The bankrupt had a protected life interest in a trust fund under the will of his late father which was defeasible inter alia if he should do or omit to do or should suffer to be done any act whereby the income of the trust fund if payable to himself should become vested in some other person or persons. He committed an act of bankruptcy by failing to comply with a bankruptcy notice and was adjudicated bankrupt. Was an apportioned part of a dividend which had been received by the trustees of the will after the adjudication (but part of which had accrued in respect of the period before and part in respect of the period after the act of bankruptcy) payable to the trustee in bankruptcy or was it applicable under the gift over in the will.
Held: For the trustees of the Will. The right to receive the dividend, though payable after adjudication, had vested in the official receiver by virtue of the doctrine of relation back at the date of the act of bankruptcy; and was therefore forfeited as from that date. The court rejected the argument of the official receiver that under the section 54 the property did not vest in the official receiver until adjudication, and that it was not until then that the bankrupt had suffered something to be done which caused the property to be vested in someone else. ‘Let us, then, consider for a moment what would have been the result if the act of bankruptcy had occurred on July 8, the dividend had been payable on October 5, and the adjudication had taken place on October 10. There would then have vested in the official receiver all the property of the bankrupt from July 8 onwards, including the dividend of October 5. By virtue of what act or omission by the debtor would the dividend of October 5 have vested in the official receiver? It appears to me that it would have been by virtue of this act or omission, namely that he failed on July 8 to comply with the bankruptcy notice. Did he then do anything whereby the dividend of October 5 became vested in some other person or persons? I answer Yes. The act which produced this result would be not the act of the Court in adjudicating him a bankrupt, but his act to which it related back. it would be because the act was before October 5 that the dividend would vest in the official receiver.’ Intermediate income of property disposed of by the debtor during the period of relation back belonged to the trustee in bankruptcy.
Judges:
Buckley J
Citations:
[1901] 1 Ch 435
Statutes:
Cited by:
Cited – Re Dennis (A Bankrupt) CA 22-May-1995
A joint tenancy was severed (under the former law) on the event of an act of bankruptcy, and not only by the later actual adjudication of bankruptcy. The vesting of the debtor’s property in the trustee which occurred on adjudication was automatic; . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 29 April 2022; Ref: scu.186758