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Donohoe v Ingram [2006] EWHC 282 (Ch)

Appeal against order for sale of property in favour of trustee in bankruptcy dismissed.

Donohoe v Ingram [2006] EWHC 282 (Ch)

Chancery Division: Stuart Isaacs QC (20 January 2006)

Appeal against order for sale of property in favour of trustee in bankruptcy dismissed.

The appellant and her partner were in a relationship between 1982 and 1999, and they had four children aged 10, 8, 6 and 4. In October 1996, they bought a property, of which they were registered as joint proprietors, and they occupied it as their home. In March 2000, the appellant's partner was declared bankrupt; the couple separated in July 2001; and, in May 2004, the respondent to this appeal was appointed as the trustee in bankruptcy.

In June 2005, the respondent applied for an order for sale of the property under section 335A of the Insolvency Act 1986 (inserted by the Trusts of Land and Appointment of Trustees Act 1996), and the district judge ordered the sale with vacant possession.

The appellant applied 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 would attain the age of 16. The only issue which arose on this appeal was whether the district judge was correct in deciding that the circumstances were not 'exceptional' within the meaning of section 335A(3).

The judge considered the Court of Appeal decision in In Re Citro [1991] Ch 142, the leading authority on the meaning of 'exceptional' in this context, and Nourse LJ's interpretation in that case of In Re Holliday [1981] Ch 405. The appellant contended that the present case was materially indistinguishable from In Re Holliday and the district judge was wrong not to have decided that the fact that the creditors were likely to be paid in full with interest, even if the order for sale was postponed for a number of years to allow the children to remain in the property until they were older, amounted to exceptional circumstances. She further submitted, in reliance on Barca v Mears [2004] EWHC 2170 (Ch), that the 'narrow' construction of section 335A was not consonant with the right to respect for family and private life recognised in Article 8 of the European Convention on Human Rights, which required that section 335A should be interpreted in a manner which afforded greater weight to the needs of the bankrupt's partner and children.

Held, dismissing the appeal, that the district judge had been correct in deciding that the circumstances in this case were not exceptional. The judge expressed sympathy for the position in which the appellant and her family found themselves, through no fault of their own, and varied the district judge's order to the extent that the sale of the property should not take place for a further three months from the date of the hearing, to allow her time to arrange her affairs and make provision for her children. He also expressed the view that the authority of In Re Holliday needed to be approached with a degree of caution, as the decision had been described in a 1986 case as being 'very much against the run of recent authorities'.

As regards the human rights point under Article 8, the judge concluded that it was unnecessary for him to determine the point because, even if a wider interpretation of 'exceptional circumstances' were required, the district judge's conclusion that there were no exceptional circumstances was correct.

Read the full text of the judgment here