Transfer of property order set aside on bankruptcy

Hill and another v Haines ChD TLR 14 May

In ancillary relief proceedings under ss23–25 of the Matrimonial Causes Act 1973 the Family Court made a property adjustment order, requiring the husband to transfer his interest in a property known as Strudges Farm, Dunhampton, Worcestershire, to the wife. The family judge adjourned an application for a lump sum order because of the risk that the husband might become bankrupt as a result of his own deliberate actions, thereby guarding against the eventuality that the trustee in bankruptcy might seek to impugn the transfer of property. The husband was made bankrupt on his own petition and the appellants were appointed trustees in bankruptcy. The transfer was executed and the property sold. The trustees applied to the court for an order under s39(3) of the Insolvency Act 1986 to set aside the transfer on the ground that it was a transaction at an undervalue, because the wife had provided no consideration (s339(3)(a)) or the value of the wife’s consideration in money or money’s worth was significantly less than the value of the property transferred (s339(3)(c)). Section 39 of the Matrimonial Causes Act 1973 provides that the fact that a settlement for transfer of property has to be made in order to comply with a property adjustment order does not prevent the settlement or transfer from being a transaction that could be set aside under s339 of the Insolvency Act 1986. The wife submitted that she was to be regarded as having given consideration equivalent to the value of the property transferred, relying on In re Abbott (a bankrupt) [1983] Ch 45 and In re Kumar (a bankrupt) [1983] 1 WLR 224, which established the proposition that a transfer or settlement made pursuant to a compromise of ancillary relief proceedings was supported by sufficient consideration to prevent an order under s339 being made. On this basis, the district judge had dismissed the trustees’ application.