Re Citro, Lloyds Bank plc v Byrne and Byrne, Abbey National plc v Moss and others and Barclays Bank plc v Hendricks: CA 1991

Trustees in bankruptcy of bankrupt husbands successfully appealed for the removal of provisos delaying the operation of orders for sale made under s30 in respect of each husband’s matrimonial home for the benefit of that husband’s wife who had been declared by the judge at first instance to be an equal owner with the husband of the beneficial interest in the matrimonial home. Bingham LJ: ‘Section 30 of the Law of Property Act 1925 confers two discretion’s. First, it confers a discretion on ‘any person interested’ to ‘apply to the court …. for an order directing the trustees for sale to give effect thereto.’ Secondly, it confers a discretion on the court to ‘make such order as it thinks fit’. The section contains no express limitation on the exercise of these discretions but neither is it altogether unfettered.’ The interests of a bankrupt spouse’s creditors would, absent exceptional circumstances, usually prevail over those of the other spouse and children. Accordingly it reduced to six months the period of postponement of the order for sale of the property made by the judge below.
Nourse LJ: ‘One of the consequences of the 1925 Property Legislation is that the legal estate in any property which is beneficially owned jointly or in common is necessarily held on trust for sale and is thus subject to the jurisdiction of the court under s. 30. From its inception the section was one of wide application. But is seems that before Jones -v- Challenger [above] it had not been the means of making an order for the sale of a former matrimonial home ….’ and as to what counted as exceptional circumstances: ‘ What then are exceptional circumstances? As the cases show, it is not uncommon for a wife with young children to be faced with eviction in circumstances where the realization of her beneficial interest will not produce enough to buy a comparable house in the same neighbourhood or indeed elsewhere. And, if she has to move elsewhere, there may be problems over schooling and so forth. Such circumstances, while engendering a natural sympathy in all who hear of them, cannot be described as exceptional. They are the melancholy consequences of debt and improvidence with which every civilised society has been familiar.’

Judges:

Bingham LJ, Nourse LJ

Citations:

[1991] 1 FLR 71, [1991] Ch 142, (1991) 23 HLR 472

Statutes:

Law of Property Act 1925 30

Cited by:

CitedBank of Baroda v Dhillon and Dhillon CA 17-Oct-1997
A property had been bought in the husband’s name. The wife made financial contributions to repayment of the charge, and thereby acquired an interest in it. The property was later charged by the paper owner to the claimant, who sought possession . .
CitedDonohoe v Ingram ChD 20-Jan-2006
The appellant had lived with the bankrupt for several years, and sought an order delayng sale of the house they had lived in until their children had grown up. She said the circumstances were exceptional.
Held: The fact that the delay might . .
CitedBarca v Mears ChD 2005
While the categories of exceptional case which might allow delay in the sale of a bankrupt’s property are not circumscribed by the previous case-law, the only cases subsequent to In Re Citro in which orders for possession and sale have been withheld . .
CitedNicholls v Lan and Another ChD 26-May-2006
The bankrupt had been discharged from his bankruptcy, but his share in the family home remained vested in the trustee who applied for the sale of the home. His wife applied to set aside an order for sale on the basis that it interfered with her . .
CitedGotham v Doodes CA 25-Jul-2006
The former bankrupt resisted sale of his property by the trustee, saying that enforcement was barred by limitation. He and his wife bought the property in early 1988, and he was made bankrupt in October 1988. He was dischaged from bankruptcy in . .
Lists of cited by and citing cases may be incomplete.

Land, Insolvency

Updated: 30 April 2022; Ref: scu.197883