(5.) The Court may, on the application of any person. s. 55. who is, as against the trustee, entitled to the benefit or subject to the burden of a contract made with the bankrupt, make an order rescinding the contract1 on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise, as to the Court may seem equitable, and any damages payable under the order to any such person may be proved by him as a debt under the bankruptcy.

1 Bankruptcy does not per se operate as a rescission of a contract (Ex pte Chalmers, In re Edwards, L. R. 8, Ch. 289; Morgan v. Bain, L. R. 10, C. P., 15).

(6.) The Court may, on application by any person either claiming any interest in any disclaimed property, or under any liability not discharged by this Act in respect of any disclaimed property, and on hearing such persons as it thinks fit, make an order for the vesting of the property in or delivery thereof to any person entitled thereto, or to whom it may seem just that the same should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Court thinks just; and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose.

Provided always, that where the property disclaimed is of a leasehold nature, the court shall not make a vesting order in favour of any person claiming under the bankrupt, whether as under-lessee or as mortgagee by demise except upon the terms of making such person subject to the same liabilities and obligations as the bankrupt was subject to under the lease in respect of the property at the date when the bankruptcy petition was filed, and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and if there shall be no person claiming under the bankrupt who is willing to accept an order upon such terms, the court shall have

ss. 55, 56. power to vest the bankrupt's estate and interest in the property in any person liable either personally or in a representative character, and either alone or jointly with the bankrupt to perform the lessee's covenants in such lease, freed and discharged from all estates, incumbrances, and interests created therein by the bankrupt.

Powers of trustee to deal with property.

(7.) Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the bankrupt to the extent of the injury, and may accordingly prove the same as a debt under the bankruptcy.

Where a lease is disclaimed, the lessor's damage is the difference between the rent reserved and what he can obtain on re-letting the premises (Ex pte Llynvi Coal and Iron Co., In re Hide, L. R. 7, Ch. 28; Ex pte Blake, In re McEwan, 11 Ch. D., 572).

In the case of an underlease the under-lessee's damage is the difference between the rent he agreed to pay and that reserved by the original lease Ex pte Walton, In re Levy, 17 Ch. D., 746).

Where four joint-tenants jointly and severally covenanted to pay the rent, it was held, there being no joint estate of the four, that the lessor could prove against the separate estates of the three survivors (Ex pte Corbett, In re Shand, 14 Ch. D., 122, cf., Sch. II., s. 18).

56. Subject to the provisions of this Act, the trustee may do all or any of the following things :

(1.) Sell all or any part of the property of the bankrupt (including the good will of the business, if any, and the book debts due or growing due to the bankrupt), by public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels :

Whatever is vested in the trustee he is authorised to sell. Hence he may sell a right of action in respect of the bankrupt's property, even though the bankrupt himself might not have been able to assign it (Seear v. Lawson, 15 Ch. D., 426).

The trustee ought to make out a good title to realty; but if he sell the estate only "under such title as he (the bankrupt) lately held the same" and makes provision for the abstract to be seen before the sale, the purchaser will be bound to accept it (Freme v. Wright, 4 Madd., 364).

"Book debts" are debts in respect of which entries would be made in the ordinary course of business, and such as are connected with and grow out

of the bankrupt's trade (Shipley v. Marshall, 14 C. B., N.S., 566); but the book debts and books of a bankrupt solicitor ought not to be sold, for the reason that it would make public some of the most confidential communications between him and his clients (Ex pte Roberts, In re Holden, 10 Jur., N.S., 28).

The trustee, the auctioneer, or any one bearing a fiduciary character in relation to the estate is precluded from becoming a purchaser, as an agent cannot sell to himself, but the bankrupt may purchase (Kitson v. Hardwick, L. R. 7, C. P., 473, 478). If the bankrupt becomes the purchaser, the profits of the business belong to him although he has not obtained his discharge and do not pass to his trustee as after-acquired property (Ex pte Tinker, In re France, L. R. 9, Ch. 716; In re Caughey, Ex pte Caughey, 4 Ch. D., 533).

(2.) Give receipts for any money received by him, which receipts shall effectually discharge the person paying the money from all responsibility in respect of the application thereof:

(3.) Prove, rank, claim, and draw a dividend in respect of any debt due to the bankrupt :

(4) Exercise any powers the capacity to exercise which is vested in the trustee under this Act, and execute any powers of attorney, deeds, and other instruments for the purpose of carrying into effect the provisions of this Act:

See ss. 44 (ii.) and 50.

(5.) Deal with any property to which the bankrupt is beneficially entitled as tenant in tail in the same manner as the bankrupt might have dealt with it; and sections fifty-six to seventy-three (both inclusive) of the Act of the session of the third and fourth years of the reign of King William the Fourth (chapter seventy-four), "for the "abolition of fines and recoveries, and for the "substitution of more simple modes of assur"ance," shall extend and apply to proceedings under this Act, as if those sections were here re-enacted and made applicable in terms to those proceedings.

H

s. 56.

s: 57.

Powers exercisable by trustee with permission of

committee of inspection.

57. The trustee may, with the permission of the committee of inspection, do all or any of the following things:

1 If there is no committee of inspection permission must be obtained from the Board of Trade (s. 22 (91), or rather from the official receiver (r. 250).

(1.) Carry on the business of the bankrupt, so far as may be necessary for the beneficial winding up of the

same :

The power here given to the trustee, with the permission of the committee of inspection, to carry on the bankrupt's business, is for the sole purpose of beneficially winding up the same. He would not therefore be justified in carrying on the business generally, or for an indefinite period, even in pursuance of a resolution of the creditors (Ex pte Emmanuel, In re Batey, 17 Ch. D., 35). The trustee may, with the sanction of the committee of inspection, employ the bankrupt for this purpose, and remunerate him for his services (s. 64).

When the trustee carries on the business he must keep a distinct account of the trading in the prescribed mode (r. 225).

(2.) Bring, institute, or defend any action or other legal proceeding relating to the property of the bankrupt: This should be done in the official name of the trustee (s. 83).

An action by a trustee in the High Court, concerning any matter not specially assigned by the Judicature Acts to a particular Division of the High Court, must be brought in the Division to which bankruptcy business is assigned to be tried before the Judge to whom such business is assigned (r. 91).

Permission to exercise the powers mentioned in this sub-section would seem to carry with it an implied authority to employ a solicitor, and to render special permission for that purpose under the following sub-section unnecessary in such cases.

The costs of an action or other proceeding may be ordered to be paid by the trustee as an ordinary litigant, and if properly incurred ought to be repaid to him out of the bankrupt's estate (Ex pte Angerstein, In re Angerstein, L. R. 9, Ch. 479; Pitts v. Le Fontaine, App. Cas., 483; Ex pte Stapleton, In re Nathan, 10 Ch. D., 586; Ex pte Edmondson, 4 De G. F. & J., 486). If there is a prospect of the assets being insufficient for the payment of costs, the trustee should obtain an indemnity from the creditors, otherwise he may have to bear them personally (Ex pte Angerstein, In re Angerstein, suprà).

Notwithstanding that a trustee has elected to discontinue an action commenced by the bankrupt, he can bring a fresh action as representing the estate (Bennett v. Gamgee, 2 Ex. D., 11).

Where the bankrupt is a member of a partnership, his trustee may by leave of the Court sue in the names of himself and the other partner (s. 113).

(3.) Employ a solicitor or other agent to take any proceedings or do any business which may be sanctioned by the committee of inspection:

Unless the employment of a solicitor or other agent has been duly sanctioned, the trustee will not be allowed, in his accounts, their costs and charges (s. 73 (3)).

A solicitor instructed by the trustee is entitled to a lien upon documents and papers in respect of professional services rendered to the estate (Ex pte Yalden, In re Austen, 4 Ch. D., 129), but notwithstanding his lien he is bound to produce them for inspection (In re Toleman, Ex pte Bramble, 13 Ch. D., 885).

(4) Accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security and otherwise as the committee think fit:

(5.) Mortgage or pledge any part of the property of the bankrupt for the purpose of raising money for the payment of his debts:

(6.) Refer any dispute to arbitration, compromise all debts, claims, and liabilities, whether present or future, certain or contingent, liquidated or unliquidated, subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt, on the receipt of such sums, payable at such times, and generally on such terms as may be agreed on :

(7.) Make such compromise or other arrangement as may be thought expedient with creditors, or persons claiming to be creditors, in respect of any debts provable under the bankruptcy:

(8.) Make such compromise or other arrangement as may be thought expedient with respect to any claim arising out of or incidental to the property of the bankrupt, made or capable of being made on the trustee by any person or by the trustee on any person :

Under the Act of 1869, the trustee had power, mero motu, to bring or defend an action, and it was held that he had, as incidental to that power, the right to compromise (Leeming v. Lady Murray, 13 Ch. D., 123); but, inasmuch as under the present Act (sub-s., (2) suprà) the permission of the committee of inspection is required to enable the trustee to bring or

s. 57.