Chapter 31.9 – ANNEX L – Table of key right of action cases
Rights of action is an area which has been largely driven by case law. To assist official receivers in understanding how the law has developed this table lists the key cases that have had some impact on rights of action. The table is in rough chronological order and has links to the paragraph within the Chapter where the point made in the case in discussed more fully. The (very) brief summary of the decision in each case should not be relied on its own but should, instead, be considered alongside the more detailed information in the Chapter.
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Case |
Held
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Howard v Crowther (1841) 8 M&W 601
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“Personal” actions do not vest
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Rogers v Spence (1846) 8 ER 1586 |
Example of personal action staying with bankrupt (personal annoyance).
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Beckham v Drake (1849) 2 HL Cas 579
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“Personal” actions do not vest
Paragraphs 31.9.37 and 31.9.38
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Kitson v Hardwick (1872) LR 7 CP 473 |
Trustee can assign right of action to bankrupt
Paragraphs 31.9.106 and 31.9.116
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Ex parte James (1874) LR 9 Ch App 609 |
Obligation on officers of the court to act honourably and fairly.
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Jackson v North Eastern Rly Co (1877) 5 Ch D 844 |
Trustee must, at least, become co-claimant on a vesting action. Bankrupt cannot continue it alone.
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Re Wilson ex parte Vine (1878) 8 Ch 364 |
Cannot intercept personal monies, but can claim fruits of investment, etc.
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Leeming v Lady Murray (1879) 13 ChD 123 |
Trustee is not precluded from bringing or defending an action simply because he/she has not obtained sanction of committee.
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Seear v Lawson (1880) 15 ChD 426, CA |
Trustee can sell a right of action by assignment – does not constitute champerty or maintenance
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Re Park Gate Waggon Works Co (1881) 17 Ch D 234 |
Liquidator can sell a right of action
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Metropolitan Bank v Pooley (1885) 10 App Cas 210 HL |
Action can be dismissed as frivolous or vexatious if bankrupt carries it on after vesting.
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Guy v Churchill (1889) 40 ChD 481 |
Action may be sold by the trustee on the basis that some part of the fruits may come back to the estate.
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Whitwood Chemical Co v Hardman [1891] 2 Ch 416, CA |
Court will normally award damages (rather than reinstatement) for a wrongful dismissal.
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Rose v Buckett [1901] 2 KB 449 |
Claim that gives rise for aggravated damages would remain with bankrupt
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Re White ex parte Nichols (1902) 46 Sol Jo 569 |
Trustee will lose right to be paid out of estate if he/she does not get sanction.
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General Billposting Co Ltd v Atkinson [1909] AC 118 |
Employee is released from contract in a wrongful dismissal.
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Glegg v Bromley [1912] 3 KB 474 |
Right of action should be assigned without any conditions attached (e.g., a right to interfere in the action).
Paragraphs 31.9.06 and 31.9.108
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Bannister v Bannister [1948] 2 All ER 133
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Explanation of a constructive trust
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Wilson v United Counties Bank [1920] AC 102 |
There can be two rights of action from the same breach of contract
Over-ruled by Ord v Upton.
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Re Kavanagh [1950] 1 All ER 39 |
If claim settled before court and there has been no evidence to show the shares in which the settlement should be apportioned (between the causes of action – personal v property) it will be split equally.
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Ramsey v Hartley [1977] 2 All ER 673 |
Trustee is entitled to assign claim back to bankrupt for a share of the net proceeds.
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Re Papaloizu [1999] BPIR 106
14 December 1980 |
Trustee should exercise the power to assign causes of action to bankrupts with circumspection – where, for example, to do so would leave the defendant open to vexatious litigation.
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R v East Berkshire Health Authority ex parte Walsh [1985] QB 152 |
Correct forum for a wrongful dismissal claim is Employment Tribunal.
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Weddell v Pearce [1988] Ch 26 |
Since vesting is by operation of law, trustee does not have to give notice to potential defendants.
Assignment on terms that trustee is to receive part of the proceeds requires sanction of creditors’ committee
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Re Hans Place [1992] BCC 737 |
Court will only overturn official receiver’s decision (e.g., not to assign) if decision mala fides or perverse.
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Heath v Tang; Stevens v Peacock [1993] 4 All ER 694 |
Bankrupt has no locus standi to bring a cause of action that vests in trustee without consent of trustee or by order of court.
The appeal of any judgement on which bankruptcy order founded is a vesting action.
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Linden Gardens Trust v Lenesta Sludge Disposals Ltd [1994] 1AC 85 |
Action may be non-assignable where there is an express contractual prohibition on assignment.
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Re Oasis Merchandising Services Ltd [1995] 2 BCLC 493 |
Cannot assign rights of action that arise as a result of the insolvency order (preferences, transactions at an undervalue, etc.).
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Re Rae [1995] BCC 102 |
Fishing licence (or similar) is a ‘personal’ asset.
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Royal Bank of Scotland v Farley [1996] BPIR 638 |
Action seeking to overturn judgment on which bankruptcy founded is vesting asset.
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Re Campbell [1996] 1 All ER 537 |
Can’t claim right to criminal injuries compensation.
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Stein v Blake [1996] 1 AC 243 |
Value of claim is the difference between the claimed amount and any counter-claim.
Net difference between claim and counter-claim can be assigned.
Paragraphs 31.9.114 and 31.9.120
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Three Rivers DC v Bank of England [1996] QB 292 |
Court will usually require that equitable assignor is joined as a party to the proceedings before judgment is given.
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Re Edennote Ltd [1996] BCC 718 |
Trustee should not accept first offer (if there are multiple potential offers) without first testing the market. Should offer settlement to defendant.
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Citicorp and others v Official Trustee in Bankruptcy and Another [1996] FCA 1115
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Frivolous claim (one that is unlikely to succeed) should not be assigned.
Paragraphs 31.9.153 and 31.9.118
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RBS v Farley [1996] BPIR 638 |
Bankrupt has no locus standi to challenge judgment on which order is based.
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Wordsworth v Dixon [1997] BPIR 337 |
Right of appeal in a vesting action would also vest.
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Griffiths v Civil Aviation Authority [1997] BPIR 50 |
Pilot’s licence is ‘personal’ property.
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Re Ng (a bankrupt) [1997] BCC 507 |
Trustee should not be used as a ‘hired gun’ – as a name in which to bring an action.
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Seven Eight Six Properties v Ghafour [1997] BPIR 519 |
Assignment does not give retrospective right to bring an action if bankrupt had no previous right to bring action (e.g. where statute barred, seeking to overturn judgement on which order based).
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Khan v Official Receiver [1997] BPIR 109 |
Trustee not obliged to assign action where only offer is derisory and seeking other offers would be an unjustifiable expense.
Paragraphs 31.9.101 and 31.9.114
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Vickery v Modern Security Systems Ltd 1997 WL 1104285 |
Consequences of trustee continuing claim.
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Griffiths v Civil Aviation Authority [1997] BPIR 50 |
Aviation licence is non-transferable and is personal. Right to appeal against decision to withdraw licence is personal.
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OR v Davis [1998] BPIR 771 |
Trustee can assign action to defendant.
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Cummings c Claremont Petroleum [1998] BPIR 187 |
Right of appeal in a vesting action would also vest.
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Re Bell [1998] BPIR 26 |
Lump sum awarded as periodic payment would simply be considered as lump sum (not, for example, income).
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Vickery v Modern Security Systems Limited [1998] BPIR 164 |
Official receiver, as trustee, may be exposed to costs if he/she allows bankrupt to continue claim.
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Morris v Morgan [1998] BPIR 754 CA |
A right of appeal may constitute a right of action if it has an economic value in its own right.
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Hamilton v OR [1998] BPIR 602 |
Bankrupt may request re-assignment of cause of action where trustee does not take it on.
Assignment should be absolute. Trustee may remain vulnerable to an adverse costs order, if he/she retains an interest in the outcome – but not if sold outright.
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Re Landau [1998] Ch 223 |
A provision prohibiting assignment of a right of action is not infringed by the vesting in the estate as the action passes into the estate without assignment [s306(2)], but is deemed to have been assigned [311(4)].
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Artbuthnot Latham Bank Ltd v Trafalgar Holdings Ltd [1998] 1 WLR 1426 |
Court may not allow claim ‘out of time’ where, to do so would allow a ‘second bite of the cherry’.
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Oasis Merchandising Services [1998] Ch 170 |
Official receiver, as trustee, may not assign right of action that arises as a consequence of insolvency order (e.g. a preference).
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Osborn v Cole [1999] BPIR 251 |
Bankrupt may appeal, under s303 of the IA1986, decision not to re-assign.
Official receiver, as trustee, can seek indemnity (e.g., against costs) from assignee.
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Craig v Humberclyde Industrial Finance [1999] BPIR 53 |
Trustee can seek direction from court as to terms in which he/she can enter into assignment.
If the value of the counter-claim is higher than the value of the claim this will, effectively, be a bar on assignment.
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Stock v London Underground Ltd 30 July 1999 CA
Times, August 13 1999
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One claim can have two heads of damage – a “hybrid” claim.
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Ord v Upton [2000] 1 All ER 193 |
Hybrid action vests in trustee.
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Glenister v Rowe [2000] Ch 76 |
Costs after bankruptcy not a bankruptcy debt.
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Mulkerrins v Price Waterhouse Coopers [2001] PNLR 5 |
It is open to bankrupt to apply for order that action does not vest.
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Edmonds Judd v Official Assignee CA(NZ) [2001] BPIR 468 |
Trustee should not ‘traffic’ frivolous or vexatious claims.
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Patel v Jones [2001] EWCA Civ 779 |
Limit claim for future lost earnings to three years.
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Haq v Singh [2001] 1 WLR 1594 |
Assignment should be made before the expiration of the relevant limitation period.
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Cork v Rawlins [2001] BPIR 222 |
Permanent disability benefit paid under insurance policies in respect of an accident suffered by the debtor before bankruptcy is bankruptcy asset.
Paragraphs 31.9.59 and 31.9.207
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Faryab v Smith [2001] BPIR 246 |
Bankruptcy should not be used as a means to stifle a claim.
Trustee should be careful to seek advice re merits of assignment in complex claims.
Paragraph 31.9.100 and 31.9.102
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Quadmost Ltd v Reporotech (Pebsham) Ltd [2001] BPIR |
Action may be non-assignable where express contractual prohibition.
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Hamilton v Official Receiver [2002] BPIR 582 |
Trustee should accept offer for assignment if it is reasonable and does not prejudice him/her.
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Cummings v OR [2002] BPIR 246 |
Trustee should see that case has merit before assigning and if it does have merit he/she should seek payment.
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Official Receiver v Mulkerrins [2002] BPIR 582 |
Loss of future earnings a property claim. (though see Patel v Jones).
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Grady v Prison Service [2003] 3 All ER 745
Particularly, paragraphs 25-27 |
Unfair dismissal is a claim for reinstatement, so cannot vest in trustee. Wrongful dismissal is a claim for breach of contract for which a compensatory payment can be made. That action would vest (i.e. not seeking reinstatement)
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Mulkerrins v PricewaterhouseCoopers [2003] UKHL 41 |
Bankrupt can apply for an order declaring that a right of action does not vest, but only those party to the application would be bound by its effect.
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Shepherd v Legal Services Commission [2003] BCC 728 |
Trustee has a duty to consider how best to deal with a claim, so it would not be stifled by bankruptcy.
Paragraphs 31.9.21 and 31.9.115
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Re Shettar [2003] BPIR 1055 |
Official receiver, as trustee, should not carry out an assignment that would leave defendant open to vexatious litigation.
Official receiver, as trustee, can seek indemnity (e.g., against costs) from assignee.
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Khan v Trident Safeguards Ltd [2004] EWCA Civ 624 |
Claim for racial discrimination will not vest.
Claimant can limit claim to avoid it vesting – probably only in discrimination cases.
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Ultraframe (UK) Ltd v Rigby and others (CA) BILD 2001050178
2005
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Liquidators should not assign without proper consideration of the value of the claim.
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Ajahot v Waller [2005] BPIR 82 |
Tax appeal is a vesting asset.
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James v Rutherford-Hodge [2005] EWCA Civ 1580 |
Bankrupt’s standing to (not) bring claim is unaffected by him/her having been awarded legal aid.
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Skinner v Hood [2005] EWCA Civ 1634 |
Bankrupt cannot have a vesting order in disclaimed property.
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Allan v Newcastle-upon-Tyne City Council; Degnan v Redcar and Cleveland Borough Council [2005] ICR 1170 |
Compensation for non-economic losses cannot be awarded in a claim for equal pay
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Shepherd v Official Receiver [2006] All ER (D) 72 (Nov) |
Court will apply “reasonableness” test when considering a s303 application against trustee’s decision not to assign.
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James v Rutherford-Hodge [2006] BPIR 973 |
Inability of bankrupt to bring legal action unaffected by him/her having being granted legal aid.
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Horton v Sadler [2007] 1 AC 307 |
Court can allow claim after expiration of limitation where there has been, for example, a technical failure on the part of the claimant.
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Wilson v Specter Partnership [2007] BPIR 649 |
Official receiver, as trustee, not obliged to assign right of action where no worthwhile offer.
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Dadourian Group v Simms [2008] EWCA Civ 474 |
Bankrupt has no locus standi even where trustee has yet to be appointed.
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Nomura International plc v Granada Group Ltd [2008] Bus LR 1 |
Protective claim may be challenged if it does not meet procedural requirements.
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Calvert v William Hill Credit Limit Limited [2008] EWCA Civ 1427 |
Action against bookmaker for allowing debtor to gamble is likely to be without merit.
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Hellard v Michael [2009] EWHC 2414 (Ch) |
Official receiver, as trustee, should be fair to all parties when negotiating assignment of right of action.
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Gold Shipping Navigation Co SA v Lulu Maritime Ltd [2009] EWHC 1365 (Admlty) |
A poorly worded ‘standstill agreement’ may leave claimant unable to bring claim.
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Pickthall v Hill Dickinson LLP [2009] PNLR 31 |
Person with no interest in a claim cannot bring it (which, of course, would include bankrupt in a vesting claim).
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Young v OR (unreported) 23 March 2010 |
Denial of a bankrupt’s right to bring an action not contrary to ECHR or HRA.
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