August 26, 2008 – 12:04 am
From Family lore
written by John Bolch on Saturday, August 23, 2008
OK, Bank Holiday weekend… time for some law. I’ve been meaning to look at the case of Paulin v Paulin [2008] EWCA Civ 900 in detail for some while, but other things have got in the way.
The Facts: The only “obvious asset” available to satisfy the wife’s financial claims was a sum of about £1,088,000, representing the proceeds of sale of a property that had been used briefly as a matrimonial home and then, following the husband’s departure, by the wife and children as a home. The property had been owned by an Isle of Man company which, by the time of the substantive hearing, was in liquidation because it was apparently unable to pay an alleged debt, in the sum of £1,243,000, for which the creditor had obtained judgment. The husband claimed that this was a genuine debt, that the only asset of the company was the proceeds of sale of the property and that that sum would therefore have to be used towards discharging the debt.
The wife applied to have the judgement against the company set aside, and this application was listed for hearing alongside her application for ancillary relief. The judge, Mr Richard Anelay QC, determined that the alleged debt was bogus and that “the husband had engineered it in order to eliminate from the reach of the family court an asset which might be applied towards discharge of his obligations towards the wife under matrimonial law”. He therefore set aside the judgment. He also found that the company was the alter ego of the husband, and accordingly the proceeds of sale were, in principle, “available for the discharge of the husband’s obligations to the wife in terms of ancillary relief”.
However, in 2006, with the wife’s ancillary relief application well under way, the husband had made himself bankrupt. The wife applied for annulment of the bankruptcy, and that application was also transferred for hearing alongside her application for ancillary relief. It is, of course, established law that an order for bankruptcy ought not to have been made if, at the time when it was made, the person adjudged bankrupt was able to pay his debts as and when they fell due, and this was the wife’s contention. The judge initially indicated in a written judgment on 18th March 2008 that he intended to dismiss the wife’s application, as he found that, as at the date of the bankruptcy, the husband had not been able to pay his debts as they fell due. However, after discussions in court and afterwards, a further hearing was fixed at which the judge reversed his previous decision, and, in an Amended Judgment, ruled that the bankruptcy order should be annulled. He therefore awarded the wife the entire proceeds of sale, in respect of her costs and by way of a lump sum payment. The husband applied for permission to appeal, claiming that the judge was wrong to annul the bankruptcy order.
The Decision: In the Court of Appeal Lord Justice Wilson found that: “the judge fell into error in concluding that he could, following delivery of the judgment on 18 March 2008, make a volte-face so vast and so central as that which he made in the Amended Judgment” and that: “the obverse reasoning in the judge’s earlier judgment seems to me, almost as a matter of logic, to afford to the husband arguable grounds for contending that the reasoning in his later judgment is flawed”. He therefore granted the husband permission to appeal.
Commentary: As Lord Justice Wilson stated, speciously making themselves bankrupt is “a tactic now not uncommonly employed by some devious husbands intent upon obstructing the claims of their wives following divorce”. However, if the judge has already clearly indicated that he found that the husband was not able to pay his debts when they fell due, then it is very strange that he should have made a complete about-turn without hearing any fresh evidence. He was apparently persuaded that he had power to reverse his earlier judgment by reference to the decision in Re: T (Contact: Alienation: Permission to Appeal) [2003] 1 FLR 531, but this didn’t hold much water with Lord Justice Wilson who, amusingly, had been the trial judge in that case, and whose reasons the Court of Appeal had held to be deficient.
Posted in Professional Standards, Uncategorized | No Comments »
Loading ...