High Court rules that claims for financial orders on divorce do not vest in trustee in bankruptcy

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In Robert v Woodall [2016] EWHC 538 (Ch), the High Court considered whether the Matrimonial Causes Act 1973 (MCA) created rights which could only be pursued by the spouses themselves or hybrid claims which vest in a trustee in bankruptcy.

Facts

H had been made bankrupt in July 2009, during a time when divorce proceedings were ongoing between him and his wife. A consent order was approved by the court which, amongst other matters, allowed for a maintenance payment to be made from H to his wife for her benefit and the benefit of their child before December 2012.

Subsequently, after the death of H, the trustee in bankruptcy, applied for a lump sum or other financial provision to be paid by the ex-wife under the MCA on the basis that this right vested in him on appointment as an asset of the bankruptcy estate.

Held

The High Court considered the decisions of the House of Lords in Barder v Caluori [1988] AC 20 and the Court of Appeal in Harb v King Fahd Bin Abdul Aziz (Secretary of State for Constitutional Affairs intervening) [2005] EWCA Civ 1324.

The court held that the provisions of the MCA created rights which could only be pursued by spouses for themselves and for the benefit of their children.  These rights did not extend beyond the spouses’ joint lives.

The court rejected the trustee’s argument that the claims under the MCA were hybrid causes of action which vested in him.  It held that section 283 Insolvency Act 1986 did not apply to the right to seek financial provision on divorce and the trustee had no right to seek a lump sum payment or any other financial provision.

Comment

This is the first reported case which specifically considers a trustee in bankruptcy’s ability to pursue financial orders on divorce and provides clarity that such rights are personal to the bankrupt.

For more information, help or advice please contact Kelly Jordan on 0191 211 7899 or email [email protected].