ON APPEAL FROM THE HIGH COURT OF JUSTICE, FAMILY DIVISION
MR JUSTICE PETER JACKSON
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE KITCHIN
MR JUSTICE MANN
| Grazyna Mekarska (wife)
|- and -
(1) Martin Ruiz (Husband)
(2) Patrick Boyden (Trustee in Bankruptcy)
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Mr Justice Mann:
The decision below
The appeal from the ancillary provision part of the judgment
"(1) This section applies if
(a) one spouse or civil partner (Person A) is entitled to occupy a dwelling-house by virtue of
(i) a beneficial estate or interest or contract, or
(ii) any enactment giving that spouse the right to remain in occupation, and
(b)the other spouse or civil partner (Person B) is not so entitled."
In those circumstances, Person B has the following matrimonial home rights under subsection (2):
"(a) if in occupation, a right not to be evicted or excluded from the dwelling-house or any part of it by Person A except with the leave of the court given by an order under section 33;
(b) if not in occupation, a right with the leave of the court so given to enter into and occupy the dwelling-house."
"(8) These home rights continue a) only so long as the marriage … subsists except to the extent that an order under Section 33(5) otherwise provides… "
Here the rights were extended as narrated above.
"49. (1) An occupation order or non-molestation order may be varied or discharged by the court on an application by-
(a) the respondent, or
(b) the person on whose application the order was made.
(2) In the case of a non-molestation order made by virtue of section 42(2)(b), the order may be varied or discharged by the court even though no such application has been made.
(3) If a spouse's matrimonial home rights are a charge on the estate or interest of the other spouse or of trustees for the other spouse, an order under section 33 against the other spouse may also be varied or discharged by the court on an application by any person deriving title under the other spouse or under the trustees and affected by the charge."
"(2) Where a spouse's or civil partner's home rights under the Act of 1996 are a charge on the estate or interest of the other spouse or civil partner, or of trustees for the other spouse or civil partner, and the other spouse or civil partner is adjudged bankrupt—
(a) the charge continues to subsist notwithstanding the bankruptcy and, subject to the provisions of that Act, binds the trustee of the bankrupt's estate and persons deriving title under the trustee, and
(b) any application for an order under section 33 of that Act shall be made to the court having jurisdiction in relation to the bankruptcy."
"The applicant wife accepts that she is in no position to be able to continue to reside in the matrimonial home."
Any entitlement was therefore academic.
"(4) On such an application [and I pause that is an application under 336(2)(b)] the court shall make such order as it thinks just and reasonable having regard to:
(a) the interests of the bankrupt's creditors;
(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the [bankrupt's spouse or civil partner or former spouse or former civil partner]:
(i) the conduct of the [spouse, civil partner, former spouse or former civil partner], so far as contributing to the bankruptcy,
(ii) the needs and financial resources of the [spouse, civil partner, former spouse or former civil partner], and
(iii) the needs of any children; and
(c) all the circumstances of the case other than the needs of the bankrupt.
(5) Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt's estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt's creditors outweigh all other considerations."
The last of those subsections is particularly significant.
1) He referred to section 313A of the 1986 Act which restricts the trustee's rights to get possession and sale of low value homes. He complained that the statutory instrument which sets the relevant low value at £1,000 was ultra vires because that amount is absurdly low; no house is worth that small amount of money. I think he probably misunderstands what the relevant value is for these purposes; it is in fact the value of the interest in the house, not the house itself: see paragraph 5 of the Insolvency Proceedings Monetary Limits Order 1986 SI 1986/1996. But in any event, I do not see how that section has anything to do with this case.
2) He had various complaints about the conduct of the trustee. He criticised what he described as the inefficient conduct of the trustee in bankruptcy, as a result of which fees were run up which ought not to have been run up. Once he knew of Ms Mekarska's home rights he ought to have realised that there was no valuable asset, and indeed that it was onerous and he ought to have disclaimed it. I assume that this is another reason for saying that the award ought not to have proceeded on the footing that it operated only in relation to the then apparent surplus, which reflected very significant fees and expenses. Quite apart from the problem that this point was not taken before the district judge, this argument depends on the success of his section 336 argument. Since that fails, any argument along these lines fails too. There are other problems with the disclaimer analysis but I do not need to deal with them.
3) It was said that it was wrong to get an order from District Judge Wicks which said that the bankruptcy debts come first. This argument misdescribes the district judge's order. The district judge's order operated only in relation to the bankruptcy surplus. Without an annulment it could do no other. It represented the apparent shared approach to the argument. It does not appear that anyone suggested that the order could operate in relation to anything else, judging from the district judge's judgment.
4) Last Mr Bothwell took a point in relation to the Secretary of State's fees in the insolvency which he said amounted to taxation, and double taxation insofar as VAT is charged on them. He said that they were ultra vires. I accept that there are many who think that they are, to put it at its lowest, unattractive, but that is no basis for saying they are ultra vires and there is in any event no apparent link between that and the ancillary provision order in this case.
The appeal from the decision on annulment.
"(1) The court may annul a bankruptcy order if it at any time appears to the court—
(a) that, on any grounds existing at the time the order was made, the order ought not to have been made…"
Lord Justice Kitchin:
Lord Justice Thorpe:
Order: Application refused