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Family Law

The leading authority on all aspects of family law

13 MAR 2008

Margaret Hatwood & Sandra Bayne: Haines v Hill: The Division of the Spoils

Margaret Hatwood and Sandra Bayne, Associates, Thomas Eggar

In May 2007 the High Court decision in Hill v Haines [2007] EWHC 1012 (Ch), [2007] 2 FLR 983 overturned the long-held understanding among family lawyers that a decision made after a fully contested hearing could not be challenged by a trustee in bankruptcy. This led to concern among family lawyers that trustees in bankruptcy would rummage through their filing cabinets to see if they had any cases where orders made in divorce proceedings could be set aside. The decision meant that any wife who had obtained her divorce settlement following a contested hearing in the last 5 years, whose husband subsequently went bankrupt, could find the assets that had been transferred to her vulnerable to attack, even where, as in Haines, the transfer pre-dated the bankruptcy.

Thankfully for such wives, a strongly constituted Court of Appeal overturned this decision on appeal in Haines v Hill [2007] EWCA Civ 1284, [2008] 1 FLR (forthcoming), where Thorpe LJ said with admirable clarity:
'There is an obvious tension between the statutory scheme for the protection of a bankrupt's creditors and the statutory scheme for the financial protection of the bankrupt's former wife and child. Bankruptcy Acts and Matrimonial Causes Acts may be said to compete for shares in the fund which will always be incapable of satisfying both. Clearly if the act of bankruptcy precedes an order made under the Matrimonial Causes Act the legal and practical outcome is straightforward. Difficulties arise when the order under the Matrimonial Causes Act precedes the bankruptcy.'

In this article, Margaret Hatwood and Sandra Bayne evaluate the decision of Haines and it's impact on family and insolvency law.

For the full article, see February [2008] Family Law journal.

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