Trustee in bankruptcy cannot pursue deceased bankrupt’s claims against wife
In my career I have rarely had to step into the arcane world of the Chancery Division. As a young, timid and very green lawyer back in the 1980s I would occasionally be tasked with appearing before a Chancery Master in the Royal Courts of Justice. Apart from the fear the Chancery Masters instilled in me (they all seemed to be old and intimidating), and my mystification at its strange and impenetrable ways, my main recollection of Chancery is how deathly quiet its corridors were compared to the hustle and bustle of the Queen’s Bench Division. Chancery was different.
And now I find myself venturing once more into Chancery, albeit only on the written page. The reason for revisiting those stuffy corridors is the recent judgment Robert v Woodall, an appeal in the Chancery Division with a family law connection.
Robert v Woodall concerned an ingenious, and if I may say so rather cheeky, attempt by a trustee in bankruptcy to recover money for his creditor from the Bankrupt’s estate. There were several strands to the Trustee’s efforts on behalf of the creditor, but the one that is of interest concerns his effort to pursue financial claims against the Bankrupt’s former wife, as if he were the husband in the divorce case. In other words, he sought to take up the financial claims against the wife that the husband could have made had he lived.
Before I go on I should explain that references in this post to ‘the Bankrupt’ and ‘the husband’ relate to the same person. I felt it was clearer to use different terms, depending upon whether I was referring to the bankruptcy or the divorce. Apologises if you find this confusing.
A little background. The facts were that the Bankrupt and Ms Woodall were married in 1999. The marriage broke down and Ms Woodall commenced divorce proceedings in 2008. On 7 July 2009 the Bankrupt was made bankrupt on the creditor’s petition. On 16 July the District Judge in the divorce court approved a consent order, setting out a financial/property settlement agreed between the parties. For the purposes of this post I do not need to set out the terms of the settlement, although it should be noted that the District Judge was not made aware of the bankruptcy. The final sad fact I need to relate is that the Bankrupt took his own life in November 2014.
The Trustee commenced proceedings in 2015. He sought to have the consent order declared void because at the time it was made the husband was a bankrupt. If the consent order was void then the matrimonial proceedings had not been settled and the Trustee therefore sought to take up the husband’s financial claims on divorce against the wife. As I have indicated, the Trustee’s arguments in support of his application were ingenious, but essentially were along the lines that if, as section 25 of the Matrimonial Causes Act states, the divorce court must, when considering financial claims, take account of the financial obligations of each of the parties, then it stood to reason that he could pursue a claim on behalf of the creditor, to whom the husband had a financial obligation.
The Trustee was successful in having the consent order declared void, but the court struck out his application for financial orders against the wife. The Trustee applied for permission to appeal against the striking out, but permission was refused. The Trustee then sought to renew his application for permission, and that application is dealt with in this judgment, handed down by Robin Dicker QC, sitting as a Deputy High Court Judge.
In his judgment Judge Dicker deals quite comprehensively with the arguments raised on behalf of the Trustee by his counsel James Pickering, but one does not need to read far into the judgment to see which way things are going.
At paragraph 12 he says:
“I confess to some initial surprise at the suggestion that a trustee in bankruptcy is entitled, after the death of the bankrupt, to apply for an order for financial relief against the surviving party to the marriage, for the benefit of the bankrupt’s creditors, and that initial reaction was only reinforced during the course of Mr Pickering’s submissions.”
Unfortunately for the Trustee the insuperable hurdle for his claim was the long-established point that a financial claim on divorce does not survive the death of either spouse. Once the husband died a financial claim on divorce was no longer possible. The Trustee could not be put in a better position than the Bankrupt (or at least his estate) would have been, in the absence of the bankruptcy. Accordingly, the Trustee’s appeal had no real prospect of success, and his application for permission was therefore dismissed.
The full report of Robert v Woodall can be found here.