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14 DEC 2016

Robert v Woodall [2016] EWHC 2987 (Ch)

Robert v Woodall [2016] EWHC 2987 (Ch)

What was the application about?

The bankrupt husband (Bankrupt) committed suicide in November 2014.

This was a renewed 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 1973).

The strike out was made by Mr Registrar Jones on 15 March 2016 ([2016] EWHC 538).

Morgan J had, on paper, rejected the Trustee’s application for leave to appeal the Order of Mr Registrar Jones.

Reason for strike out:
The Registrar struck out the application on the grounds that rights created under the MCA 1973 may only be pursued by the spouses themselves and that 'the rights do not extend beyond joint lives'.

The cross-application:
At the same time, Ms Woodall made a cross application to set aside Morgan J's order in so far as it gave the Trustee permission to appeal against the decision striking out his claim that the payments were transactions at an undervalue pursuant to s 339 Insolvency Act 1986 (IA 1986) and against the order for costs.

The Trustee’s argument:
The Trustee asserted that the Bankrupt’s spousal claims under the MCA 1973 had vested in him as part of the bankrupt's estate, being 'property' under s 436 of the IA 1986.
Accordingly, the Trustee had issued claims under the MCA 1973 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. 

The hearing in the High Court:
Mr Robin Dicker QC, sitting as a deputy High Court Judge of the Chancery Division, explained why the Trustee's matrimonial claim could not proceed.

Grounds for ruling against the trustee:
Robin Dicker QC agreed with Mr Justice Morgan's basis for rejecting the leave on paper, namely that:
  1. The death of the Bankrupt brought to an end his rights under the MCA 1973; and
  2. The Trustee could have no greater claim than that of the Bankrupt.
At paragraph 13 of the Judgment, Mr Robin Dicker QC said:

'In my judgment, whatever other problems may exist with such a claim, the authorities clearly establish that a claim under ss 23 or 24 of the 1973 Act ceased to be possible following the death of the Bankrupt.'

The other arguments of the Trustee:

Mr Dicker QC also addressed other arguments put forward by the Trustee (confirming also Mr Registrar Jones' strike out judgment).
  1. He rejected the suggestion that a Court could have regard to the s 25 factors, despite the death of one spouse, interpreted for the sole benefit of the deceased's creditors.
  2. He further rejected the Trustee's submission that the Registrar's judgment had found the compromise of spousal claims to be a disposal of property (rather, the Registrar had confirmed authority stating that an Order which transfers property is a disposition by the individual not the court).
  3. The judge, in acknowledging the line of authorities confirming that applications for financial relief are not 'causes of action' for the purpose of s 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934, rejected the Trustee's submission that different considerations applied for the purpose of s 436 of the IA 1986.
  4. In completing the review of the relevant law, the Judge confirmed that his judgment did not affect a case where, for example, an order for secured provision had been obtained prior to the death of a spouse, nor where an order against a bankrupt results in assets being obtained as after-acquired property under s 307 IA 1986:
'26. I should add that none of this means that, if, during joint lives, the applicant spouse obtains a secured provision order against the respondent spouse then the order, duly obtained during joint lives, does not continue to benefit one spouse after the death of the other; see Thorpe LJ in Harb v King Fahd Bin Abdul Aziz at [13]. Nor does it mean that, in the event that an order is made in favour of a bankrupt, a trustee in bankruptcy may not be able to have recourse, for the benefit of creditors, to any assets subsequently obtained as after-acquired property under s.307 of the 1986 Act.'

Accordingly, the High Court dismissed:
  1. The Trustee's renewed application for permission to appeal, and
  2. Ms Woodall's cross-application.

Case No: 1977 of 2009

Neutral Citation Number: [2016] EWHC 2987 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MR REGISTRAR JONES
IN BANKRUPTCY

RE: JONATHAN CHIAM ELICHAOFF
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
AND IN THE MATTER OF THE MATRIMONIAL CAUSES ACT 1973


Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL


Date: 25 November 2016 


Before :


Mr Robin Dicker QC (sitting as a Deputy High Court Judge)


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Between :


IAN ROBERT
(As the Trustee in Bankruptcy of Jonathan Chiam Elichaoff)
Appellant


- and -


SARAH JANE DUNCANSON WOODALL
Respondent


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James Pickering (instructed by Darwin Law Ltd) for the Appellant
Caroline Hely Hutchinson of Family Law Chambers for the Respondent


Hearing date: 4th November 2016


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Judgment

Robert v Woodall [2016] EWHC 2987 (Ch).rtf
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