The High Court has dismissed an ex-wife’s appeal against a ruling that her former husband’s share of the home they owned together was held by his trustees in bankruptcy.
The couple had married and purchased the property in 2009. They had two children. In 2017, the wife presented a divorce petition and began financial remedy proceedings. The Family Court ordered that the husband’s interest in the property be transferred to the wife. Shortly before judgment was handed down, however, a bankruptcy order was made against the husband. As a result the judgment was subsequently set aside.
The husband’s trustees in bankruptcy issued an application for possession of the property and sought an order for its sale. The wife alleged that the husband had transferred his interest in the property to her in December 2018, in communications about their divorce via email and WhatsApp. However, a Deputy Judge found that that the transfer was ineffective because it had not been sanctioned by the Family Court.
The Deputy Judge found that there were exceptional circumstances in the wife’s favour under Section 335A(3) of the Insolvency Act 1986, because of the husband’s alleged misconduct in not informing the wife and the Family Court of the bankruptcy petition, and the mental health of the wife and the couple’s son. The wife was ordered to deliver up vacant possession of the property on 31 July 2032.
The trustees in bankruptcy appealed, arguing that the Deputy Judge had been wrong to find that there were exceptional circumstances and to defer the date on which the wife was required to deliver up vacant possession for so long. The wife cross-appealed, arguing that the Deputy Judge should have found that the husband had transferred his beneficial interest in the property to her during the email and WhatsApp exchange.
The Court considered that the emails and WhatsApp messages did not demonstrate that the husband had intended to immediately relinquish his interest in the property in favour of the wife. To the extent that the Deputy Judge had found otherwise, he had been wrong to do so. The parties had instructed solicitors, who might have been expected to be involved in the finalisation of any settlement agreement. One of the emails appeared to make the husband’s suggestion of the wife keeping the house conditional upon the children moving with him to Iceland. The language of the WhatsApp messages pointed more towards the husband agreeing to transfer his interest in the property as part of an overall divorce settlement, rather than his intending to do so immediately. Dismissing the wife’s cross-appeal, the Court concluded, albeit for different reasons, that the Deputy Judge had been right to hold that the husband’s beneficial interest in the property remained vested in him when he had been made bankrupt.
In the Court’s view, the Deputy Judge’s overall evaluation that there were exceptional circumstances was one that he was entitled to come to. However, the Court concluded that the wife should be required to deliver up vacant possession five years earlier, on 31 July 2027.
