of shares or stock in companies,* of unprofitable contracts, or of any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor thereof to the performance of any onerous act, or to the payment of any sum of money, the trustee, notwithstanding that he has endeavoured to sell or has taken possession of the property, or exercised any act of ownership in relation thereto, but subject to the provisions of this section, may, by writing signed by him, at any time within three months after the first appointment of a trustee,† disclaim the property.

Provided that where any such property shall not bave come to the knowledge of the trustee within one month after such appointment, he may disclaim such property at any time within two months after he first became aware thereof.

(2.) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interests, and liabilities of the bankrupt and his property in or in respect of the property disclaimed and shall also discharge the trustee from all personal liability in respect of the

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*In the 23rd section of the Act of 1869 the expression was marketable shares." See as to the position of the bankrupt and the trustee in respect to shares held by the former at the date of his bankruptcy, the Companies Act 1862 (25 & 26 Vict. c. 89), sections 75 and 76. See also Lindley on Partnership, 4th Ed., p. 1,117.

The limitation of the time for disclaimer to three months from the first appointment of a trustee or (under the condition specified) to two months after becoming aware of the property is a new provision.

A trustee is, therefore, not personally liable under a lease for rent accruing due between the adjudication and the disclaimer, if he has not been in beneficial occupation of the premises. It still, however, seems to remain doubtful (as it was under the Act of 1869) whether the trustee may not be liable in respect of the period for which he has had actual beneficial occupation of the devised premises. But even if he is liable, it has been held (Lowry v. Barber, L. R. 5 Ex. D. 170) that the estate is also liable to indemnify him.

property disclaimed as from the date when the property vested in him, but shall not, except so far as is necessary for the purpose of releasing the bankrupt and his property and the trustee from liability, affect the rights or liabilities of any other person.*

(3.) A trustee shall not be entitled to disclaim a lease without the leave of the Court, except in any cases. which may be prescribed by general rules, and the Court may, before or on granting such leave, require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such orders with respect to fixtures, tenant's improvements, and other matters arising out of the tenancy as the Court thinks just.*

The latter part of the sub-section gives statutory effect to the decision in ex parte Walton v. Levy, L. R. Ch. D. 746. Neither this sub-section nor any other part of the clause appears to affect some important decisions on corresponding provisions in clause 23 of the Bankruptcy Act of 1869. It will, for instance, still be law that when the bankrupt is assignee of a lease the disclaimer by the trustee will leave the lease subsisting between the lessor and the original lessee, and leave the latter liable to pay all rent due both before and after the disclaimer (Smyth v. North, L. R. 7 Ex. 242); that a sublessee may be compelled under the lessor's power of distraint on reentry to pay the rent due from a bankrupt lessee (ex parte Walton re Levy, L. R. 17 Ch. D. 746); that the rights of a legal mortgagee of a term are not affected by a disclaimer (ex parte Walton v. Levy, supra), and that the trustee will not be allowed by his disclaimer to affect the right of an equitable mortgagee (ex parte Buxton v. Muller, L. R. 15 Ch. D. 289).

It was provided by G. R. 28 of the rules of 1871 than when any property of a bankrupt shall consist of a leasehold interest, the trustee shall not execute a disclaimer of the same without leave of the Court. There was some doubt as to whether that rule was not ultra vires. No such doubt can attach to the present sub-section, which not only makes a similar provision, but expressly empowers the court to make "such orders with respect to fixtures, tenants' improvements, and other matters arising out of the tenancy," as the court

any

(4.) The trustee shall not be entitled to disclaim property in pursuance of this section in any case where an application in writing has been made to the trustee by any person interested in the property requiring him to decide whether he will disclaim or not, and the trustee has for a period of twenty-eight days after the receipt of the application, or such extended period as may be allowed by the Court, declined or neglected to give notice whether he disclaims the property or not; and, in the case of a contract, if the trustee, after such application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it.

(5.) The Court may, on the application of any person 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 contract 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.+

thinks just. It was held under the Act of 1869 that the trustee had no right to remove fixtures, though he were in possession up to the date of the disclaimer; and it was said to be very doubtful whether, in the absence of any express stipulation that the tenant should have the fixtures, he would have a right to disclaim after removing them. It would seem that on these and other "matters arising out of the tenancy," including the payment of rent, the court will now be at liberty to make such orders as they deem just.

*The subsequent part of this sub-section is new. It appears to be intended to meet the point raised in re Sneezum ex parte Davis, L. R. 3 Ch. D. 463, and will render the decision in that case no longer an authority.

This sub-section is a new provision,

(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 underlessee 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 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.*

*This important sub-section, some of the most material portions

(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.*

56. Powers of Trustee to deal with Property.†— Subject to the provisions of this Act, the trustee may do all or any of the following things :

of which are entirely new, will make provision, in an apparently satisfactory manner, for a variety of contingencies which have heretofore given rise to considerable difficulty and involved some injustice to one or more of the parties interested.

* In ex parte Llynvi Coal and Iron Co. re Hide, L. R. 7 Ch, 28, it was held on a similar provision in the Act of 1869 that when a bankrupt was lessee for a term of years at an annual rent of £500, and the trustee having disclaimed the lease the landlord was unable to re-let the premises at so high a rent; the landlord was entitled to prove in the bankruptcy for the difference between the present worth of the rent of £500 and the present worth for the same period of the letting value of the premises.

This clause corresponds generally, but with some noticeable variations, to clause 25 of the Bankruptcy Act of 1869. It does not re-enact the first sub-section of that clause, which empowered the trustee to "receive and decide upon proof of debts in the prescribed manner, &c." This is, however, not important, inasmuch as the same power is now given to the trustee by the second schedule. It is more material to observe that the present clause does not re-enact two other of the sub-sections of clause 25 of the Act of 1869, which empower the trustee to "carry on the business of the bankrupt so far as may be necessary for the beneficial winding up of the same,' or to "bring, institute, or defend any action or other legal proceedings relating to the property of the bankrupt." Those sub-sections are now transferred to the next clause (57), with this result that the trustee can no longer do the acts to which they relate without the permission of the committee of inspection.