Disclaimed leases: Vesting of lease when company is restored to Register of Companies (Re Buzzlines Coaches Ltd; Mistral Asset Finance Ltd v Registrar of Companies – 2020)
Where a company in England and Wales is restored to the Register of Companies, will a lease disclaimed by the Crown automatically revest in the company?
In Re Buzzlines Coaches Ltd; Mistral Asset Finance Ltd v Registrar of Companies , the claimant was a purchase finance provider which had supplied funding to Buzzlines Travel Ltd (a subsidiary of Buzzlines Coaches Ltd) secured by a mortgage over Buzzlines’ leasehold property. The company defaulted on its obligations to the claimant and subsequently became insolvent.
The company was struck off the Register of Companies and was dissolved. The Treasury Solicitor filed a notice of disclaimer to disclaim the lease, although such notice was not served on the claimant until 2 months later. An application was subsequently made by a former director of Buzzlines to restore the company to the Register, which was successful. The Court was asked to consider whether the lease could revest back in the company where the company was restored to the Register.
The High Court found that the lease did automatically revest into the company upon restoration to the Register of Companies. Where the Treasury Solicitor has disclaimed ‘bona vacantia’ property, this disclaimer does not necessarily survive the restoration of the dissolved company. The question for the Court to consider was whether the Crown’s disclaimer took effect as a disposition. There was no statutory definition of ‘disposition’ under the Companies Act 2006 and the meaning of ‘disposition’ in the 2006 Act differed to the definition contained in the Law of Property Act 1925. Upon consideration of the case law, it was found that a statutory disclaimer of ‘bona vacantia’ land was not a disposition for the purposes of the 2006 Act and did not survive the restoration of the dissolved company.
Further, the Court held that the claim by the claimant made within 14 days of service of a notice of disclaimer for a vesting order is sufficient for the disclaimer not to take effect, regardless of whether the vesting order is granted or not.
Advice and action
This case will be of interest to landlords of premises where a leaseholder company has been dissolved, as well as parties considering restoration of a dissolved company to the Register.
Where ’bona vacantia’ land has been disclaimed by the Crown, any restoration of the leasehold owner company will automatically revest the lease without further action required to be taken.
Parties considering restoration of a dissolved company should ensure that thorough due diligence is undertaken before making any application, satisfying themselves that the company will be restored free from encumbrances including revested leases.
The High Court found that the lease did automatically revest into the company upon restoration to the Register of Companies. Where ‘bona vacantia’ property is disclaimed, the disclaimer does not necessarily survive the restoration of the dissolved company.