s339 Insolvency Act claim by trustee in bankruptcy failed; robust application of Hill v Haines. A party's obligations under the MCA were not 'liabilities' did not make the applicant spouse a 'creditor' within s 383 and 38,2 for the purpose of s340 'preferences'. Capitulation in divorce negotiations was not equivalent to preferring a spouse.
Despite clear signs of H’s impending bankruptcy, DJ ordered H to transfer his 50% interest in FMH to W which he failed to do. He was declared bankrupt on his own petition. T in B tried to set aside under s339 as a transaction at an undervalue
It was held that the court order was effective to transfer beneficial interest. The personal right to apply for orders under the MCA 1973 was consideration for purposes of s339.
Whether the order followed contested proceedings or was by way of compromise, in ordinary cases full consideration will be assumed unless it could be demonstrated that the property transfer order had been obtained by fraud or some broadly similar exceptional circumstance
If the ancillary relief order were the product of collusion between the spouses, designed to affect the creditors adversely, or there were some other vitiating factor, the trustee would be entitled to apply to set the order aside
Dismissal of the oral renewal by the Trustee in Bankruptcy appealing the strike out of his claims under sections 23 and 24 of the Matrimonial Causes Act 1973 (above). Leave to appeal had already been refused by Mr Justice Morgan on the basis that the death of the husband had brought to an end rights under the MCA and the Trustee could have no greater claim than that of the bankrupt. Mr Robin Dicker QC, sitting as a deputy High Court Judge, gave a clear analysis of why all the bases raised by the Trustee were misconceived. See
Robert v Woodall  EWHC 538 (Ch)
Caroline represented the wife of a deceased bankrupt and was successful in striking out a Trustee in Bankrupcty’s application in his own name under sections 23 and 24 of the MCA 1973. Spousal rights under the MCA did not vest in a Trustee and in any event ceased on the death of the spouse.
The case also dealt with dispositions by the bankrupt under s284 and preferences/transactions at an undervalue.
CAROLINE HELY HUTCHINSON Barrister
Family, Divorce and Matrimonial Lawyer
Legal Advice and Efficient, Practical Help in Resolving
Matrimonial and Family Issues
Application for a Charging Order Nisi to be made absolute. If application was before the Divorce Petition, no basis for W to resist. If after, the court holds the balance between the wife and the creditor.