Kremen v Agrest

Section 5 of the Debtors Act 1869 requires the debtor to satisfy the debt before a committal order can be discharged. Payment directed by the court from a court fund is not necessarily payment by the debtor. That is especially so where the debtor’s beneficial entitlement to the fund has not been established. A third-party payment may in some circumstances support discharge, but the court distinguished that situation from a payment made only because of a court order and from funds not clearly belonging to the debtor.

The appellant, formerly married to the respondent, pursued financial relief and related maintenance obligations. A suspended committal order had been made under section 5 of the Debtors Act 1869 after the respondent failed to pay sums ordered by the court.

The respondent did not attend the later hearing, having gone to Russia. Holman J concluded that an earlier order directing payments to the appellant from proceeds held in a court account had discharged the liability and irrevocably discharged the committal order. The appellant appealed, arguing that the statutory condition was not met because the payment was made by the court and the funds could not be treated as the respondent’s money.

1. Appeal allowed. The Court of Appeal set aside the order irrevocably discharging the suspended committal order and warrant. The warrant remained capable of execution.
2. Section 5 of the Debtors Act 1869 provides for discharge where the debtor satisfies the debt. Payment made out of a court fund by order of the court did not satisfy that statutory requirement.
3. The proceeds of sale held in the court account could not properly be treated as the respondent’s equitable entitlement without an investigation and conclusive finding on beneficial ownership.
4. Arden LJ added that section 5 may apply where a person arranges for a third party to pay, although that was materially different from the present case. The funds here were paid only pursuant to a court order and could not clearly be said to belong to the respondent.
5. The court assumed, without argument, that “out of custody” applied with necessary modification to discharge of a suspended committal order. The directions hearing and trial were to proceed before Mostyn J.

• Court of Appeal (Civil Division): Appeal from an order of Holman J in the Principal Registry of the Family Division. The appeal was allowed and the paragraph irrevocably discharging the suspended committal order and warrant was set aside.