Re Harper (a bankrupt), Harper v O'Reilly and Another
| Jurisdiction | England & Wales |
| Judgment Date | 1998 |
| Date | 1998 |
| Court | Chancery Division |
Matrimonial home – Spouses holding beneficial interest in property in equal shares – Marriage dissolved – In ancillary relief proceedings court ordering property to be sold and net proceeds paid to wife – Bankruptcy order made against husband before property sold – Whether beneficial interest in property forming part of his estate as a bankrupt – Matrimonial Causes Act 1973, ss 21, 23, 24 and 24A – Insolvency Act 1986, ss 283 and 306.
The spouses were married in 1980. During the marriage the matrimonial home was purchased in their joint names and they were entitled beneficially to it in equal shares. The marriage was dissolved in February 1995 and in May, on the wife’s application for ancillary relief, an order was made that the property be sold and the net proceeds be paid to the wife. The order did not state under which section of the Matrimonial Causes Act 1973 it was made. In December 1995, before the property was sold, a bankruptcy order was made against the husband. The wife made an application against the husband’s trustee in bankruptcy for a declaration that she was solely entitled to the property. She submitted that the effect of the order was to vest the whole of the husband’s beneficial interest in the property in her as from the date of the order so that it did not subsequently form part of his estate for the purposes of s 283 of the Insolvency Act 1986. The trustee submitted that the transfer or extinguishment of the husband’s interest in the property would not occur until completion of the sale directed in the order so that the husband’s beneficial interest formed part of the bankrupt’s estate for the purpose of s 283 of the 1986 Act and therefore vested in the trustee pursuant to s 306 of that Act.
Held — The terms of the order raised an issue as to the jurisdiction under which it was made and any ambiguity in the construction of the order should be resolved in the trustee’s favour under the contra proferentum rule. However, there was no ambiguity which would allow the order to be regarded as one for a lump sum payment under s 23(1)(c) of the 1973 Act nor as one for a future transfer of the property by the husband to the wife under s 24(1)(a) of the 1973 Act as each would be a highly artificial way to interpret the order. Having regard to the terms of the order it must be construed as having been an order under s 24(1)(c) of the 1973 Act varying the terms of a post-nuptial settlement or possibly an order under s 24(1)(d) of the 1973 Act extinguishing the interests of the husband under the settlement. Under those provisions the order had
immediate effect on the beneficial interests. Therefore the declaration sought by the wife would be made.
Cases referred to in judgmentBendall v McWhirter [1952] 2 QB 466, [1952] 1 All ER 1307, CA.
Bradley-Hole v Cusen [1953] 1 QB 300, CA.
Bradley-Hole (a bankrupt), Re[1996] 2 FCR 259, [1995] 4 All ER 865, [1995] 1 WLR 1097.
Burton v Burton [1986] 2 FLR 419.
Flint (a bankrupt), Re[1993] 1 FCR 518, [1993] Ch 319, [1993] 2 WLR 537.
Higham (a bankrupt), Re (25 October 1996, unreported), Ch D.
McKeen (a debtor), Re [1995] BCC 412.
Mordant, Re, Mordant v Halls (trustee in bankruptcy) [1995] BCC 209, [1995] 2 BCLC 647.
Omielan v Omielan[1996] 3 FCR 329, CA.
R v Rushmoor BC, ex p Barratt [1989] QB 60, [1988] 2 All ER 268, [1988] 2 WLR 1271, CA.
ApplicationThe wife applied against the husband’s trustee in bankruptcy for a declaration that she was solely entitled beneficially to the matrimonial home following an order in ancillary proceedings that the property, which was held in equal shares, be sold and the net proceeds paid to the wife, and which had not been sold prior to the making of the bankruptcy order against the husband. The facts are set out in the judgment of Mr Michael Hart QC.
John Machell (instructed by Manches & Co) for the plaintiff.
Marcia Shekerdemian (instructed by Dibb Lupton Alsop) for the respondents.
MICHAEL HART QC.This is an application made by the former wife (the wife) of the second respondent (the husband) against the husband’s trustee in bankruptcy (the trustee) for a declaration that she is solely beneficially entitled to the former matrimonial home, 70 Ifield Road, London, SW10 (the property).
The facts may be shortly stated. The husband and wife married on 14 November 1980. The marriage was dissolved by decree absolute on 13 February 1995. The property had been purchased during the course of the marriage in the joint names of the husband and the wife, and it is not disputed that they were entitled beneficially to it in equal shares. On 29 March 1994 the wife applied for ancillary relief in the divorce proceedings then current by giving notice of her intention to apply for—
‘orders for maintenance pending suit, periodical payments, secured periodical payments and lump sum(s) both for herself and for the child of the family and a property adjustment order in respect of: (1) [the property] (2) the contents of the former matrimonial home.’
On 24 May 1995 Hollis J, with the consent of the parties, made an order (the order) on the wife’s application for ancillary relief. It is desirable that I set out the material parts of the order and its prefatory recitals in some detail:
‘A. UPON the Petitioner and the Respondent acknowledging that the provision referred to hereafter is accepted in full and final settlement of all claims the Respondent may have against the Petitioner for income capital and other property adjustment and all claims the Petitioner may have against the Respondent for claims the Petitioner may have against the Respondent for capital and other property adjustment including all such claims arising under the Matrimonial Causes Act 1973 (as amended) and under the Married Women’s Property Act 1882 (as amended)
B AND UPON the basis that National Westminster Bank has agreed to release its Second Charge secured on the [property] prior to the sale and not to require that the Second Charge be discharged from the proceeds of sale of the said property
C AND UPON the Petitioner and the Respondent agreeing that the term “net proceeds of sale” referred to in paragraph 2 below means the proceeds of sale less the amount required to redeem the First Charge to National Westminster Home Loans secured thereon or £198,450 whichever is the lesser, and estate agents’ commission and solicitors’ costs of sale
D AND UPON the Petitioner and the Respondent agreeing that the Petitioner’s solicitors shall have the conduct of the sale of the [property] and upon the Petitioner agreeing to keep the Respondent fully informed of all offers to purchase the said property, communications from the agent and on the progress of the sale itself . . .
H AND UPON the Respondent agreeing and undertaking to the Court . . . (ii) that until completion of the sale of [the property] as provided below he will promptly pay the following expenses and outgoings in respect of 70 Ifield Road: [there then followed a list of household outgoings] . . .
BY CONSENT it is ordered
1. the [property] be sold forthwith by private treaty and the following consequential provisions shall apply: (a) the said property shall be sold for such price as may be agreed between the parties or in default of such agreement as determined by the Court; (b) the Petitioner’s solicitors shall have the conduct of the sale; (c) the said property shall be offered for sale by such estate agents as may be agreed between the parties or in default of such agreement as nominated by the Court.
2. The net proceeds of sale as defined in paragraph C of the Recital to this order shall be paid to the Petitioner.’
Paragraph 3 of the order provided for the respondent to pay periodical payments at the rate of £1,500 per month as from 1 March 1995 until completion of the sale of the property. Paragraph 4 provided for periodical payments at a reduced rate following the sale of...
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