Lawbite: Insolvency Act: no fast track to possession from trespassers

The High Court has considered and clarified the scope of section 234 of the Insolvency Act 1986 (“s234”) and whether it allows the court to make an order for vacant possession against a trespasser.

The decision confirms that s234 does not empower the court to order trespassers to give vacant possession because a trespasser’s possessory title is not ‘property’ that can be transferred or delivered under s234.

Office-holders (i.e. insolvency practitioners) wishing to recover possession of commercial or residential premises from trespassers will, therefore, need to pursue relief under Part 55 of the Civil Procedure Rules in the name of the company in administration.

This decision is significant for office-holders dealing with unauthorised occupiers of properties and highlights the importance of using the correct legal procedure.

Background

Pocket Renting Limited (“Pocket”) owned and let a portfolio of residential properties, five of which were let to Investalet Limited (“Investalet”).

Pocket went into administration and Investalet subsequently stopped paying the rent due under the tenancies, despite demands.

The joint administrators (“JAs”) served notices to quit on both Investalet and on any persons in occupation (the properties were apparently occupied without Pocket’s authority by tenants of Investalet’s own alleged sub-tenant).

As possession was not given, the JAs applied under s234 for an order requiring vacant possession of the properties. The application was opposed by Investalet.

The central issue for the court was whether s234 provides an appropriate mechanism for an office-holder to obtain vacant possession of company property from trespassers.

What does s234 do?

S234 is intended to assist office-holders (i.e. insolvency practitioners) to recover property or records that belong to the company in administration.  It provides that:

“Where any person has in his possession or control any property, books, papers or records to which the company appears to be entitled, the court may require that person forthwith (or within such period as the court may direct) to pay, deliver, convey, surrender or transfer the property, books, papers or records to the office-holder” (emphasis added)

For these purposes, “property” is defined at section 436 of the Insolvency Act 1986 and includes:

”… land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property” (emphasis added).

When does s234 apply?

ICC Judge Greenwood considered a number of authorities and in particular, referred to Snowden LJ’s commentary in Carvill-Biggs v Reading [2025] EWCA Civ 619:

Section 234 “does not create new rights but is designed as a summary procedure to assist an insolvency office-holder to carry out his functions in the relevant insolvency process. The office-holder can obtain an order in his own name for transfer etc. of company property to himself, but the section does not give the office-holder any better rights to any property than the company had”.

Decision

The JAs’ application under s234 was dismissed.

Whilst Pocket’s properties fall within the definition of “property” for the purpose of s234, and Pocket (and so the JAs) has the right to seek vacant possession, it was not within the scope of s234 to permit the court to order vacant possession against trespassers as they couldn’t “…deliver, convey, surrender of transfer” the properties.

The reason for this is because a trespasser holds a possessory interest in the property it occupies, which is capable of being asserted against those with no (or no better) right, and capable of being transferred. However, a trespasser cannot assert that title as against a person with a superior right (such as Pocket in this case), so cannot transfer (or deliver, convey or surrender) it to that person.

In particular, ICC Judge Greenwood stated:

“The person with the superior right vindicates it by compelling the trespasser to leave, terminating his interest; he does not acquire that interest – he brings it to an end”.

The court emphasised that the JAs possession proceedings against trespassers could be pursued under Part 55 of the Civil Procedure Rules, in the name of the company.

Key takeaways

• s234 cannot be used to compel trespassers to give up possession.
• a trespasser’s possessory title is not the kind of ‘property’ that can be ‘paid, delivered, conveyed, surrendered or transferred’ under s234.
• office-holders are not without remedy – they can still pursue possession through the company using CPR Part 55 proceedings.