The parties had agreed to an ancillary relief order on their divorce. The husband was made bankrupt without having paid the lump sum agreed. The former wife and now claimant had received no dividend. Debts which were not provable in the bankruptcy are not released: they are untouched by the process. The former husband now sought an order discharging the debt on his own discharge.
Held: The order was refused, and the obligation remained in place.
Hildyard J said of the discretion given to the court: ‘the purpose of the discretion is to enable the Court, in order better to achieve the objectives of discharging a bankrupt, to release an obligation if persuaded that the likelihood of its being satisfied is not such that its continuance is likely to have be of any benefit to the obligee, and that, conversely, its release is necessary in order to assist the obligor in building a viable financial future. ‘ The attempt to recharacterise the payment of a lumps sum by instalments as maintenance failed because: ‘(a) I am not persuaded that the relevant obligation should be re-characterised as in substance an order for maintenance payments (b) I am not persuaded it would be open to review in matrimonial proceedings and (c) in any event, I do not consider that the discretion conferred by section 381(5) of the IA was intended to extend to such a review.’
Evidence did not support the feeling that the claimant had ‘ done everything he can to discharge his obligations to his ex-wife; they do encourage a sense that the Applicant’s finances may not be entirely transparent. By contrast, they do encourage a feeling, since these fairly substantial sums were being provided to him whilst the obligation to pay subsisted, that if (as he maintains he will) he demonstrates the allegations against him to be false he may well be able to generate funds or means of support in the future which may be enough both for his and his family needs and also to begin to enable him to reduce the lump sum outstanding. ‘
Judges:
Hildyard J
Citations:
[2012] EWHC 2966 (Ch), [2012] WLR (D) 305
Links:
Statutes:
Insolvency Act 1986 281(5), Matrimonial Causes Act 1973 23(3)(c)
Jurisdiction:
England and Wales
Citing:
Cited – Smith (a bankrupt) v Braintree District Council HL 1989
The House considered the effects of bankruptcy on the imposition of a committal to imprisonment in default of paying rates.
The purpose of section 285 is to preserve the estate of the bankrupt for the benefit of his unsecured creditors.
Cited – Woodley v Woodley (2) CA 12-Apr-1993
A stay of execution of an order against matrimonial assets was not defeated by bankruptcy. As to the interplay of the Insolvency Rules and matrimonial proceedings.
Balcombe LJ said: ‘I cannot leave this case without saying something about the . .
Cited – In re Mordant CA 1996
The court discussed the interplay of family and insolvency proceedings: ‘Since the wife is unable to prove in the husband’s bankruptcy, the position . . is that the husband’s trustee must use the andpound;385,000 in paying the trustee’s expenses . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Family
Updated: 06 November 2022; Ref: scu.465631