Clive Everitt (As Liquidator Of Property Securities Ltd) v (1) Gisele Zeital (2) Kim Zeital (2018)
Where a company owner died intestate and his estranged wife and daughter moved into a flat registered to the company, they did not acquire rights of occupation, ownership or adverse possession to prevent the flat being recovered as a company asset when the company was placed into liquidation nine years later.
he liquidator of a company applied under the Insolvency Act 1986 s.234 for possession of a flat occupied by the respondents.
The company was incorporated in Liberia in 1986. Its owner (Z) lived in London in a flat the leasehold of which he had purchased and registered in the company's name in 1988. The company was dissolved under Liberian law in 1990 but Z continued to fund the flat's service charge and outgoings as if the company still owned it. After Z died intestate in 2004, his estranged wife and daughter (the respondents) stayed there occasionally from 2005. They paid no rent or service charges. In 2014, the flat's freeholder obtained a winding-up order against the company owing to the service charge debt. The liquidator sought possession of the flat on the basis that it was a company asset.
The respondents submitted that the court had no jurisdiction as the company was subject to Liberian law; the liquidator had no standing to bring a s.234 application and the flat was outside the provision's scope; they had acquired rights of occupation, ownership and adverse possession; and the liquidator's application was time-barred.
Applicable law - Although the company was incorporated in Liberia, it had been made subject to a winding-up order by an English court. English insolvency law therefore applied, HIH Casualty & General Insurance Ltd, Re  UKHL 21 followed (see paras 58-61 of judgment).
Locus standi and scope of s.234 - The liquidator had standing to bring a claim for possession under s.234, Smith (Administrator of Cosslett (Contractors) Ltd) v Bridgend CBC  UKHL 58 followed. Further, s.234 provided for the delivery up of "property", which, under s.436 of the 1986 Act, included land (paras 65-66).
Rights of occupation or ownership - There was no sustainable basis that supported any rights of occupation on the respondents' part. Their occupation had never been formally admitted. The fact that the landlord's employees had provided them with keys did not, of itself, support an acknowledgement of a right to occupy that undermined the legal title of the company to the flat. Z had been in occupation but only because he had owned the company and therefore impliedly procured the company's consent to live in the flat. That consent had extinguished on his death and could not be inherited by the respondents; nor could it be resurrected on their assuming possession in 2005, as they did not have control of the company at that time. They had entered the flat as unlawful occupiers and remained there as such. Further, the respondents were not beneficiaries of a trust in land: any interest they had was in the shares of the company only. No rights of ownership had passed to Z when the company was dissolved in 1990, since he had had no intention of assuming ownership of the flat. Therefore, it did not form part of his estate when he died (paras 67-68).
Adverse possession - No rights of adverse possession arose against the company as Z had occupied the flat with the company's consent. It could be said that, on the company's dissolution, the flat had passed to the Crown as bona vacantia before re-vesting in the company on its liquidation. However, the respondents had not occupied it for the required minimum period of 10 years to acquire rights of adverse possession against the Crown, and in any event the right could be acquired only in very confined circumstances that did not apply in their case (paras 69-71).
Limitations - The liquidator's application was not time-barred. Under the Land Registration Act 2002 s.96(1), no limitation period under the Limitation Act 1980 s.15 ran against any person, other than a chargee, in relation to an estate in land the title to which was registered. Further, under s.96(3) of the 2002 Act, s.17 of the 1980 Act did not operate to extinguish the title of any person where, by virtue of s.96, a period of limitation did not run. If the land was owned by the Crown, the limitation period was extended to 30 years under s.37 of the 1980 Act for the Crown to recover its land, and that period had not passed (paras 72-77).
Disposal - At all material times, the flat was an asset of the company; alternatively, it became bona vacantia on the company's dissolution and was re-vested as an asset on liquidation for the benefit of the creditors. The liquidator was therefore entitled to possession of the flat (para.87).