8.80 Confirmation of ownership by third parties
Reference should be made to paragraphs 8.48 to 8.50 for the action to be taken during an inspection to identify third party property. Until such time as the official receiver establishes, or has reason to believe, that property at an insolvent’s premises belongs to a third party, he has a statutory duty to protect that property. Once he is aware that the property does or is likely to belong to a third party, his statutory duty to protect it is replaced with a common law duty of care in negligence - i.e. he will have a duty to take reasonable care of the property until such time as it is claimed by its owner.
Notes: [s144(1), 287 or 305(2)]
8.81 Official receiver's duty of care
There is no duty on the official receiver as receiver and manager, trustee or liquidator to protect chattels which does not form part of the estate. A duty of care may arise in respect of such chattels if the official receiver could be considered to be a bailee of the chattels. A bailment arises whenever one person (the bailee), voluntarily takes possession of chattels belonging to another person (the bailor). There need not be a contract between the bailor and the bailee for a bailment to arise. In order for a person to be considered a bailee of a chattel, that chattel must first be in his possession. Possession may be actual or constructive and the latter will arise if the person in question is able to exercise control over the chattels in question. An involuntary bailee must not wrongfully dispose of the chattels or take any positive steps to damage or destroy them. If the official receiver volunteers to keep chattels, he is under a duty to take reasonable care to keep the chattels safe. The extent of the care which the official receiver will need to take of third party chattels will depend upon the circumstances of the case but he should notify persons identified as owning chattels at the insolvent’s premises of the proceedings as a matter of urgency and ensure that arrangements are made for them to collect their chattels. Where the official receiver instructs agents to deal with the chattels, he should nevertheless give initial notification of the proceedings to the owners himself.
8.82 Insuring third party property
The official receiver should not incur expenditure on insuring third party property except to protect himself from any public liability. This includes buildings where it is apparent that no surplus will accrue to the estate. Where he will not insure the property, he must immediately inform the owner of this decision, particularly where the insolvent had a duty, e.g. under a hire purchase or lease contract, to insure the property. If the official receiver is unable to contact the owner, he should insure the property until he is able to do so. Where this insurance will result in a high premium the matter should be discussed with Technical Section in advance (see also paragraph 8.70 and chapter 49.7).
8.83 Retention of title claims
Unpaid creditors may attempt to claim the return of goods supplied to the insolvent under retention of title clauses - see chapter 63. Before giving up any property claimed by third parties, detailed enquiries are necessary, especially in the case of a party connected or associated with the insolvent. The official receiver should seek to avoid claims for damages for wrongfully taking possession (actual or constructive) of property to which he or the insolvent may have no title. The official receiver will be unable to rely upon the protection given by sections 234(3) and (4), 287(4) or 304(3) where he has notice of a claim by a third party unless he has reasonable grounds for rejecting such a claim.
Notes: [s249 or 435]
8.84 Statutory declaration (bankruptcy cases)
In bankruptcy cases a statutory declaration may be requested by the official receiver as evidence of ownership of property by third parties. Such statements should generally be tested by careful enquiry and scrutiny of supporting documentation, particularly where the third party is associated with the bankrupt. If the official receiver is satisfied that the claim cannot be substantiated, the claimant should be informed that if the claim is not withdrawn within seven days, the official receiver may apply to the court under the Statutory Declarations Act 1835 for an order that the property claimed forms part of the assets of the estate and that in that event application will also be made for costs to be awarded against the claimant.
Notes: [forms ATPC] [s435]
8.85 Collection of property by third parties
Wherever possible, owners should be requested to collect their property from the former trading address or other premises of the insolvent. However, the official receiver may consider it necessary to instruct agents to remove third party property to store pending its return to its owners if the property is exceptionally valuable, there is particular risk as a result of leaving it at the premises, the official receiver wishes to vacate the premises (see paragraph 8.61) or if the insolvent has a lien for sums due from the third parties e.g. for repairs made to their property. The official receiver may wish to consider making a charge on the owners of the property concerned for the costs incurred in this activity and/or for insuring the property where the insolvent does not have an interest in it. The official receiver or his agents should, where possible, inform third parties that their property is to be moved.
8.86 Disposal of unclaimed third party property
In some cases the official receiver may find the Torts (Interference with Goods) Act 1977 will assist in the disposal of unclaimed third party property. Where the official receiver is the bailee of goods aright to sell those goods may in certain circumstances arise under section 12 of the Torts (Interference with Goods) Act 1977 and Parts I and II of Schedule 1 thereto. The text of these provisions is contained in Annex 2 to this chapter. Briefly, notice of the intention to sell the goods has to be given to the bailor, who is entitled to the net sale proceeds (less any sum owing to the insolvent for any repair etc to the goods). If the official receiver is in doubt regarding the disposal of unclaimed third party property, he should consult Technical Section.
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