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Top 3 property litigation Q&As

House key iStock 000004543619XSmall 146x219The LexisPSL Local Government service regularly publishes Q&As on property litigation. Here are three of the most popular.

These Q&As seek to briefly address common questions faced when dealing with Local Government matters.

The Q&As supplement and link to other more detailed content within Lexis®PSL, but are intentionally short. It is anticipated that a brief Q&A will be most helpful when you need a quick overview of an issue and its likely impact. This might arise, for example, for lawyers needing to provide advice, provide business development or training at short notice.

 

Q1. A court bailiff appointment is scheduled to take place. The tenant has already vacated the property. However, the tenant unlawfully sub-let the property prior to the court bailiff’s appointment. Can the Landlord change the locks to stop the sub-tenant from gaining access? If not, does the court order need to be varied to include the sub-tenant so that the court bailiff can evict the sub-tenant, as the possession order does not include 'persons unknown'? 05/06/2015

The following assumptions have been made for the purposes of this Q&A, that:

  • the tenancy has terminated pursuant to a court possession order and the purported subletting took place after the possession order became effective but before the bailiff’s appointment was made pursuant to the warrant for possession.
  • the property is commercial and not residential. If the property is residential, a property owner must be particularly careful in taking back possession by changing the locks rather than relying on court proceedings. Please see Claims to the Possession of Land/Part A: Possession from Trespassers and Licensees/A4 Procedure for the removal of trespassers and licensees/Direct physical repossession and its dangers.

Status of current occupier

On the assumptions above, the former tenant was a trespasser when they purported to sublet the property to another party. Accordingly, they did not have capacity to grant a valid interest in land. Therefore, the current unlawful occupiers should also be treated as trespassers.

Landlord changing the locks

The landlord will have the usual remedies against the trespassers, including taking back possession by changing the locks. However, as with forfeiture, it is a criminal offence to use or threaten violence (to property or person) to secure entry to property if there is someone present on the property who is opposed to the entry, even a trespasser. Please see our Practice Note: Trespass—remedies.

Executing existing warrant for possession

The alternative is to rely on the existing possession order. Case law has established that a warrant for possession will cover all persons found on the land at the date of execution, whether or not they are named on the original possession order. Please see Hill and Redman’s Law of Landlord and Tenant, Division A, Chapter 15, paragraph 5307.

 

Q. 2 A creditor is owed money and has agreed to receive monthly instalments from the debtor but would also like to obtain a charging order as security only. If the charging order is obtained as security only, can the creditor then enforce a sale of the property if the debtor defaults on the monthly payments? 09/07/2015

Obtaining a charging order

A charging order is an indirect method of enforcement which secures the judgment debt rather than satisfies it.

For a summary of the process for obtaining a charging order, see Practice Note: Charging orders—what are they and when to use them and Obtaining a charging order—flowchart

Judgment debt payable in full

Assuming that the judgment debt is not specified to be payable by instalments by way of an 'instalments order' (ie if there is just a straightforward judgment for payment of the whole amount of the debt, which will be payable within 14 days of the order unless otherwise specified), a creditor could agree not to enforce the charging order unless and until there is a default in payment of any agreed debt instalments. In the event of default in payment of instalments, a creditor can then move onto enforcing the charging order, subject to section 3 of the Charging Orders Act 1979 as amended.

Judgment debt payable under instalments order

If, however, there is already an instalments order, while a creditor can still apply for a charging order, if there has not been in a default in paying the instalments, the court will only grant the charging order if it considers it appropriate in all of the circumstances. See Practice Note: Charging orders—what are they and when to use them and section 1 of the Charging Orders Act 1979 as amended by section 93 of the Tribunals Courts and Enforcement Act 2007 for more information.

Enforcing a charging order

Once a charging order has been obtained, the creditor has security for the debt. The creditor can enforce that charging order (in appropriate circumstances—see below) by obtaining an order for sale. See Practice Notes: Enforcing charging orders—orders for sale and Enforcing a charging order over land for more information.

If there is an instalments order in place, the court will not allow the charging order to be enforced unless there is a default of payment of an instalment. If there has been a default, the court may still limit the amounts for which, and the times at which, the charge may be enforced. See Practice Note: Charging orders—what are they and when to use them and section 3 of the Charging Orders Act 1979 as amended for further information.

 

Q. 3 I act for a local authority who had a service user of residential accommodation who built up arrears of debt. The service user passed away and had some monetary assets, which were used to partly pay the bill to the local authority. However, there is still a significant sum outstanding. The service user did jointly own a third share in a property (as a joint tenant) which has now passed to the two remaining owners. The local authority has been informed that the service user's family do not intend to take out a grant of probate and that they are not willing to sell the property to realise money in order to pay the remaining debt. Is the local authority able to bring a county court debt claim against the remaining two owners of the property on the basis that the service user's one-third share would have had value and therefore should be used to pay the local authority as creditor? 14/07/2015

What causes of action survive a person’s death?

As regards causes of action following a person’s death, if the person died on or after 25 July 1934, all causes of action subsisting against him survive against his estate, except causes of action for defamation. The cause of action may survive but it may be difficult or unable to be prosecuted.

The causes of action which survive for the benefit of or against the estate of the deceased include rights of action founded on breaches of contractual obligations, rights of action for personal injuries to the deceased, including claims for damages for pain and suffering and for loss of expectation of life, and rights of action founded on statutory duties or rights, if as a matter of construction the statute envisages this.

What are the rules for paying the debts of a deceased debtor?

The answer to this question depends on the solvency of the estate. Personal representatives (PRs) have a duty to pay the deceased's debts with due diligence, having regard to the assets in their hands that are properly applicable for that purpose and all the circumstances of the case (Re Tankard [1941] 3 All ER 458). They remain liable to the creditors and beneficiaries of the estate for any unpaid debts or liabilities to the extent that there are assets in the estate (even if they have no notice of the debts), although they may protect themselves against this by placing an advertisement for claims or seeking leave of the court to distribute the deceased’s estate on the basis of the debts ascertained.

If the deceased died with arrears of debt, this may raise questions over whether the deceased’s estate was solvent or insolvent, ie whether the assets in the estate are sufficient to pay the funeral, testamentary and administration expenses, debts and liabilities in full. The rules applicable to the payment of the deceased’s debts and funeral and testamentary expenses depend on whether the estate is solvent or insolvent. The rights of the creditor will also vary depending on whether the debt was secured or unsecured.

For more information, see our Practice Notes: Payment of debts—solvent estate, Payment of debts—insolvent estate. For procedural guidance in the event of the death of a debtor, see also: Death of the debtor and What happens if a debtor dies before or after the presentation of a bankruptcy petition? You may also be interested to read our Q&A on When can an executor be removed?

In terms of limitation, where the creditor’s cause of action accrued during the life of the deceased debtor, time begins to run against the creditor, even if administration to the estate has not been taken out and there has been no personal representative who can be sued (Boatwright v Boatwright (1873) LR 17 Eq 71).

Is it possible for property passing to joint tenants by survivorship to be made available to a creditor upon the death of the debtor?

For particular comment in relation to the impact of a bankruptcy order against a deceased debtor, see the above Payment of debts—insolvent estate, under sub-heading ‘Beneficial joint tenancy’:

If a bankruptcy order was made against the deceased before their death, the effect of the order is to sever the bankrupt's interest in any beneficial joint tenancy so that the deceased's share will not pass to the surviving joint tenant on their death but will be part of the deceased's estate to be administered in bankruptcy. Re Dennis (a bankrupt) [1995] 3 All ER 171.

If the deceased dies before a bankruptcy order is made, their unsevered interest in the property accrues by right of survivorship to the other joint tenant at the moment of death and so does not form part of the estate over which the insolvency administration order has effect. Re Palmer (a debtor) [1994] 3 All ER 835.

Where the insolvency petition against the estate is presented on or after 2 April 2001 and within five years of the date of the death of the joint tenant, on the application of the trustee in bankruptcy, the court has a discretion to make an order that the surviving joint tenant pay an amount not exceeding the value lost to the estate (IA 2000, s 12).

These questions were published in LexisPSL Local Government. If you would like to read more quality content like this, then register for a free 1 week trial of LexisPSL.