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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

21 MAY 2013

McRoberts v McRoberts [2012] EWHC 2966 (Ch); [2013] BPIR 77

(Chancery Division, Hildyard J, 1 November 2012)

By a consent order in ancillary relief proceedings, H was ordered to pay a lump sum of £450,000 in instalments to W. He did not make the instalment payments and a bankruptcy order was made against him by a third party. W submitted a proof in H's bankruptcy for £244,000 odd, but there was no dividend paid. H was discharged, whereupon he was released from all bankruptcy debts provable in his bankruptcy except as provided in s 281(5) of the Act which covered the debt arising from the consent order made in family proceedings. H applied under s 281(5) of the Act to be released from that debt. Dismissing the application, Hildyard J applied Hayes v Hayes [2012] EWHC 1240 (Ch); [2012] BPIR 739. The Court could exercise its discretion to release H from the debt at any time after. The discretion was unfettered, and had to be exercised by reference to all the relevant circumstances as they existed at the date when the application was determined. The ultimate balance to be struck was between (a) the prejudice to the respondent/obligee in releasing the obligation if otherwise there would or might be some prospect of any part of the obligation being met, and (b) the potential prejudice to the applicant's realistic chance of building a viable financial future for himself and those dependent upon him if the obligation remained in place. In striking that balance, the burden was on the applicant, and unless satisfied that the balance of prejudice favoured its release, the obligation should remain in place. In all the circumstances of this case, the balance remained in favour of keeping in place the obligation and there was no sufficient reason to override the default provision. 

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