Court provides guidance on Section 283A

Section 283A IA gives a bankrupt’s trustee in bankruptcy three years to take steps to realise or secure the bankrupt’s interest in the bankrupt’s home. If, at the end of the three year period the bankrupt’s trustee has not taken the required steps the interest will re-vest in the bankrupt.

The provision applies where property comprised in the bankrupt’s estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of the bankrupt, the bankrupt’s spouse or former spouse (Section 283A(1) IA).

In this case, Brake v Swift the Court undertook an in-depth examination of the interpretation of Section 283A (1) IA, focusing on the phrases (1) ‘an interest in’, (2) ‘a dwelling-house’, and (3) ‘sole or principal residence’.

First, the judge held that a claim by way of proprietary estoppel equity, to a recognised property right enabling a person to occupy a property in relation to a dwelling-house which was the home of the bankrupt at the date of bankruptcy, amounted to ‘an interest in’ under Section 283A IA.

Second, the judge considered the interpretation of ‘dwelling-house’ the definition of which includes any yard, garden… belonging to the dwelling house and occupied with it. The judge focused on the meaning of ‘belonging’ and held that this refers to serving or being useful to the dwelling-house and ‘occupied’ which refers to occupation of the same quality by the same person. In this case the court concluded that the land did not belong to, and was not occupied with, the dwelling house.

Finally, the judge turned to the interpretation of ‘sole or principal residence’ and held that the test for determining this issue is an objective test, dependent on the view of the “reasonable onlooker, with knowledge of the material facts” and there was no evidence that the bankrupt had changed their principal residence.

The court refused to re-vest the interests in land in the ex-bankrupt and the other applicants.

Brake v Swift [2020] EWHC 1810 (Ch) 

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