Insolvency Act 1986, section 315

Disclaimer (general power)

Part IX Bankruptcy

(1)Subject as follows, the trustee may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.

(2)The following is onerous property for the purposes of this section, that is to say—

(a)any unprofitable contract, and

(b)any other property comprised in the bankrupt’s estate which is unsaleable or not readily saleable, or is such that it may give rise to a liability to pay money or perform any other onerous act.

(3)A disclaimer under this section—

(a)operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the bankrupt and his estate in or in respect of the property disclaimed, and

(b)discharges the trustee from all personal liability in respect of that property as from the commencement of his trusteeship,

but does not, except so far as is necessary for the purpose of releasing the bankrupt, the bankrupt’s estate and the trustee from any liability, affect the rights or liabilities of any other person.

(4)A notice of disclaimer shall not be given under this section in respect of any property that has been claimed for the estate under section 307 (after-acquired property) or 308 (personal property of bankrupt exceeding reasonable replacement value) [F833or 308AF833] , except with the leave of the court.

(5)Any person sustaining loss or damage in consequence of the operation of a disclaimer under this section is deemed to be a creditor of the bankrupt to the extent of the loss or damage and accordingly may prove for the loss or damage as a bankruptcy debt.

Definitions used in section 315 1

bankruptcy debt

(a) in relation to a bankrupt, means a person to whom any of the bankruptcy debts is owed (being, in the case of an amount falling within paragraph (c) of the definition in section 382(1) or “bankruptcy debt”, the person in respect of whom that amount is specified in the criminal bankruptcy order in question), and

Defined in s.383(1) · see it in the full Act

Cases considering section 315 15

Abdul-Ghaffar Khan-Ghauri (t/a Glam Homes) v Dunbar Bank Plc & Ors

[2001] EWCA Civ 223 · 8 February 2001Limits

The court treated disclaimer under section 315 as the necessary precondition for an application under section 320. No evidence established that the causes of action had been disclaimed.

Sleight v The Crown Estate Commissioners

[2018] EWHC 3489 (Ch) · 19 December 2018Interprets

The court treated disclaimer as determining, from the date of disclaimer, the bankrupt’s and estate’s rights, interests and liabilities in or in respect of the disclaimed property. (see paras [18], [21]) The court referred to the use of “interest” in section 315(3)(a) as reinforcing the conclusion that section 320(2)(a) does not extend to a general interest in the outcome. (see para [21]) Section 315(5) was identified as the provision for assessing loss or damage in consequence of disclaimer when giving effect to a vesting order. (see para [19])

Frosdick v Fox & Anor

[2017] EWHC 1737 (Ch) · 11 July 2017Interprets

Confirms that a cause of action forming part of the bankrupt’s estate may be onerous property capable of disclaimer. (see paras [33]-[39]) Interprets the reference to other property in the bankrupt’s estate as covering a cause of action that may expose the claimant to legal costs and an adverse costs order. The potential claim was therefore capable of being onerous property. (see paras [37]-[39])

1 more judgment, and what each says about section 315, are in the case-law panel in the full Act.

Amendments and notes

4 notes from legislation.gov.uk

Amendments

  1. F833Words inserted by Housing Act 1988 (c. 50, SIF 75:1), s. 117(4)

Modifications

  1. C1039S.315, applied with modifications by S.I. 1986/1999, art. 3, Sch. 1 Pt. II
  2. C1040S. 315 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 164(1), 182(4), Sch. 22 para. 7(1); S.I. 1991/878, art. 2, Sch. .
  3. C1041S. 315 restricted (1.1.1996) by 1995 c. 30, s. 21(2)(b) (with ss. 1(1), 2(2), 26(1)); S.I. 1995/2963, art. 2