Background

The bankrupt and her husband, the appellant, were joint tenants of a business premises pursuant to an underlease. The trustee in bankruptcy disclaimed ‘all my/our interest in Leasehold property under the terms of the [underlease] in respect of [the property]’.

Appellant’s Case

The appellant contended that the disclaimer operated such as to prevent the landlords from claiming for rent in the bankruptcy estate post disclaimer.

Landlords’ Case

The landlords and trustee contended that the bankrupt and appellant held the legal interest in the underlease on trust for themselves. The only asset that had been disclaimed was that which vested in the trustee on his appointment, the bankrupt’s beneficial interest in the underlease as one of two tenants in common.

Decision

The appellant was unsuccessful in front of a county court District Judge, but was granted permission to appeal to a High Court Judge.

However the Judge agreed with the trustee and landlords that the only asset that could be disclaimed was the bankrupt’s beneficial interest in the underlease. That was the only asset that vested in the trustee. Therefore, the bankrupt remained liable for rent and other sums due under the underlease post disclaimer.

Abdulla v Whelan and others [2017] EWHC 605 (Ch)