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Family Law

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03 MAY 2007

BANKRUPTCY/ANCILLARY RELIEF: Hill v Haines [2007] EWHC 1012 (Ch)

(Chancery Division; Judge Pelling QC sitting as a High Court judge; 3 May 2007)

In ancillary relief proceedings, the husband was ordered to transfer his interest in the matrimonial property to the wife and to make nominal periodical payments; the wife's lump sum application was adjourned. It had been made clear to the ancillary relief judge that the husband was hopelessly insolvent and that there was a risk that he would be made the subject of a bankruptcy order. In the event the husband was made bankrupt on his own petition. The trustees in bankruptcy applied to have the property transfer set aside on the basis that it was a transaction at an undervalue. At first instance the district judge accepted that the wife had given consideration for the transfer, relying on Re Abbott [1983] Ch 45 and Re Kumar [1993] 1 WLR 224.

Allowing the appeal of the trustees, an applicant for ancillary relief did not give consideration in money or money's worth for relief obtained. The position was the same whether the matrimonial court made an order following a contested hearing or following a compromise agreement: in neither case did the receiving party give, nor the paying party receive, consideration. Since an agreement to compromise an ancillary relief claim could not give rise to binding contractual obligations, and an applicant for such relief had no cause of action, an applicant could not give consideration by simply compromising claims by a settlement agreement that was, by definition, not binding.

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