Re Sir Thomas Spencer Wells. Swinburne-Hanham v Howard

JurisdictionEngland & Wales
Judgment Date1933
Date1933
Year1933
CourtCourt of Appeal
[COURT OF APPEAL] In re SIR THOMAS SPENCER WELLS. SWINBURNE-HANHAM v. HOWARD. [1931. W. 43.] 1932 May 26, 27, 30; July 18. LORD HANWORTH M.R., LAWRENCE and ROMER L.JJ.

Crown - Bona Vacantia - Mortgage by Company of Leaseholds by Assignment - Dissolution of Company before 1929 - Claim of Crown to Equity of Redemption allowed - Companies Act, 1929 (19 & 20 Geo. 5, c. 23), s. 296.

A company in 1899 mortgaged certain leasehold properties by the assignment of the residue of the terms to the mortgagees, subject to a proviso for redemption. In 1910 the company was wound up voluntarily and a liquidator was appointed. In 1916 the company was dissolved. The mortgagees had in 1913 appointed a receiver of the rents, but at that time the net rents were insufficient to pay the full interest on the mortgage. The liquidator considered that the equity of redemption was of no value and did not either surrender it to the mortgagees or part with it to any other person. The rents had now largely increased in value and the arrears of interest had been paid off, and the equity of redemption had become of value. The Crown claimed the equity of redemption as bona vacantia, and the mortgagees claimed that they were entitled to the property free from any right to redeem:—

Held (reversing the decision of Farwell J.), that the doctrine of bona vacantia extended to leaseholds, that the equity of redemption in the mortgaged premises passed to the Crown as bona vacantia on the dissolution of the company, and that the Crown was therefore entitled to a declaration to that effect.

Middleton v. Spicer (1783) 1 Bro. C. C. 201; Dyke v. Walford (1846–48) 5 Moo. P. C. 434; Megit v. Johnson (1780) 2 Dougl. (K. B.) 542; and Taylor v. Haygarth (1844) 14 Sim. 8 applied.

Obiter dictum of Wright J. in In re Higginson & Dean [1899] 1 Q. B. 325, 332, that it would “be judicial legislation to declare the Crown entitled to maintain actions in such cases except where it can allege a trust,” dissented from.

Hastings Corporation v. Letton [1908] 1 K. B. 378 discussed and distinguished.

Held, also (affirming the decision of Farwell J.), that s. 296 of the Companies Act, 1929, is not retrospective.

APPEAL from a decision of Farwell J.F1

Sir Thomas Spencer Wells, by his will dated November 19, 1896, after making various bequests, devised and bequeathed to his executors and trustees the residue of his real and personal estate upon trust to invest certain shares thereof upon the securities therein mentioned, including freehold, copyhold, leasehold and chattel real securities in Great Britain, but not in Ireland, and to hold such investments upon the trusts therein declared, which were still subsisting.

The testator died on January 31, 1897, and the will was duly proved in the Principal Probate Registry on March 30, 1897.

The trustees of the will invested the sum of 4325&L, being part of the said trust shares, upon a mortgage of three leasehold properties, known as Nos. 3, 4 and 5 St. John's Park Mansions, Pemberton Gardens, in the county of London, which were then vested in the Tufnell and Caledonian Parks Syndicate, Ld. (hereinafter called “the company”), for the respective terms of ninety-nine years from June 24, 1868 (less the last three days thereof), by three underleases, one dated April 25, 1899, and the others dated July 3, 1899, at the yearly rent for each property of 80&L By the mortgage dated October 31, 1899, the company covenanted with the trustees to repay the said sum of 4325&L with interest thereon at the rate of 4&L per cent. per annum, and assigned to the trustees the said three properties for the whole of the unexpired residue of the terms for which the same were respectively held, subject to the usual proviso for redemption.

On March 23, 1910, the company passed an extraordinary resolution that the company should be reconstructed by a sale and transfer of its property, assets and liabilities to a new company, and that the company should be wound up, and that Llewellyn Howard Wilkins should be appointed liquidator. The extraordinary resolution was duly confirmed by resolution on April 7, 1910.

In July, 1913, the trustees gave notice to the liquidator to pay off the mortgage money, but default was made in payment. In December, 1913, the trustees appointed Claude Lound receiver of the income of the mortgaged property, and he entered into possession of the rents and profits. From the accounts rendered by the receiver it appeared that after payment of the ground rents and other outgoings a very small balance of the rents came to the hands of the trustees and was not sufficient to satisfy the interest.

The company was never reconstructed, nor was any sale or transfer made to any new company, and on May 24, 1916, the company was dissolved. At the time of the dissolution the liquidator was of opinion that in the circumstances the equity of redemption of the mortgaged premises was of no value, and he took no steps either to surrender the equity of redemption to the mortgagees or to sell or dispose of it to any other person. The said Claude Lound continued to act as receiver of the income of the mortgaged premises until 1921, when the mortgagees appointed Percy Lawrence to act as receiver in his place. At the time of the dissolution of the company there was a substantial sum due to the mortgagees in respect of interest, which the net rents had been insufficient to meet. Since the dissolution the rents of the mortgaged premises had largely increased, with the result that net rents received had been sufficient to pay the current interest and all arrears of interest, and to leave a balance in the hands of the receiver. The equity of redemption in the mortgaged premises had therefore become of value. Questions then arose as to the persons entitled to the equity of redemption, and the Crown claimed to be entitled to it as bona vacantia, while the surviving trustee claimed that in the circumstances no one was entitled to redeem the property, and that he, as survivor of the mortgagees, to whom the property had been assigned, was entitled to it free from any equity of redemption.

The surviving trustee, therefore, issued this summons, to which one of the beneficiaries and the Attorney-General, representing the Crown, were parties. The summons came before Eve J. on April 17, 1931, and as at that time no definite information had been obtained as to the circumstances of the dissolution of the company, his Lordship directed an inquiry in the following terms: “Whether the company was reconstructed under s. 192 of the Companies (Consolidation) Act, 1908, or otherwise, and whether any and what property of the company was sold or transferred to any other company or person on the terms of the scheme of reconstruction mentioned in the extraordinary resolution of the company or on any and what terms.” The summons then stood over. The former liquidator of the company was afterwards found, and made an affidavit giving the facts of the dissolution as before mentioned, and the Master made his certificate accordingly.

The summons was then restored to the list for hearing.

Farwell J. held, on the authorities, that the Crown could claim as bona vacantia property in the hands of another person only if that person held it under some trust for a legal entity; that the mortgagee was not a trustee of the equity of redemption for the mortgagor; that the Crown's claim failed and that the surviving mortgagee was owner of the mortgaged terms without any right in any person to redeem. He further held that s. 296 of the Companies Act, 1929, was not retrospective.

The Crown appealed. The appeal was heard on May 26, 27 and 30, 1932.

Sir Boyd Merriman S.-G. and Stafford Crossman for the Crown. The equity of redemption in the mortgaged property passed to the Crown as bona vacantia when the company in which the equity was vested was dissolved on May 24, 1916. It is true that the receiver appointed by the mortgagees continued to act, but under s. 24 of the Conveyancing Act, 1881, the receiver when appointed was the agent of the company as mortgagor and on the dissolution of the company must be treated as having become the agent of the Crown. If therefore (as Farwell J. held) the Crown can claim as bona vacantia property in the hands of another person only if that person holds on trust, the receiver can be regarded as a trustee. This, however, is only a subsidiary point, for it is contended that Farwell J.'s decision on that point is wrong.

Under the Companies Act, 1929, s. 296, property and rights vested in a company on its dissolution belong to the Crown as bona vacantia. It is contended that this provision is retrospective. This section replaces s. 71 of the Companies Act, 1928. There is no authority on the question, but in In re Family Endowment SocietyF2 s. 199 of the Companies Act, 1862 (now represented by s. 338 of the Act of 1929), providing for the winding up of unregistered companies, was held to apply to a company dissolved a year before the Act of 1862 came into force. That was notwithstanding the provision in sub-s. 3 of s. 199 that the circumstances in which an unregistered company might be wound up are “whenever the company is dissolved ……” It is contended that in s. 296 of the Companies Act, 1929, “Where a company is dissolved” should be treated as retrospective. That case was followed in In re Russian and English Bank.F3 In Hastings Corporation v. LettonF4 a lease was held to determine when the corporation was dissolved without having assigned the lease. It is on account of this decision that the words in brackets in s. 296 of the Act of 1929 were inserted: “including leasehold property but not including property held by the company on trust for any other person.” This makes it difficult to say that the section is merely declaratory of already existing law; and the Court cannot be asked to say that Hastings Corporation v. LettonF4 was wrongly decided, as it was cited...

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