Insolvency

Benefits from insurance policy - bankrupt's estate - monies available for creditors and not held for bankrupt on constructive trustCork v Rawlins: ChD (Judge Weeks QC, sitting as a judge of the Chancery Division in the Bristol District Registry ):7 April 2000

The defendant, after having been adjudicated bankrupt in 1996, was told that sums assured under two policies he had taken out were payable as a result of a spinal injury he had suffered in 1993.The accident left the defendant totally and permanently disabled such that he would never be able to return to work.

His trustee in bankruptcy applied to the court for a declaration that the sum due to him was part of his estate for the purpose of the bankruptcy and fell to be divided between his creditors.Stephen Davies (instructed by Osborne Clarke, Bristol) for the claimant; Geoffrey Zelin (instructed by Freeth Cartwright Hunt Dickins, Nottingham) for the defendant.Held, giving judgment for the claimant, that by analogy with Ord v Upton [2000] 2 WLR 755 the claim was a mixed claim giving rise to one right which was a single item of property which vested in the trustee in bankruptcy; that the claimant's permanent disability was the event on which the sum became payable, and no part of the sum payable was calculated by reference to pain and suffering; and that, accordingly, the money was divisible between the creditors and none of it was held on trust for the defendant.