to give rise to a valid claim to the two properties by way of proprietary estoppel. I also hold that this gives rise to a sufficient interest by way of trust, existing at the date of the company’s dissolution in June 2010, to engage the court’s jurisdiction under s. 44 (ii) (c) of the Trustee Act 1925 to make a vesting order in respect of each property in favour of the relevant claimant. If I am wrong about that, then I would hold, in the alternative, that the court’s jurisdiction under s. 181 of the Law of Property Act 1925 is engaged.

The recent decision of the Supreme Court in Guest v Guest [2022] UKSC 27, [2022] 3 WLR 911 is concerned with the proper approach to the identification of the appropriate remedy to satisfy the resulting equity once a proprietary estoppel has been established. However, the majority judgment of Lord Briggs JSC (with whom Lady Rose JSC and Lady Arden agreed) contains much useful learning on the subject of proprietary estoppel. At [4] and [5] Lord Briggs explained that “… one of the principal functions of equity is to put right injustice to which the law is otherwise blind, by restraining the rigid application of legal rules where their implementation would be unconscionable”. One such legal rule is that

At [10] Lord Briggs emphasised that “… detriment is relevant to both the arising of the equity and to the remedy. Without reliant detriment there is simply no equity at all. This reflects the notion that it is the reliant detriment which makes it unconscionable for the promisor to go back on his promise.” At [31] Lord Briggs cited with approval the acceptance by “one of the greatest equity judges, Oliver J (later Lord Oliver of Aylmerton)” of the following summary by counsel of the remedy of proprietary estoppel in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Limited [1982] QB 133, at 144:

At [74-76] Lord Briggs explained that

In a separate judgment, Lord Leggatt JSC (with whom Lord Stephens JSC agreed) sought (at [254-255]):

Applying these legal principles to the present case, acting on behalf of the company, Mr Allen led the claimants, as its shareholders, to understand that there had been a valid winding-up of the company as part of which Rodham Terrace had been validly transferred to the first claimant and Little Corby Road to the second claimant, with their respective entitlements to the company’s liquid cash assets being calculated by reference to the respective values of these two properties, and the first claimant accounting for his perceived resulting CGT liability on that basis. In reliance on the understanding that the company had distributed all of its liquid cash and property assets, the first claimant took the necessary steps to have the company struck-off the register and dissolved; and the second claimant abstained from taking any steps to prevent this. Thereafter, not realising that the company remained as the registered proprietor of the two properties, neither of the claimants took any steps to have the company restored to the register until it was too late to do so. I recognise that this last omission necessarily post-dates the dissolution of the company, and the first vesting of its property in the Crown. However, I acknowledge that this post-dissolution detriment may be of some slight, albeit not decisive, relevance to the claimants’ proprietary estoppel claim because it both reinforces the pre-dissolution detriment suffered by the claimants, and it also assists in determining the appropriate remedy to be awarded to the claimants, since restoring the company to the register, thereby enabling it to dispose of the properties itself, has now ceased to be an available option.

I am satisfied that it would clearly be unconscionable for the company, and for the Commissioners, as their (involuntary) successors in title (for no consideration), to deny the claimants’ ownership of the properties. Equally, the making of vesting orders in favour of the claimants in respect of each of the properties would be consistent with the interests of justice. First, the failure to transfer the properties out of the company before it was struck off and dissolved was a clear mistake which the making of vesting orders in favour of the claimants will effectively correct. Had the company continued to exist, the claimants would have been able to procure the transfer of the properties to themselves. That result can only now be achieved by the making of vesting orders in favour of the claimants. Second, if the mistake is not corrected, then the Commissioners will receive a windfall; and they do not oppose the claim. Third, if no vesting orders are made, then it is unclear what will happen to the properties or their tenants. The Commissioners’ solicitors’ letter dated 22 July 2022 implicitly recognises the Commissioners’ reluctance to undertake any acts of possession, entry or management so as to avoid any liability or responsibility arising in respect of the properties. Fourth, the making of vesting orders would be consistent with the situation which would be likely to have applied had it still been possible to restore the company to the register.

For these reasons, I uphold the Part 8 claim. I will make orders pursuant to s. 44 (ii) (c) of the Trustee Act 1925, or alternatively s. 181 of the Law of Property Act 1925, vesting the legal and beneficial interests in (1) Rodham Terrace in the first claimant, and (2) Little Corby Road in the second claimant. There will be no order as to costs.