Robert v Woodall

A trustee in bankruptcy cannot pursue an application under sections 23 or 24 of the Matrimonial Causes Act 1973 after the bankrupt spouse has died. Those provisions concern the adjustment of the financial position of the parties to a marriage and operate during their joint lives. A trustee cannot convert the bankrupt’s former matrimonial claim into a claim for the benefit of creditors. A secured provision order made during joint lives may, however, continue to have effect after death, and after-acquired property may remain available under the Insolvency Act 1986.

Permission to appeal should rarely be reconsidered. The relevant question is whether an exceptional irregularity occurred, such as the permission judge being misled or overlooking decisive authority.

The appellant was trustee in bankruptcy of Jonathan Chiam Elichaoff. The respondent was his former wife. Before the bankruptcy, the spouses agreed a consent order providing for periodical payments and repayment of a substantial sum. The order was approved after the bankruptcy order, without the bankruptcy having been brought to the matrimonial judge’s attention.

The Registrar declared dispositions under the consent order void under section 284 of the Insolvency Act 1986, struck out the trustee’s claim for financial relief under sections 23 and 24 of the Matrimonial Causes Act 1973, and struck out part of the undervalue claim. Morgan J refused permission on the financial-relief issue but granted permission concerning the alleged undervalue transactions and costs. The issues were whether permission should be renewed or set aside.

1. Financial relief claim. The renewed application for permission to appeal was dismissed. Applications under sections 23 and 24 of the Matrimonial Causes Act 1973 ceased to be possible after the bankrupt’s death. The statutory scheme is concerned with adjusting the financial position of the parties to a marriage while both remain alive. The absence of the express words found in section 27 did not create a different rule for sections 23 and 24.
2. The trustee could not rely on the broad definition of property in section 436 of the Insolvency Act 1986. A former spouse’s needs, obligations and responsibilities under section 25 could not be recharacterised as a post-death claim for the benefit of creditors. The trustee therefore had no real prospect of obtaining the proposed lump sum or property adjustment order.
3. The conclusion did not affect a secured provision order properly made during joint lives, which could continue to benefit one spouse after the other’s death. Nor did it prevent a trustee from having recourse to assets later acquired by a bankrupt under section 307 of the Insolvency Act 1986.
4. Reconsideration of permission. Ms Woodall’s cross-application was dismissed. Permission to appeal is not ordinarily reconsidered as an intermediate appeal on the merits. Under the principles stated in Nathan v SVI Smilovitch [2002] EWCA Civ 759 and Barings Bank Plc v Coopers & Lybrand [2003] C.P. 2, reconsideration is confined to exceptional cases involving an irregularity, such as the permission judge being misled or decisive authority being overlooked.
5. The description of the bankrupt’s evidence as arising from a statutory interview was inaccurate, and the failure to draw the Registrar’s attention expressly to the file note before judgment was handed down was regrettable. Nevertheless, Morgan J had the relevant material and was not misled. It was reasonably arguable that the Registrar had failed to deal with evidence capable of casting doubt on whether the payments were loans. The costs challenge likewise raised an arguable issue about the wider significance of the first claim.

Both the renewed application for permission and the cross-application were dismissed.

• High Court (Chancery Division): the renewed application for permission to appeal against the Registrar’s order was dismissed. The respondent’s cross-application to set aside permission previously granted by Morgan J was also dismissed.
• Registrar in Bankruptcy: the trustee’s claims under sections 23 and 24 of the Matrimonial Causes Act 1973 and section 339 of the Insolvency Act 1986 were struck out, with a costs order against the trustee.
• Morgan J: permission was refused on the financial-relief claim but granted on the alleged undervalue transactions and costs.