(1)Nothing occurring in the initial period of the bankruptcy (that is to say, the period beginning with the day of the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition and ending with the vesting of the bankrupt’s estate in a trustee) is to be taken as having given rise to any home rights under Part IV of the Family Law Act 1996 in relation to a dwelling house comprised in the bankrupt’s estate.
(2)Where a spouse’s or civil partner’s home rights under the Act of 1996 are a charge on the estate or interest of the other spouse or civil partner , or of trustees for the other spouse or civil partner , and the other spouse or civil partner is made bankrupt—
(a)the charge continues to subsist notwithstanding the bankruptcy and, subject to the provisions of that Act, binds the trustee of the bankrupts’s estate and persons deriving title under the trustee, and
(b)any application for an order under section 33 of that Act shall be made to the court having jurisdiction in relation to the bankruptcy.
(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)On such an application as is mentioned in subsection (2) . . . the court shall make such order under section 33 of the Act of 1996 . . . as it thinks just and reasonable having regard to—
(a)the interests of the bankrupt’s creditors,
(b)the conduct of the spouse or former spouse or civil partner or former civil partner , so far as contributing to the bankruptcy,
(c)the needs and financial resources of the spouse or former spouse or civil partner or former civil partner ,
(d)the needs of any children, and
(e)all the circumstances of the case other than the needs of the bankrupt.
(5)Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt’s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt’s creditors outweigh all other considerations.
Cases considering section 336 8
[2011] EWCA Civ 1646 · 2 December 2011Interprets
The court interpreted the section 336 scheme as preserving the charge during bankruptcy while allowing the occupation rights to be regulated. It rejected the contention that the scheme created entrenched rights immune from the bankruptcy process. (see paras [20]-[26])
The court interpreted subsection (2) as preserving the charge notwithstanding bankruptcy, subject to the provisions governing matrimonial home rights and applications to regulate occupation. (see paras [20]-[25])
The court applied section 336(2)(a) to confirm that the matrimonial home-rights charge continues through bankruptcy and binds the trustee and persons deriving title under the trustee. The provision does not prevent later regulation of occupation rights. (see paras [20], [23]-[25])
The court treated section 336(2)(b) as directing that an application to regulate home rights be made to the court having jurisdiction in the bankruptcy. It supported the conclusion that the bankruptcy court could determine the occupation issue. (see paras [20], [24]-[25])
The court applied section 336(4)’s just-and-reasonable assessment, requiring consideration of creditors’ interests, the spouse’s conduct, needs and resources, children’s needs, and all circumstances other than the bankrupt’s needs. (see paras [12], [24]-[26])
The court confirmed that, after one year from the first vesting of the bankrupt’s estate in a trustee, creditors’ interests are presumed to outweigh all other considerations unless the circumstances are exceptional. (see paras [24]-[26])
[2010] EWCA Civ 1521 · 2 December 2010
The court treated section 336(4) as giving creditors’ interests priority over other considerations on a sale application made more than a year after the trustee’s appointment, subject to exceptional circumstances. It upheld deferred possession as a lawful balance of those interests and the family’s care needs (see para [13]).
The court treated section 336(5) as requiring the court to consider exceptional circumstances and balance the competing interests surrounding possession and sale. The lower judge’s decision to defer possession while allowing time for rehousing and care arrangements was upheld (see para [13]).
[2011] EWHC 3719 (Ch) · 16 December 2011
Confirms, by comparison, that the statutory expression concerning creditors’ interests can include payment of bankruptcy expenses. The absence of equivalent wording in section 310 supports the conclusion that creditor benefit is not a precondition to an income payments order (see para [10]).
What each judgment says about section 336 is in the case-law panel in the full Act.