Ch 31.9: Rights of Action (November 2010)


November 2010


31.9.1 Introduction

A right of action is essentially a claim, a right that someone believes that they have against another to enforce a right, to recover money or property etc., often involving court proceedings.  Generally speaking it will be property that  the official receiver, acting as liquidator or trustee, can deal with, giving the opportunity to realise monies for the estate, but so far as bankruptcy cases are concerned there are exceptions, on which information and advice is given in this Chapter.

The Chapter also gives advice on how to deal with a right of action to maximise the benefit to creditors and includes a Part that deals with employment claims, as some of the principles are different to those applying to other types of actions (see Part 8).

The Chapter contains the answers to FAQs, which gives an overview of the subject of rights of action.  The FAQs are intended to be a useful introduction to the subject, or to be used as a training tool, but should not be seen as a replacement for the more detailed advice given in the Chapter.


31.9.2  Scope of this chapter                   

This chapter does not deal with claims against the insolvent, except for counterclaims (see paragraph 31.9.48) and appeals (see paragraph 31.9.57).  Advice on claims against the insolvent can be found in Chapter 9.

Neither does this chapter deal with claims arising as a result of the liquidation or bankruptcy (claims for preferences and transactions at an undervalue, for example).  Advice on those types of claims can be found in Chapters 31.4A and 31.4B.

This is an area which has been largely driven by case law.  To assist official receivers in understanding how the law has developed, Annex L is a table listing 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.


The chapter is divided into the following parts:

Part 1 – General points regarding rights of actions (paragraphs 31.9.3 to 31.9.14)

Part 2 – Dealing with a right of action (paragraphs 31.9.15 to 31.9.31)

Part 3 – Deciding whether a right of action vests (paragraphs 31.9.32 to 31.9.69)

Part 4 – Effect of a right of action vesting (paragraphs 31.9.70 to 31.9.82)

Part 5 – Settlement of a right of action (paragraphs 31.9.83 to 31.9.96)

Part 6 – Assignment of a right of action (paragraphs 31.9.97 to 31.9.126)

Part 7 – Litigation of a right of action (paragraphs 31.9.127 to 31.9.154)

Part 8 – Employment claims (paragraphs 31.9.155 to 31.9.185)

Part 9 – Dealing with the fruits of a right of action (paragraphs 31.9.186 to 31.9.216)

Part 10 – ‘Negative’ options for dealing with a right of action (paragraphs 31.9.217 to 31.9.224)


The chapter contains the following annexes:

Annex A – Letter requesting information about claim

Annex B – Letter ending arrangement with solicitor

Annex C – Letter asking solicitor to agree position

Annex D – Letter explaining effect of action vesting

Annex E – Letter retaining solicitors

Annex F – Letter asking for funds to pay legal advice

Annex G – Letter circularising creditors (amended June 2012)

Annex H – Letter asking solicitor to agree position in unfair dismissal claim

Annex I - Letter asking solicitor to agree position in wrongful dismissal claim

Annex J – Letter asking solicitor to agree position in discrimination claim

Annex K – Flowchart too assist in decision whether action vests or not

Annex L – Table of key right of action cases

Annex M - FAQs


The following abbreviations are used in this Chapter:

AOR – Assistant Official Receiver

ET – Employment Tribunal

MCA 1973 – Matrimonial Causes Act 1973

PPI – Payment Protection Insurance


[On to Part 1 – General points regarding rights of actions]