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 effect of r 12.3 of the Insolvency Rules 1986. Before those rules came into force orders for periodical payments were not provable in bankruptcy . . whereas an order for a lump sum was provable . . That position is understandable. However r 12.3(2)(a), by making any obligation arising under an order made in family proceedings, ie including a lump sum order, not provable, has changed that position. Whether it was the intention of those who drafted the 1986 rules to bring about this change I know not. It may be that it was considered that as a debt arising from an order made in family proceedings is not released upon the discharge of the bankrupt (s 281(5) (a) of the 1986 Act) therefore it should not be provable. However there is no necessary or logical link between the provability of a debt and its release on discharge. In some cases there is such a link see, eg a fine imposed for an offence which is not provable under r 12.3(2)(a) and is not released on discharge under s 281(4). On the other hand a liability to pay damages in respect of personal injuries is a provable debt in bankruptcy, not being the subject of any exclusion under r 12.3, but is not released on discharge: s 281(5)(a). It seems, therefore, that any link between provability and release on discharge is a matter of policy and I can see good policy grounds for saying that a lump sum order made in family proceedings should (like damages for personal injuries) be both provable in bankruptcy and yet not be released on discharge.
I invite the Insolvency Rules Committee to consider whether a lump sum order made in family proceedings should be provable in bankruptcy as it was before the 1986 rules came into force. If it were provable, then that would be the appropriate route for the creditor to follow, since the procedure by way of judgment summons would then be barred by s 285(3) of the 1986 Act (see Smith v Braintree DC [1990] 2 AC 215).’
Judges:
Balcombe LJ
Citations:
Ind Summary 12-Apr-1993, [1994] 1 WLR 1167
Statutes:
Debtors Act 1869 5, Insolvency Rules 1986
Jurisdiction:
England and Wales
Cited by:
Cited – Gita Ram v Baskinder Ram,Solinder Ram, Monder Ram and Maurice William Russell CA 5-Nov-2004
A bankrupt had, before his bankruptcy disposed of his share in a house at an undervalue. His wife appealed an order that the share disposed of should vest entirely in the trustee in bankruptcy. Matrimonial proceedings had also been commenced.
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 . .
Cited – McRoberts v McRoberts ChD 1-Nov-2012
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 . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Family
Updated: 26 October 2022; Ref: scu.90593
