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Family Law

The leading authority on all aspects of family law

20 JAN 2009

ANCILLARY RELIEF/BANKRUPTCY: Y v Y

(Principal Registry; HHJ Plumstead; 20 January 2009)

On the day of the first directions hearing in the couple's ancillary relief proceedings, the husband petitioned for his own bankruptcy; the bankruptcy order was made on the basis that the husband had unsecured debt of £73,640. The wife obtained a declaration that the legal owner of the matrimonial home, the husband's cousin, held the property on trust for the husband and the wife. In the ancillary relief proceedings the husband was found to have a gross earning capacity of £160,000 per year, and to have failed to disclose the ultimate sources of and disposal of these earnings. The wife was awarded indemnity costs. However, the trustee in bankruptcy was now seeking the sale of the matrimonial home, opposed by the wife. The wife applied, under Insolvency Act 1986, s 282, to annul the husband's bankruptcy petition, arguing that the petition had been motivated by a desire to frustrate the wife's ancillary relief application, and that the husband would be able to pay his debts from his considerable income.

The court dismissed the wife's application: while the husband's motive had been a desire to frustrate the wife's ancillary relief application, the true test was liquidity. Mainly as a result of failing to pay instalments, the husband was unable to pay the sums now due. The findings as to the husband's income related to the period subsequent to the petition, and no findings had been made as to his capital position. In addition, there was no evidence that the husband could pay the costs of the bankruptcy trustee

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