A former bankrupt had purported claims against a firm of solicitors arising pre-bankruptcy, which vested in his subsequently appointed trustee in bankruptcy. The debtor wrote to both the Official Receiver (OR) and, post appointment, the trustee in bankruptcy, offering to buy the claims. The trustee subsequently disclaimed the claims. The debtor alleged that the claims had already re-vested in him following his notice to both the trustee and the OR.
The debtor brought various actions against the solicitors and challenging the bankruptcy order, which were unsuccessful and resulted in an extended civil restraint order (CRO) being granted. The debtor then brought an action against the OR in respect of the disclaimer, which was struck out, albeit that the Judge queried whether the claims were onerous property that could be disclaimed by the trustee. The debtor then issued proceedings against the trustee, relying in part on the Judge’s observations, challenging the disclaimer. The trustee applied to strike out those proceedings.
The Judge agreed with the trustee that a claim could be onerous property. Legal costs would be incurred in bringing it; and there would be a risk of an adverse costs order if unsuccessful. The Judge disagreed with the trustee that the notices given to the OR and trustee did not constitute proper notice under the insolvency legislation for the trustee to disclaim an asset or have it re-vest. However, he did agree with the trustee that that asset had already vested in the trustee under the insolvency legislation and therefore the debtor had no interest in the asset and it could not re-vest in him.
On that basis, the only action was to challenge the trustee’s conduct in respect of the disclaimer and the Judge found that no proper grounds for such a claim had been provided. Accordingly, he struck out the proceedings as having no reasonable prospect of success.
The Judge did not make a further CRO, but warned that one would be appropriate if further unsuccessful applications were made.
Frosdick v Fox and Baker Tilly Creditor Services LLP  EWHC 1737 (Ch)