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Bankruptcy and its Impact Upon Proceedings

Family and Divorce Law

In the case of Arif v Zar and another [2012], The Court of Appeal found that the Family Division had no jurisdiction to transfer an application to annul a bankruptcy order from the Chancery Division.

The first respondent, the husband, was declared bankrupt in 2011.  The wife applied for an annulment of the order claiming it would severely prejudice her application for ancillary relief.

The wife argued that many of the husbands debts were shams and the creditors were in fact family and friends who had made up the debts to aid his bankruptcy.  The wife argued that if these were disregarded there were a considerable amount of assets from which an award could be made.  This was denied by the husband and the trustees-in-bankruptcy.

The judge in the Family Division made an order inviting the Bankruptcy Court to transfer the matter to the Family Division so the annulment application could be heard alongside the ancillary relief proceedings.

The Bankruptcy Court declined to transfer the matter citing that it could be dealt with more cost effectively by the Chancery Division.  If the bankruptcy was wrapped up in lengthy ancillary relief proceedings it would cause problems with the bankruptcy.

The wife argued that she had been put at a considerable disadvantage as she would have no way of testing his financial documents and could not push for proper disclosure or cross-examination.  The Family Division judge therefore made an order transferring the annulment hearing to the Family Division.

The husband and trustees appealed.  The appeals would be allowed.

The Family Division judge did not have the powers to transfer the bankruptcy annulment hearing from the Chancery Division.  The proper process would have been an appeal to the Chancery Division.

Divorce Solicitors and Lawyers Eastbourne, Hailsham, Polegate, East Sussex

If you would like advice on divorce and finances please contact our Family Law Department for a free initial interview on Eastbourne 01323 727321 or Hailsham 01323 841481.

Nicholas Dennis
Nicholas Dennis
Alexandra Funnell
Alexandra Funnell
Guy Brown
Guy Brown
Carolyn Richards
Carolyn Richards