Whose property is it anyway? High Court refuses to make a vesting order where company dissolved

When an English company is dissolved whilst still owning assets, those assets (normally a property) vest in the Crown. Where a freehold estate in land vests in the Crown in this way, the Crown may disclaim it and, in a quaint manner redolent of the feudal origins of English law, the land reverts to the Crown under the common law doctrine of escheat.[1] Certain parties may apply to the court for an order vesting those assets in themselves (the applicant), known as a ‘vesting order’. In a recent decision by the High Court in Robert Lulham and Nichola Lulham v The Crown Estate Commissioners [2025] EWHC 1572 (Ch) the Court refused to make an order vesting the land in the company’s former directors and shareholders, where there was no chance of restoration of the company. As such, the decision underlines that vesting is not a foregone conclusion, and shines a light on the application of these arcane principles to the reality of property development and management using limited companies, especially Special Purpose Vehicles (SPVs).

Company dissolution and reversion to the Crown

The applicants, Robert and Nichola Lulham, were former directors and shareholders of a limited company called Matchmount Limited. In 2005, the company purchased the freehold in a property in Maidstone, Kent. The property was divided into two flats and the couple were long leaseholders of the flats. They therefore obtained the freehold interest via the company (which they owned and controlled) and leasehold interests as tenants in each of the flats.

Following a series of failings and errors relating to the filing of the company’s annual returns, the company was struck off administratively by the Registrar in 2010. The Lulhams stated all relevant documents regarding the striking-off and dissolution were sent to their former solicitors, which had ceased to practice, and they were therefore unaware of the dissolution of the company for several years.

Crucially, the couple did not apply for the restoration of the company within the 6-year period provided for under section 1024(1) or section 1029 of the Companies Act 2006. The company’s dissolution was therefore irrevocable and the property became ownerless, or bona vacantia, passing to the Crown by operation of section 1012(1) Companies Act 2006.

The Crown, represented by the Treasury Solicitor, exercised a power of disclaimer under section 1013 of the Companies Act, with the result that the freehold estate determined, leading to a reversion back to the Crown pursuant to the common law doctrine of escheat.

The Lulhams applied for a vesting order to recover the property’s freehold on the bases that they (i) had an interest in the disclaimed property as the company’s former sole shareholders and directors, and (ii) continued to incur liabilities under the tenant covenants in the leases, meaning it would be just to vest the freehold in them.

The High Court’s Decision: No Interest in the Freehold

Deputy Master Holden rejected the Lulhams’ application, finding that they had failed to show any relevant interest or enforceable right in the land.

On the first of the applicants’ submissions, citing Leon v Attorney General [2020], the court found that the applicants’ role as shareholders and directors of the company, and the fact that they had funded the purchase of the company’s freehold, did not give right to any proprietary interest, and that to attribute such an interest would lead to a piercing of the corporate veil.

On the latter submission, the court also rejected the argument that the tenant covenants in the leases were a sufficient liability to justify a vesting of the freehold, finding that those obligations arose under the leasehold titles, not the freehold, and therefore did not satisfy the statutory test under section 1017 of the Companies Act.

Given how the property was acquired and subsequently dealt with, the Judge stated that the Lulhams “would have been forgiven for thinking that the Property was, to all intents and purposes, theirs”, but the case is a useful clarification of the limits on the court’s powers to make vesting orders under the Companies Act 2006 and the Law of Property Act 1925 in cases of escheat.

Though this case deals with administrative striking-off, the facts may be relevant in the insolvency context where, during a company’s winding-up, a liquidator disclaims an asset. The decision may also be of importance to parties managing share-of-freehold properties in the same ownership structure, who may need to give careful consideration to what may happen as a consequence of a company’s striking off.

For further information, please contact Rosemary Pijper or William O'Brien.