Proving third party ownership in insolvency

[eteb3]

A friend works in a very niche engineering role where employees provide their own tools. These are floor-mounted specialist lathes, etc. Def wouldn't fit in a toolbox.

His employer seems to be teetering on insolvency. He can't walk out with his tools if if they're sacked on the spot, and not unreasonable to think the landlord might forfeit the lease one weekend either, so he might lose access to them that way, too.

How would he prove the tools are his? Can he just tell the IP/landlord "those are mine" and that's an end of it?

Thanks.

 

[Newchodge]

A friend works in a very niche engineering role where employees provide their own tools. These are floor-mounted specialist lathes, etc. Def wouldn't fit in a toolbox.

His employer seems to be teetering on insolvency. He can't walk out with his tools if if they're sacked on the spot, and not unreasonable to think the landlord might forfeit the lease one weekend either, so he might lose access to them that way, too.

How would he prove the tools are his? Can he just tell the IP/landlord "those are mine" and that's an end of it?

Thanks.

Why can't he take his tools tomorrow? I imagine he would need proof they are his - employee ownership of large tools in a workplace is unusual.

 

[eteb3]

He needs them in the workshop to continue to do the job he's employed to do, and they're too big to just walk out with - he'd need to plan the move.

Yes, very unusual. Very small industry, and this is apparently standard.

 

[Newchodge]

He needs them in the workshop to continue to do the job he's employed to do, and they're too big to just walk out with - he'd need to plan the move.

Yes, very unusual. Very small industry, and this is apparently standard.

Before Christmas I was involved with a manufacturing company that was, very clearly, going into administration before staff returned from the Christmas break. All staff were told very clearly to remove all their belongings before Christmas.

I would suggest that keeping ownership of his own (probably fairly expensive) property should be a bigger priority than continuing to produce goods for a dying company. What has the bsuiness owner said?

 

[Elliot Green]

A friend works in a very niche engineering role where employees provide their own tools. These are floor-mounted specialist lathes, etc. Def wouldn't fit in a toolbox.

His employer seems to be teetering on insolvency. He can't walk out with his tools if if they're sacked on the spot, and not unreasonable to think the landlord might forfeit the lease one weekend either, so he might lose access to them that way, too.

How would he prove the tools are his? Can he just tell the IP/landlord "those are mine" and that's an end of it?

Thanks.

Bare assertion might not be enough.

Hitchens's razor as to the burden of proof isn't exactly how the court articulates the position but perhaps arguably in somewhat similar style Chief Insolvency and Companies Court Judge Briggs inN osnehpetsj Ltd v Watersheds Capital Partners Ltd & Anor [2020] EWHC 1938 (Ch) said "...the conventional rule...he who asserts must prove".

 

[NickGrogan]

Is it labelled in any non-removable way? Clearly showing property of .... with phone/email?
Has he tagged it with something airtags so if it does get removed at the weekend, he'll know its moving and where it is?

Does he have receipts to prove ownership?

 

[WaveJumper]

A bit of paper work on the subject would be idea as above receipts etc, get all his ducks in a row now before its too late

 

[fisicx]

@eteb3 - why don't they resign now and arrange to remove the kit before the firm goes bust.

 

[Lisa Thomas]

@eteb3 - why don't they resign now and arrange to remove the kit before the firm goes bust.

Eek, careful of that - they may lose all rights to redundancy etc!

 

[fisicx]

Eek, careful of that - they may lose all rights to redundancy etc!

Unless they are self employed

 

[Mark T Jones]

Is it labelled in any non-removable way? Clearly showing property of .... with phone/email?
Has he tagged it with something airtags so if it does get removed at the weekend, he'll know its moving and where it is?

Does he have receipts to prove ownership?

Definitely label it

I have a few instances where IPs (presumably their agents) have removed goods wholesale

In one case, an office full of furniture all clearly labeled as ours was removed and disposed of - in this case they settled.

Another, a phone system and computers removed and disposed of. They weren't labeled, but we had clear evidence of ownership (the customer hadn't passed it on). We would have had to go legal, with outstanding debt of £1k, we didn't bother

 

[UK Contractor Accountant]

I would imagine a lot of stock & assets go missing just before a liquidator sends in his valuer to take stock of whats there to sell off. Never quite sure to what extent Liquidators go hunting for missing assets when cross referencing the fixed asset register with whats on site.

 

[Newchodge]

I would imagine a lot of stock & assets go missing just before a liquidator sends in his valuer to take stock of whats there to sell off. Never quite sure to what extent Liquidators go hunting for missing assets when cross referencing the fixed asset register with whats on site.

When I left the company I was helping before Christmas I took with me the mobile phone they had given me so I could keep up to date with emails and developments during the Christmas closure. I have told the administrator 3 times that I have it and asked for their instructions, but none have appeared yet.

 

[Lisa Thomas]

Unless they are self employed

They may well be, but care should be taken to tell a potential employee to resign.

 

[eteb3]

Thanks for all these replies: helpful suggestions.

"...the conventional rule...he who asserts must prove".

I guess my wondering is, who is doing the asserting? Is it for him to assert (and prove) that the items are his, or is it for the liquidator to assert that they’re the company’s?

 

[Newchodge]

Thanks for all these replies: helpful suggestions.


I guess my wondering is, who is doing the asserting? Is it for him to assert (and prove) that the items are his, or is it for the liquidator to assert that they’re the company’s?

They are inside the company's premises. They belong to the company unless proved otherwise. And a letter from the (soon to be) ex-business owner is not enough proof.

 

[fisicx]

I remember a local engineering company sold off a load of tools and equipment to staff just before declaring insolvency. Got in a lot of hot water over that as all the kit was still in the building.

 

[Elliot Green]

Thanks for all these replies: helpful suggestions.


I guess my wondering is, who is doing the asserting? Is it for him to assert (and prove) that the items are his, or is it for the liquidator to assert that they’re the company’s?

Whoever has to make the assertion.

 

[Elliot Green]

They are inside the company's premises. They belong to the company unless proved otherwise. And a letter from the (soon to be) ex-business owner is not enough proof.

What is the basis of those assertions?

 

[Newchodge]

What is the basis of those assertions?

Possession being 9 points of the law.

'Can I have my lathe back please?' 'Prove it's yours.'

Alternatively

'You took a lathe home with you before the company closed. Please return it. ' 'Prove it belonged to the company'

 

[Elliot Green]

Possession being 9 points of the law.

'Can I have my lathe back please?' 'Prove it's yours.'

Alternatively

'You took a lathe home with you before the company closed. Please return it. ' 'Prove it belonged to the company'

The company won't be able to either. Won't be on the fixed asset register conceivably. Won't have purchase invoices. The true owner should have evidence of acquisition in their bank statement.

I am not convinced by possession is 9 tenths here. If that was the case equipment hire companies might readily lose their assets too readily.

If I park my car on your driveway it doesn't become your car.

It seems to me a letter from the director confirming the position may well assist to raise sufficient doubt so the matter is properly considered.

 

[eteb3]

Thanks again everyone.

I had a look in a book on commercial law that says, tersely, "Possession is prima facie evidence of ownership" (so tending to support @Newchodge's take)

It also, less helpfully, runs through 99 varieties of possession - physical control is not necessarily possession in law, apparently.

I'll show him this thread and see what he makes of it. Thanks.

 

[fisicx]

How quickly could your friend get the tools out the building? Would they need specialist equipment to lift and shift?

 

[Newchodge]

If that was the case equipment hire companies might readily lose their assets too readily.

Hire companies retain 'possession' by means of the hire agreement.

If I park my car on your driveway it doesn't become your car.

Putting your car inside my garage and giving me the keys gives me possession, unless you tell me you want me to take care of it while you are on holiday.

It is a bit like adverse possession of land which becomes the property of the possessor after 12(?) years. If the landowner gives permission for it to be used, it is not adverse possession.

 

[eteb3]

Putting your car inside my garage and giving me the keys gives me possession, unless you tell me you want me to take care of it while you are on holiday.

Yes. As far as I can understand from the book, the bailee (one with custody of another's property) has legal possession if s/he holds it for his/her own interest, but not if holding it for the owner's interest and/or (not sure which) to owner's order. I think the test is whether possession is accompanied by an intention to exclude others from the property.

Would they need specialist equipment to lift and shift?

Good question; will ask. Guessing it's heavy one-man lift, nothing worse.

 

[fisicx]

Good question; will ask. Guessing it's heavy one-man lift, nothing worse.

In which they could be prepared to move out in very short notice. Unless the owner changes the locks and you can’t get access. Which is why it might be worth getting out early.

 

[BubbaWY]

It is a bit like adverse possession of land which becomes the property of the possessor after 12(?) years.

Reminds me of a former boss of mine. There was a field near his house which he used to park vans on...after a few years he put a storage container on it...a few years later he fenced it. In time he became the legal owner through adverse possession and sold it off (for housing), pocketting a cool £500k. Money to money!

 

[Elliot Green]

Hire companies retain 'possession' by means of the hire agreement.


Putting your car inside my garage and giving me the keys gives me possession, unless you tell me you want me to take care of it while you are on holiday.

It is a bit like adverse possession of land which becomes the property of the possessor after 12(?) years. If the landowner gives permission for it to be used, it is not adverse possession.

When there is a dispute that escalates both sides need to be able to provide evidence. It is axiomatic that generally the purchaser will have more evidence than the volunteer.

The possession is 9 tenths is likely to only go so far and it is a somewhat flaky concept as it is not 10 tenths in any event.