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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

23 OCT 2012

Hayes v Hayes [2012] EWHC 1240 (Ch); [2012] BPIR 739

(Chancery Division, His Honour Judge Pelling QC (sitting as a judge of the High Court), 23 March 2012)

During matrimonial proceedings, a costs order was made against H in favour of W. H was made bankrupt on her petition in respect of that debt, even though the then r 12.3 of the Insolvency Rules 1986 did not permit a bankruptcy petition to be based upon such an order (although it was subsequently amended to allow for it). H's application to annul was dismissed, as W could merely have presented another petition. After H's discharge from bankruptcy, W served a second statutory demand (which was withdrawn) and a third statutory demand, which included the costs order and interest. H applied under s 281(5) of the Insolvency Act 1986 for his discharge from the debt. The application was dismissed, and H appealed. The appeal was dismissed. The discretion under s 281 of the Insolvency Act 1986 was unfettered and to be exercised according to the relevant circumstances as at the date of discharge. It was clear that the default position was that family orders had to survive the discharge of a bankrupt and remained subject to an order of the court requiring the discharge of the debt. That position stemmed from the desirability of ensuring that all family-related liabilities were met and not avoided through the bankruptcy procedure. The registrar had not acted wrongly by not directing that the debt should have been regarded as discharged. Nonetheless, H could apply for the dismissal of any bankruptcy petition presented on the basis of the third statutory demand as an abuse of process, despite the fact that a non-provable debt could be used to found a petition for a bankruptcy order.

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