Cartwright v Cartwright & Ors

A bankruptcy petition may be based on a debt that is not provable, although the court will ordinarily decline to make a bankruptcy order on that basis. An unregistered foreign maintenance order which could be registered under the Maintenance Orders (Reciprocal Enforcement) Act 1972 does not become an obligation arising under an order made in family proceedings for Insolvency Rule 12.3(2)(a). However, where the order is variable, periodical-payment debts are unenforceable in the United Kingdom at common law and are non-provable under Rule 12.3(3). A non-variable lump-sum provision remains enforceable and provable.

The appellant appealed from an order of Rimer J dismissing his appeal against a bankruptcy order made in the St Albans County Court. The petition was presented by his former wife and supported by their daughter, relying on a Hong Kong consent order requiring periodical payments, a lump sum and interest. The appellant had not applied to set aside the statutory demand and was seeking in Hong Kong to have the order varied or set aside because of changed circumstances.

The appeal concerned whether sums due under the Hong Kong order could constitute the debt supporting a bankruptcy petition, particularly under Insolvency Rule 12.3(2)(a) or (3).

1. Appeal allowed. The bankruptcy order was set aside, the petition was restored for hearing before St Albans County Court, and the order of Rimer J was set aside.
2. Arden LJ held that the periodical-payment provisions were a maintenance order for the purposes of section 21 of the Maintenance Orders (Reciprocal Enforcement) Act 1972. The separate lump-sum provision was not a maintenance payment: on the wording and structure of the Hong Kong order, it represented division of property between the spouses.
3. An order capable of registration under the 1972 Act, but not registered, does not fall within Insolvency Rule 12.3(2)(a). The relevant obligations arise under the foreign order, not under proceedings under that Act.
4. Rule 12.3(3) applied to the periodical payments. The court had to assume that those provisions were variable by the Hong Kong court. Under Harrop v Harrop [1920] 3 KB 386, a variable foreign maintenance order was unenforceable in the United Kingdom at common law. The periodical-payment debt was consequently non-provable in bankruptcy.
5. The lump-sum provision was not variable. There was no equivalent common-law impediment to enforcement, so it was not excluded from proof by Rule 12.3(3). Thorpe LJ agreed with the legal conclusions but noted that, on remission, the petitioner would have to establish what part of the lump sum remained unpaid. The court had no evidence on interest under Hong Kong law.

• Court of Appeal (Civil Division): Appeal allowed: [2002] EWCA Civ 931. The bankruptcy order was set aside, the petition restored for hearing before St Albans County Court, and the order of Rimer J set aside.
• High Court, Chancery Division (Rimer J): The appellant’s appeal against the bankruptcy order was dismissed.
• St Albans County Court (District Judge Field): A bankruptcy order had been made against the appellant.