Personal Insolvency – Bankruptcy

S.335A Insolvency Act 1986

Foyle & Foyle v Turner (2007)

Unreported

The trustee in bankruptcy of Mr Foyle applied for an order for possession and sale of the matrimonial home, which was jointly owned by Mr and Mrs Foyle. The trustee's application was made some 13 years after the bankruptcy order, at which time there was no equity in the property. Since the order was made, house price inflation had created significant equity.

Mr and Mrs Foyle appealed against the decision on the basis that the decision contravened Articles 6 and 8 of the European Convention of Human Rights ("ECHR") (right to a fair and expeditious hearing and right to respect for home and family life). The court considered whether the 13 year delay was an "exceptional circumstance" within section 335A of the Insolvency Act 1986 and whether this would be sufficient to rebut the statutory presumption in favour of creditors.

It was held that there was no violation of Article 6 as the administration of a bankrupt's estate was not a process which resulted in the determination of the civil rights and obligations of the bankrupt.

In considering Article 8, the judge referred to the balancing exercise required of the court under section 335A IA 1986. The only circumstance relied upon by Mr and Mrs Foyle was the 13 year delay. It was held that "exceptional circumstance" required something out of the ordinary run of events and a bankrupt could not resist realisation of his estate to pay the debts of his bankruptcy simply because the creditors may not have pressed for payment since the bankruptcy order was made. Therefore, this was not an exceptional circumstance sufficient to deprive creditors of the presumption in favour of realisation of the property to pay their claims.

Nicholls v Lan

(2006) EWHC 1255 Ch

Mr Nicholls, a former solicitor, was made bankrupt on 1 September 1995. At the date of the bankruptcy order, Mr Nicholls and his wife were joint owners of a property. A trustee in bankruptcy was appointed on 19 May 2003. The trustee made an application for possession and sale of the property on 2 August 2004 under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. and section 335A of the Insolvency Act 1986

At the hearing of the trustee's application, the District Judge found that there were "exceptional circumstances", on the basis of psychiatric reports on Mrs Nicholls. The assumption in favour of the interests of the bankrupt's creditors was disapplied and...

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