Professional Liability, Property, Chancery & Commercial, Other Areas of Law
Bankrupt claimant – bankrupt claim?

What happens where a personal injury claimant is made bankrupt part way through the case, or where a bankrupt wishes to bring a claim for personal injury?


Under Section 306 of the Insolvency Act, the bankrupt’s estate vests in his trustee. This includes “property”, which includes things in action. This would cover a personal injury claim, unless the only damages being claimed are general damages: these are and remain personal to the bankrupt and are an exception to the vesting rule (see Heath v Tang [1993] 1 WLR 1421, 1423). Any personal injuries claim including a claim for special damages vests in the trustee in bankruptcy. The trustee is entitled to retain the special damages ultimately recovered (including damages for past and future loss of earnings), but will hold the general damages on constructive trust for the claimant (see Ord v Upton [2000] Ch 352 at 369-70).


Of course, this position gives rise to practical difficulties. The Court of Appeal in Ord optimistically took the view that these were nothing the law could not deal with. Where a bankrupt claimant wishes to pursue a personal injuries claim including special damages the Court of Appeal made clear that the trustee in bankruptcy “would have to consider carefully his duty to the bankrupt and would probably, if requested, assign the cause of action to him”.




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