Barca v Mears
| Jurisdiction | England & Wales |
| Judgment Date | 24 September 2004 |
| Neutral Citation | [2004] EWHC 2170 (Ch) |
| Docket Number | Case No: HC 03 00091 |
| Court | Chancery Division |
| Date | 24 September 2004 |
[2004] EWHC 2170 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Nicholas Strauss QC (sitting as a Deputy Judge of the High Court)
Case No: HC 03 00091
The appellant appeared in person.
Hearing dates: 21 and 29 July 2004
Approved Judgment
Mr Strauss QC :
This is an appeal against an order made by Deputy Registrar Agnello on 29 April 2004, in which she ordered the appellant ("Mr. Barca") to give vacant possession of a house at 10 Prioress Road, West Norwood, London, SE27 and further ordered that the house should be sold and the net proceeds of sale held until determination of the beneficial interests in it.
Mr. Barca was declared bankrupt on 9 August 1995. The respondent was appointed Trustee in Bankruptcy with effect from 9 December 2003. I will refer to him as "the Trustee".
As at November 2003, Mr. Barca's known creditors were owed approximately £135,595 plus statutory interest. The amount due to Halifax Plc on the mortgage of the house was £52,342.19 as at 21 August 200The Trustee relies on a valuation of the house of £140,000; Mr. Barca has obtained valuations of £120,000. On any view, there should be a substantial surplus available for the creditors.
On 8 December 2003, the Trustee applied for a declaration that he had an absolute beneficial interest in the property and for an order for possession and sale.
In his evidence in support of the application, he stated that he was aware that at some time in the past Mr. Barca had lived at the property with his former partner, Ms. Beatrice de Cock, and that they had had a child. He further stated that, whilst Mr. Barca had asserted that Ms. de Cock had an interest in the property, he had not been notified of any such interest and none was recorded on the title deeds.
In Mr. Barca's first witness statement, he said that he had had a long-term relationship with Ms. de Cock and that their son, Lorenzo, who was born on 10th August 1991, currently lived with him between Thursday and Monday morning in each week and that he had a bedroom in the house and spent more time there than at his mother's home. He further stated that Ms. de Cock had a beneficial interest in the property because she had, between 1990 and 1995, paid the mortgage and contributed to household bills. In his second witness statement, he repeated that his son spent 4 out of every 7 days in the property, and explained in some detail why an order for possession and sale would cause him considerable hardship.
There was also a short witness statement by Ms. de Cock, in which she confirmed that she had a financial interest in the property as a result of contributing to the mortgage, and supported Mr. Barca's evidence that Lorenzo spent 3–4 nights a week there albeit only in term time, and that he received assistance from his father with his educational difficulties. However, counsel instructed by Mr. Barca indicated that he placed no reliance on this statement, at least in relation to the claim that Ms. de Cock had a beneficial interest in the property, because he was not in a position to call her and the statement gave no figures.
In these circumstances, the Deputy Registrar was not prepared to proceed with the application for a declaration as to the beneficial interests in the property without joining her as a party to the proceedings and giving her an opportunity to put forward her case. However, she was prepared to proceed with the application for possession and sale of the house, notwithstanding Ms. de Cock's claim.
I was not referred to the transcript of the hearing in any detail by either side, but it appears that the matter proceeded on the basis that the principal issue between the parties was whether the court should make an order for sale pursuant to section 14 of the Trusts of Land and Appointment of Trustees Act 1996 and section 335A of the Insolvency Act 1986 (which was applicable if but only if Ms. de Cock did have an interest, so that there was a trust for sale): see pp. 11–2 of the transcript.
The main ground on which counsel for Mr. Barca resisted an order for possession and sale was that such an order would disrupt the education of his son, who had special educational needs. He had difficulty in concentrating, resulting from the fact that his mother's first language was French, and poor physical co-ordination. He stayed with his father in the house between Thursday and Monday, and the assistance which his father had been able to give him with respect to both problems had led to considerable improvement; he was now making much better progress at Harris City Technology College, which was an excellent school. Mr. Barca feared that, if he was rendered homeless, the help which he would be able to give his son would be severely curtailed, and that his son's progress would cease. Counsel for the Trustee did not cross-examine Mr. Barca.
Mr. Barca's evidence on these matters was directed at section 335A(3) which provides that, on an application made after the end of the period of one year beginning with the first vesting 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 submission made on behalf of Mr. Barca was that the hardship caused to his son by an order for possession and sale constituted "exceptional circumstances". Mr. Barca was not cross-examined and his evidence was thus not challenged.
One point which has troubled me, although not raised in Mr. Barca's notice of appeal, is that —if Ms. de Cock has or may have a beneficial interest in the property —then it may be said that she was also entitled to be heard on the question of whether there were exceptional circumstances justifying a lengthy postponement of the order for possession and sale. As was said in the leading case of re Citro [1991] Ch. 142, to which I refer in more detail below, no distinction is to be drawn between cases in which the property is still a matrimonial home and cases in which it is not.
The Deputy Registrar made an order on 29th April 2004 that Ms. de Cock should be joined, and she gave certain further directions as to the hearing of the issue as to beneficial entitlement, which were subsequently slightly varied. In the end, Ms. de Cock wrote to the Trustee's solicitors on 14th July 2004 in the following terms:-
" Beneficial interest for 10 Prioress Road, West Norwood
I would like to withdraw my Beneficial Interest for 10 Prioress Road, West Norwood, London SE25 0NW as I do not qualify for Legal Aid."
This letter is open to two possible interpretations. The more likely interpretation is that Ms. de Cock understands that she could make an application for a declaration that she has a beneficial interest in the property, but because of her inability to obtain legal aid does not wish to pursue it. There is however in my view a possibility that she believes that, because she does not qualify for legal aid, she is not able to pursue her claim. Possibly, an explanatory letter should be written to her, and she should be asked to make it clear whether she is abandoning her claim in the knowledge that she is entitled to pursue it without obtaining legal aid. This is a matter which the Registrar can no doubt consider when hearing that part of the application.
The question however remains whether I should allow the appeal in this case simply on the basis that the order for possession and sale should not have been made without first joining Ms. de Cock and giving her the opportunity to be heard on this part of the application. I do not think that it would be right to do so. Even though Ms. de Cock was not formally joined as a party to the application, she made a statement which supported Mr. Barca's evidence on their son's educational needs but without adding any substantial detail. It therefore does not seem that there is anything more that she could say, and I do not think that any useful purpose would be served by allowing the appeal merely so that she could be formally joined for the purposes of this part of the application.
As I have said above, the matter seems to have proceeded before the Deputy Registrar on an assumption that there was a trust for sale, but even if there was not, substantially the same question might well have arisen under section 337 of the Act, which applies where any person under the age of 18 with whom the bankrupt has at some time occupied the dwelling house has his/his home with the bankrupt at the time when the bankruptcy petition is presented and at the commencement of the bankruptcy. In such circumstances, the court must make a similar assumption, that the interests of the bankrupt's creditors outweigh all other considerations unless the circumstances of the case are exceptional. It is clear on the evidence that Lorenzo now has his home with Mr. Barca, but it is not clear whether this was so at the time when the bankruptcy petition was presented or at the commencement of the bankruptcy. If Ms. de Cock had no beneficial interest in the property, and if Lorenzo did not have his home with his father at the relevant times, then neither section 335A nor section 337 applies, and the Trustee would in those circumstances have an absolute right to possession.
It is clear from the transcript that the Deputy Registrar heard argument on both sides on the issue as to whether there were exceptional circumstances, and considered the evidence carefully. At the end of the submissions made by...
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