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Claims for financial orders on divorce do not vest in trustee in bankruptcy

Judgment published in appeal against strike out of claim

The judgment has been published in the dismissal of a claim by the trustee in bankruptcy under sections 23 and 24 of the Matrimonial Causes Act 1973 where the bankrupt was deceased.

The judgment in Robert v Woodall [2016] EWHC 2987 (Ch) arose from an oral renewal hearing (with a cross application) for leave to appeal the strike out of the claim of a trustee in bankruptcy ("Trustee") under sections 23 and 24 the Matrimonial Causes Act 1973 ('MCA') made by Mr Registrar Jones on 15 March 2016 ([2016] EWHC 538).  Mr Registrar Jones struck out the application on the grounds that the 1973 Act created rights which can be pursued only by the spouses themselves and that "the rights do not extend beyond joint lives". 

The Trustee described his claims as 'novel'. They contradicted the specific guidance of the Technical Manual issued by the Insolvency Service.  The Trustee asserted that the bankrupt husband's spousal claims under the MCA had vested in him as part of the bankrupt's estate, being 'property' under section 436 of the Insolvency Act 1986 (the '1986 Act'), and so the Trustee had issued claims under the MCA in the Bankruptcy Court against the bankrupt's former wife for a lump sum or property adjustment order for the benefit of the bankrupt's creditors.  A further hurdle to the claims was the death of the bankrupt in November 2014.

Mr Robin Dicker QC, sitting as a deputy High Court judge of the Chancery Division, whose "initial surprise" at the Trustee's proposition was reinforced by his oral submissions, gave a full analysis of why the Trustee's innovative matrimonial claim could not proceed.  He agreed with Mr Justice Morgan's basis for rejecting the leave on paper, namely that the death of the bankrupt brought to an end his rights under the MCA and the Trustee could have no greater claim than that of the bankrupt.

For the judgment and full summary by Caroline Hely Hutchinson, counsel for the respondent wife, click here.