Maxine Reid-Roberts & Anor v Hsiao Mei-Lin & Anor
[2024] EWHC 759 (Ch)
Audun Gudmundsson v Hsiao-Mei Lin
21 June 2024
[2024] EWHC 1576 (Fam)
High Court
A husband and wife divorced. Before the final decision on dividing their assets, the husband went bankrupt. The court decided the original order giving the wife the husband's share of the house was wrong because of the bankruptcy. The court corrected the order so that any money left from selling the husband's share of the house, after paying off his debts, will go to the wife.
Key Facts
- •Appeal against a financial remedies order made on 4 March 2020.
- •Husband (H) declared bankrupt on 26 February 2020, six days before the financial remedies order.
- •Order required H to transfer his half share in the family home (FMH) valued at £750,000 to Wife (W).
- •H's bankruptcy concealed from W and the court.
- •H's assets, including his interest in the FMH, vested in the Trustee in Bankruptcy.
- •W's application to annul the bankruptcy was dismissed.
- •Subsequent court proceedings determined W and the Trustees each own 50% of the FMH beneficially.
- •Trustees' costs in the bankruptcy approximately £657,000.
- •W is a creditor in the bankruptcy, claiming £290,925.
Legal Principles
A property adjustment order cannot be made against a bankrupt; the court has no power to order a disposition of a bankrupt's assets.
Insolvency Act 1986, s283, s306; Re Holliday (A bankrupt) [1981] CH 405; McGladdery v McGladdery [1999] 2 FLR 1102; Ram v Ram (No.2) [2004] EWCA Civ 1684 [2005] 2 FLR 63
A lump sum order can be made against a bankrupt, but only when the court has a clear idea of the likely residue of the estate after discharge.
Hellyer v Hellyer [1996] 2 FLR 579
An appeal may be allowed where the decision was wrong or unjust because of serious procedural irregularity.
FPR 30.12(3)
An application to annul a bankruptcy should be made to the Business and Property Courts.
Arif v Arif [2012] EWCA Civ 986
The court may consider 'exceptional circumstances' under s335A(3) of the Insolvency Act 1986 where the interests of creditors should not outweigh all other considerations.
Insolvency Act 1986, s335A(3)
Outcomes
Appeal allowed.
The property adjustment order requiring H to transfer his interest in the FMH was wrong as his interest vested in the Trustees upon bankruptcy.
Paragraph 1 of the order (transfer of FMH interest) set aside.
H's interest in the FMH vested in the Trustees in Bankruptcy, leaving no interest to transfer.
W owns 50% beneficial interest in the FMH.
Confirmed following the Business and Property Court decision.
Any surplus from the sale of H's 50% share in the FMH (after Trustee's costs and creditors' debts) to be paid to W.
Reflects the original judge's intention and H's conduct in concealing his bankruptcy.
H to return W's paintings.
Implementation of part of the original order.
Application to vary periodical payments order refused.
Lack of updated income/outgoings information.
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