Avis v Turner and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Chadwick,Lord Justice May,Lord Justice Ward |
| Judgment Date | 19 July 2007 |
| Neutral Citation | [2007] EWCA Civ 748 |
| Date | 19 July 2007 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2007/0146 |
[2007] EWCA Civ 748
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LIVERPOOL DISTRICT REGISTRY
(HIS HONOUR JUDGE PELLING QC)
Ch 17 (No 54 of 1989)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Ward
Lord Justice Chadwick and
Lord Justice May
Case No: A2/2007/0146
Mr Paul Chaisty QC and Mr Graham Sellers (instructed by Maxwell Hodge Solicitors, 37–39 Liverpool Road North, Maghull, Liverpool L31 2HB) for the Appellant
Mr Stephen Davies QC and Mr Stefan Ramel (instructed by Eversheds Llp, Cloth Hall Court, Infirmary Street, Leeds LS1 2JB) for the first named Respondent, Charles Hamilton Turner
The second named Respondent, Edmund Charles Avis, did not appear on the appeal
Hearing date: June 20 2007
Judgement
This is an appeal from an order made on 13 December 2006 by His Honour Judge Pelling QC, sitting as a judge of the High Court in the Liverpool District Registry of the Chancery Division, on an appeal from an order made on 4 May 2006 by District Judge Sykes in the Liverpool County Court on an application made in the bankruptcy of Edmund Charles Avis. Permission to appeal to this Court was granted by Sir Martin Nourse on 23 March 2007.
The appeal raises a question as to the powers of the court on an application by a trustee in bankruptcy for an order for the sale of a former matrimonial home in which the bankrupt had an interest in circumstances where there is an existing order, made in matrimonial proceedings between the bankrupt and his former wife, that sale be postponed until the happening of specified events which have not yet occurred.
The underlying facts
Mr Avis and his former wife, Mrs Vivienne Avis, are registered at HM Land Registry as proprietors with title absolute to property known as 23 Malvern Close, Kirkby, Merseyside. In the course of matrimonial proceedings between them in 1985 it was ordered, by consent, that the trusts upon which they had formerly held the property be varied so as to provide that the proceeds of sale be held as to two thirds for Mrs Avis and as to one third for Mr Avis. On the bankruptcy of Mr Avis on 14 February 1989 – or, more accurately on the appointment of a trustee in bankruptcy to administer his estate—his one third interest in the proceeds of sale of the property vested in the trustee under section 306 of the Insolvency Act 1986. Mr and Mrs Avis remained the registered owners and the trustees of the trust for sale upon which the property is held.
The present trustee in bankruptcy, Mr Charles Turner, was appointed with effect from 14 October 2003. By application notice dated 18 November 2005, the trustee sought (amongst other relief) an order for sale in relation to the property at Malvern Close. Mr and Mrs Avis were named as respondents to that application. The application was expressed to be made under both the Trusts of Land and Appointment of Trustees Act 1996 and the Insolvency Act 1986.
The relevant provisions of the 1996 Act, in the present context, include those in sections 14 and 15. Section 14 of the Act, so far as material, is in these terms:
“14(1) Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.
(2) On an application for an order under this section the court may make any such order —
(a) relating to the exercise by the trustees of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of any of their functions), or
(b) declaring the nature or extent of a person's interest in property subject to the trust,
as the court thinks fit.”
That section must be read with section 1(1)(a) and (2)(a) of the Act: a trust of land includes a trust for sale. The Court has power under section 14(2)(a) of the Act to direct trustees for sale of land to execute the trust and sell the land. The court may also give directions as to the disposal of the proceeds of sale to those interested – section 17(2) and (3).
Section 15 of the 1996 Act sets out matters relevant in determining an application under section 14. Subsection (1) requires the court to have regard to: “(a) the intentions of the person or persons (if any) who created the trust, (b) the purposes for which the property subject to the trust is held, (c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and (d) the interests of any secured creditor of any beneficiary.” But that requirement must be read with sub-section (4):
“(4) This section does not apply to an application if section 335A of the Insolvency Act 1986 (which is inserted by Schedule 3 and relates to applications by a trustee of a bankrupt) applies to it.”
Section 335A of the Insolvency Act 1986 – which, as section 15 (4) of the 1996 Act indicates, was inserted into the 1986 Act when the 1996 Act was enacted – is in these terms (following amendment by the Civil Partnership Act 2004):
“335A(1) Any application by a trustee of a bankrupt's estate under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (powers of court in relation to trusts of land) for an order under that section for the sale of land shall be made to the court having jurisdiction in relation to the bankruptcy.
(2) On such an application the court shall make such order as it thinks just and reasonable having regard to –
(a) the interests of the bankrupt's creditors,
(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the bankrupt's spouse or civil partner or former spouse or former civil partner—
(i) the conduct of the spouse, civil partner, former spouse or former civil partner, so far as contributing to the bankruptcy,
(ii) the needs and financial resources of the spouse, civil partner, former spouse or former civil partner and
(iii) the needs of any children; and
(c) all the circumstances of the case other than the needs of the bankrupt.
(3) Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt's estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt's creditors outweigh all other considerations.”
The application for an order for sale
The position when the application of 18 November 2005 was made was, and (so far as I am aware) remains, that Mrs Avis occupied and occupies the property at 23 Malvern Close as her home. Mr Avis has not lived there since the property adjustment order was made in 1985. By his application of 18 November 2005 the trustee in bankruptcy sought a declaration that he was beneficially interested in and entitled to a one third interest in the property. Subject to the qualification that his interest is in the proceeds of sale of the property and that that interest vests in him not beneficially but as trustee upon the statutory trusts applicable to the administration of the bankrupt's estate, there can be no answer to that claim.
By paragraph 4 of his application notice, the trustee in bankruptcy sought an order that the property be sold. There were claims to further relief for the purpose of giving effect to a sale: paragraph 2 sought an order vesting the property in the trustee in bankruptcy and paragraph 3 an order that the respondents deliver up vacant possession. But the principal issue between the parties arises from the wish of the trustee in bankruptcy to have the property sold so that the proceeds can be applied to discharge the bankruptcy debt; and, no doubt, to pay his proper fees and expenses incurred in connection with his office.
In the present case the bankrupt's estate—which included the one-third interest of Mr Avis in the proceeds of sale of the property at 23 Malvern Close—had first vested in a trustee in bankruptcy, at the latest, on 14 October 2003 when the present trustee was appointed. The application under the 1996 Act was made some two years after that date. At first sight, therefore – in giving effect to section 335A of the 1986 Act in conjunction with section 14 of the 1996 Act – the court was required to assume (unless the circumstances of the case were exceptional) that the interests of the bankrupt's creditors outweighed all other considerations.
The 1985 property adjustment order
Mr and Mrs Avis opposed an order for sale. Their opposition was founded on the 1985 property adjustment order. As I have said that order (at paragraph 1) directed that the terms of the trust for sale upon which they held the property be varied so as to provide that the proceeds of sale be held as to two thirds for Mrs Avis and as to one third for Mr Avis. Paragraph 2 of the order is in these terms:
“2. Such trust for sale shall be postponed until the happening of any one of the following events:
(a) the re-marriage of the Petitioner.
(b) the Petitioner's cohabitation with another man in a stable relationship.
(d) the Petitioner serves notice upon the Respondent in writing that she requires the property to be sold.
(e) the death of the petitioner.”
Paragraph 5 of the order provides that, until the property is sold, the...
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