An ancillary relief order was made in December 1978, following a compromise agreement. It provided for the sale of the former matrimonial home and the payment to the wife from the proceeds of sale of andpound;18,000. The husband was adjudicated bankrupt in May 1980. The trustee applied for an order declaring that the order was void under Section 42(1) of the 1914 Act, which read: ‘Any settlement of property not being a settlement made in favour of a purchaser or incumbrancer in good faith and for valuable consideration shall if the settler becomes bankrupt within 2 years after the date of settlement, be void against the Trustee in the bankruptcy.’ A settlement included any conveyance or transfer of property.
Held: The had been dismissed because although there had been a settlement within Section 42(1), the wife was a purchaser for valuable consideration having given up her right under Section 24 for what the husband had given her. A submission by the Trustee that Section 42(1) of the 1914 Act would only not apply where proprietary interests were ordered to be transferred between the parties to ancillary relief proceedings of substantially equivalent value was rejected.
Sir Robert Megarry V-C described valuable consideration as being something ‘which has a real and substantial value, and not one which is merely nominator trivial or colourable’ and concluded that ‘a claimant who relinquishes a claim in return for a substantial sum of money is a purchaser of that sum for valuable consideration whether that sum is an accurate or inaccurate estimate of what the court would award’.
Peter Gibson J, Sir Robert Megarry V-C
[1983] Ch 45
Bankruptcy Act 1914 42(1), Matrimonial Causes Act 1973 42(1)
England and Wales
Citing:
Cited – In Re Pope ex parte Dicksee 1908
In a post-nuptial settlement, the wife had given up all her rights in return for a transfer to her of property from her husband who was later made bankrupt.
Held: Sir Herbert Cozens-Hardy MR said: ‘I am unable to adopt the view that there must . .
Cited by:
Applied – Re Kumar (A Bankrupt), ex parte Lewis v Kumar 1993
H had transferred his interest in the jointly owned matrimonial home to W for her promise to have sole liability for the mortgage debt. Nearly a year later her divorce claim for capital provision was dismissed by consent on the basis that H had . .
Cited – Hill and Another v Haines ChD 3-May-2007
The husband and wife had separated and divorced. In ancillary proceedings, the family home had been transferred to the wife under a court order. The judge had noted that the husband was hopelessly insolvent, and he was made bankrupt some time later . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 10 December 2021; Ref: scu.253163
