Property held on trust by foreign company passed bona vacantia upon dissolution

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The current occupier of a property, and the trustees in bankruptcy of the trustee company’s ultimate shareholder, sought vesting orders in their favour.

The High Court held that freehold property situated in England, held on trust by a foreign company that is dissolved, does not escheat to the Crown Estate. Escheat cannot occur where the dissolved company was a trustee, as the legal title remains governed by the trust and is not extinguished. Instead, it vests in the Crown as bona vacantia subject to the trust.

This means that even if the foreign trustee company is restored, it cannot apply for a vesting order under section 181 of the Law of Property Act 1925, which is only available if the property has passed by escheat. However, the court will consider a vesting order application from relevant parties under section 44 of the Trustee Act 1925.

It was also held that restoration of a foreign former trustee company would not mean that the English property automatically revested in it. Foreign companies are outside the scope of section 1032 of the Companies Act 2006 which has this effect for UK companies. Instead, it fell to the English court to determine competing vesting order applications under section 44 of the Trustee Act 1925.

The court has a broad discretion and in this case, made a vesting order in favour of the current occupier. It was not practicable to restore the status quo. The former trustee company was now effectively controlled by the trustees in bankruptcy of its ultimate shareholder and their duties were to the bankrupt's creditors.  Meanwhile, the current occupier appeared to be able to refinance the property and continue their business from it.

Hamilton v Her Majesty's Attorney-General and others [2022] EWHC 2132 (Ch)

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