Mountney v Treharne
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jonathan Parker,Lord Justice Laws,Lord Justice Aldous |
| Judgment Date | 08 August 2002 |
| Neutral Citation | [2002] EWCA Civ 1174 |
| Docket Number | Case No: A2 2002 0119 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 August 2002 |
[2002] EWCA Civ 1174
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION (Mr Justice Stanley Burnton)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Aldous
Lord Justice Laws and
Lord Justice Jonathan Parker
Case No: A2 2002 0119
Mr Paul Morgan QC and Mr William Hansen (instructed by Messrs Jeffries) for the Appellant
Miss Raquel Agnello (instructed by Messrs Sprecher Grier Halberstam) for the Respondent
Introduction
A property adjustment order is made by way of ancillary relief in matrimonial proceedings under section 24(1)(a) of the Matrimonial Causes Act 1973 as amended ("the 1973 Act") whereby the respondent husband is ordered forthwith to transfer all his interest in the former matrimonial home to his former wife. The order provides that if the husband fails to execute the requisite documents to effect the transfer within 14 days after such documents have been sent to him, they may be signed by the district judge. By virtue of section 24(5) of the 1973 Act, the order only takes effect when decree absolute is pronounced. Within the 14-day period, decree absolute is pronounced. The next day, still within the 14-day period, the husband is made bankrupt on his own petition. At the date of the bankruptcy order no transfer documents have as yet been executed, either by the husband or by the district judge. The issue on this appeal is whether on his bankruptcy the husband's beneficial interest in the matrimonial home vested in his trustee in bankruptcy as part of his estate for bankruptcy purposes, free from any rights of the wife under or by virtue of the order. That in turn depends upon the true interpretation of section 283 of the Insolvency Act 1986 ("the 1986 Act"), and in particular section 283(5).
The appeal is brought by Mrs Helen Mountney against an order made by Stanley Burnton J on 21 December 2001 dismissing her appeal from an order made by District Judge Dudley on 23 August 2001 declaring that the former matrimonial home, 22, Main Road, Hawkwell, Hockley, Essex ("the property") vested in the trustee in bankruptcy of her former husband, Stewart Mountney ("the bankrupt"), by virtue of section 306 of the 1986 Act. Permission to appeal was granted by Chadwick LJ on the papers on 12 February 2002.
The facts
The relevant facts are not in dispute and can be shortly stated.
The property was purchased in the bankrupt's sole name. Mrs Mountney remains in occupation of the property, with the three children of the marriage. In February 2000 she petitioned for divorce. On 6 July 2000 District Judge Dudley made a property adjustment order under section 24 of the 1973 Act. Paragraphs 2 and 3 of the order were in the following terms (so far as material):
"2. All [the bankrupt's] interest (both legal and beneficial) in the property …. [and its contents] shall be transferred forthwith by him to [Mrs Mountney] absolutely subject to the mortgage with Cheltenham & Gloucester plc.
3. In the event that [the bankrupt] fails to sign and return the transfer documents and any relevant documentation in connection with the transfer ordered at paragraph 2 above within 14 days of them being sent by first class post to him …., the said documents may be signed by the District Judge."
On 13 July 2000 decree absolute was pronounced.
On 14 July 2000, by which date no transfer documents had been signed either by the bankrupt or by the District Judge, a bankruptcy order was made against the bankrupt on his own petition. On 28 September 2000 Mr Stephen Treharne, the respondent to this appeal, was appointed as the bankrupt's trustee in bankruptcy. Leaving the property out of account, the deficiency in the bankrupt's estate is approximately £195,000.
The relevant statutory provisions
It is convenient at this point to set out the relevant provisions of the 1986 Act and of the 1973 Act.
The relevant sections of the 1986 Act are sections 283, 284 and 306. They provide as follows (so far as material):
"283 Definition of bankrupt's estate
(1) Subject as follows, a bankrupt's estate for the purposes of any of this Group of Parts comprises –
(a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and
(b) any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling within the preceding paragraph.
(2) ….
(3) Subsection (1) does not apply to –
(a) property held by the bankrupt on trust for any other person, or
(b) ….
(4) References in any of this Group of Parts to property, in relation to a bankrupt, include references to any power exercisable by him over or in respect of property except in so far as the power is exercisable over or in respect of property not for the time being comprised in the bankrupt's estate ….
(5) For the purposes of any such provision in this Group of Parts, property comprised in a bankrupt's estate is so comprised subject to the rights of any person other than the bankrupt (whether as a secured creditor of the bankrupt or otherwise) in relation thereto ….
284 Restrictions on dispositions of property
(1) Where a person is adjudged bankrupt, any disposition of property made by that person in the period to which this section applies is void except to the extent that it is or was made with the consent of the court, or is or was subsequently ratified by the court.
…
(3) This section applies to the period beginning with the day of the presentation of the presentation of the petition for the bankruptcy order and ending with the vesting …. of the bankrupt's estate in a trustee.
306 Vesting of bankrupt's estate in trustee
(1) The bankrupt's estate shall vest in the trustee immediately on his appointment taking effect ….
(2) Where any property which is …. comprised in the bankrupt's estate vests in the trustee …. it shall so vcst without any conveyance, assignment or transfer."
The relevant sections of the 1973 Act (as amended) provide as follows (so far as material):
"23 Financial provision orders in connection with divorce proceedings etc.
(1) On granting a decree of divorce …. or at any time thereafter (whether …. before or after the decree is made absolute) the court may make any of the following orders, that is to say –
(a) an order that either party to the marriage shall make to the other such periodical payments, for such term, as may be specified in the order;
(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court such periodical payments, for such term, as may be so specified;
(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified;
….
(5) Without prejudice to the power to give a direction under section 30 below for the settlement of an instrument by conveyancing counsel, where an order is made under subsection (1)(a), (b) or (c) above on or after the granting of a decree of divorce …. neither the order nor any settlement made in pursuance of the order shall take effect unless the decree has been made absolute.
24 Property adjustment orders in connection with divorce proceedings etc.
(1) On granting a decree of divorce …. or at any time thereafter (whether …. before or after the decree is made absolute), the court may make any one or more of the following orders, that is to say –
(a) an order that a party to the marriage shall transfer to the other party, to any child of the family or to any such person as may be specified in the order …. such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;
(b) an order that a settlement of such property as may be so specified, being property to which a party to the marriage is so entitled, be made to the satisfaction of the court for the benefit of the other party to the marriage ….;
(c) an order varying for the benefit of the parties to the marriage …. any ante-nuptial or post-nuptial settlement ….;
(d) an order extinguishing or reducing the interest of either of the parties to the marriage under any such settlement ….;
….
(3) Without prejudice to the power to give a direction under section 30 below for the settlement of an instrument by conveyancing counsel, where an order is made under this section on or after granting a decree of divorce …. neither the order nor any settlement made in pursuance of the order shall take effect unless the decree has been made absolute.
30 Direction for settlement of instrument for securing payments or effecting property adjustment
Where the court decides to make a financial provision order requiring any payments to be secured or a property adjustment order –
(a) it may direct that it be referred to one of the conveyancing counsel of the court for him to settle a proper instrument to be executed by all necessary parties ….
39 Settlement, etc., made in compliance with a property adjustment order may be avoided on bankruptcy of settlor
The fact that a settlement or transfer of property had to be made in order to comply with a property adjustment order shall not prevent that settlement or transfer from being a transaction in respect of which an order may be made under section 339 or 340 of the Insolvency Act 1986 (transactions at an undervalue and preferences)."
Sections 52, 53 and 54 of the Law of Property Act 1925 were also referred to in argument, and it is convenient to set out the relevant parts of those sections at this point. They provide as follows (so far as material):
"52 Conveyances...
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