Donohoe v Ingram (Trustee in Bankruptcy of Kirkup)
| Jurisdiction | England & Wales |
| Judge | Mr Stuart Isaacs QC |
| Judgment Date | 20 January 2006 |
| Neutral Citation | [2006] EWHC 282 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2005/APP 0752 |
| Date | 20 January 2006 |
[2006] EWHC 282 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM THE IPSWICH COUNTY COURT
IN BANKRUPTCY
Mr Stuart Isaacs QC (Sitting as a Deputy Judge of the High Court)
Case No: CH/2005/APP 0752
Mr Nicholas Elcombe (instructed by Blocks) for the Appellant
Mr David Nicholls (instructed by Ashfords) for the Respondent
Mr Stuart Isaacs QC:
Introduction
The Respondent is the trustee in bankruptcy of Iain Charles Kirkup, against whom a bankruptcy order was made on 21 March 2000. The Appellant was appointed as Mr Kirkup's trustee on 7 May 2004. Between 1982 and 1999, the Appellant was in a relationship with Mr Kirkup. There was a brief reconciliation between them in the period 2000/2001 but they eventually separated in July 2001. On 30 October 1996, the Appellant and Mr Kirkup bought a property at 196 Britannia Road in Ipswich of which they were registered as the joint proprietors. They occupied the property as their home, together with their four children now aged 10, 8, 6 and 4 respectively.
On 7 June 2005, the Respondent applied against the Appellant and Mr Kirkup for an order for the sale of the property under section 335A of the Insolvency Act 1986. The application came before District Judge Bazley White on 18 October 2005. Mr Kirkup took no part in the proceedings and has taken no part in the present proceedings. After considering two witness statements made by the Respondent, the Appellant's witness statement and oral evidence from her, the District Judge ordered that the property be sold with vacant possession and made other consequential orders.
The Appellant now appeals to this court against that order. She applies for the order for sale made by the District Judge to be set aside and substituted by an order for sale, not to take place until 2017, when her youngest child will attain the age of 16. This hearing is a true appeal and not a rehearing of the case before the District Judge. In order to succeed, she must, so far as is material in the present case, satisfy the court that the District Judge's decision was wrong: paragraph 17.18(3)(a) of the Practice Direction relating to Insolvency Proceedings.
At the outset of the hearing, in the exercise of my discretion under paragraph 17.18(2) of the Practice Direction, I refused the Respondent's application to rely on a further witness statement made on his behalf on the day of the hearing, for reasons which I gave at the time.
Section 335A was inserted into the Insolvency Act 1986 by the Trusts of Land and Appointment of Trustees Act 1996. The 1996 Act also repealed amongst other provisions section 30 of the Law of Property Act 1925. Section 335A provides:
" (1) Any application by a trustee of a bankrupt's estate under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (powers of court in relation to trusts of land) for an order under that section for the sale of land shall be made to the court having jurisdiction in relation to the bankruptcy.
(2) On such an application, the court shall make such order as it thinks just and reasonable having regard to-
(a) the interests of the bankrupt's creditors;
(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the bankrupt's spouse or former spouse-
(i) the conduct of the spouse or former spouse, so far as contributing to the bankruptcy,
(ii) the needs and financial resources of the spouse or former spouse, and
(iii) the needs of any children; and
(c) all the circumstances of the case other than the needs of the bankrupt.
(3) Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt's estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt's creditors outweigh all other considerations.
�"
The Appellant conceded that because over one year had elapsed between the Respondent's appointment and the making of his application, under section 335A(3) the court must assume, unless the circumstances of the case are "exceptional", that the interests of Mr Kirkup's creditors outweigh all other considerations. The only issue which arises on this appeal is whether the District Judge was correct in deciding that the circumstances were not "exceptional" within the meaning of section 335A(3).
In Claughton v Charalambous [1998] BPIR 558, at 562G-H, Jonathan Parker J (as he then was) commented that what is required of the court in applying section 335A(3) is, in effect, a value judgment. The court must look at all the circumstances and conclude whether or not they are exceptional. That process, he considered, left "very little scope for the interference by an appellate court".
In Re Citro
The leading authority on the meaning of "exceptional" in this context is the Court of Appeal's decision in In Re Citro [1991] Ch 142, a case which arose under the regime governed by section 30 of the Law of Property Act 1925. At 157B-D, Nourse LJ, after a review of the authorities, said:
" 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.
Nourse LJ then continued, at 157D-158B, to consider the Court of Appeal's decision in In Re Holliday [1981] Ch 405� also a case under the regime of section 30 of the Law of Property Act 1925 �in which, in his words, such circumstances "helped the wife's voice to prevail, and then only, as I believe, because of one special feature of that case":
" One of the reasons given for the decision by Sir David Cairns was that it was highly unlikely that postponement of payment of the debts would cause any great hardship to any of the creditors, a matter of which Buckley LJ no doubt took account as well. Although the arithmetic was not fully spelled out in the judgments, the net value of the husband's half share of the beneficial interest in the matrimonial home was about �13,250, against which had to be set debts of about �6,500 or �7,500 as the sum required to obtain a full discharge. Statutory interest at 4 per cent on �6,500 for five years would have amounted to no more than �1,300 which, when added to the �7,500, would make a total of less than �9,000, well covered by the �13,250. Admittedly, it was detrimental to the creditors to be kept out of a commercial rate of interest and the use of the money during a further period of five years. But if the principal was safe, one can understand that the detriment was not treated as being decisive, even in inflationary times. It must indeed be exceptional for creditors in a bankruptcy to receive 100p in the � plus statutory interest in full and the passage of years before they do so does not make it less exceptional. On the other hand, without that special feature, I cannot myself see how the circumstances in In Re Holliday could fairly have been treated as exceptional. I am confirmed in that view by the belief that it was shared by Balcombe LJ who in Harman v Glencross [1986] Fam 81, 95, said that the decision in In Re Holliday was very much against the run of recent authorities. I would not myself have regarded it as an exceptional circumstance that the husband had presented his own petition, even 'as a tactical move'. That was not something of the creditors' choosing and could not fairly have been held against them. I do not say that in other cases there might not be other exceptional circumstances. They must be identified if and when they arise."
The...
To continue reading
Request your trial