Miles Croally acted for a wife who successfully defended her husband’s trustees in bankruptcy’s claim about his share in the matrimonial home.
The couple had previously agreed to reallocate equitable shares in the co-owned matrimonial home from 50%-50% to 98%-2% in favour of the wife.
The trustees in bankruptcy applied under section 339 of the Insolvency Act 1986 claiming the transaction had been at an undervalue. The High Court dismissed the application.
Impact of the judgment
The case has practical implications for trustees in bankruptcy, co-habiting spouses and those advising a spouse entering into ‘asset protection’ transactions.
Background to the case
The couple jointly owned their matrimonial home, acquired with the assistance of a joint mortgage. The equity in the property, after repayment of the mortgage, was estimated to be worth about £300,000.
In 2017, the husband wished to raise about £150,000 for his business projects. His wife agreed to remortgage the matrimonial home for this purpose.
She consulted solicitors who drafted a Deed of Severance which the couple signed in October 2017. The agreement severed their equal equitable interests in the property and changed them to a 98%-2% split in the wife’s favour.
(The Solicitors Regulatory Authority subsequently intervened in the solicitors’ practice).
The husband and wife jointly entered into the re-mortgage. The money raised from it was paid into a bank account held in their joint names but operated exclusively by the husband.
The husband spent the bulk of the £150,000 on his business projects which subsequently failed. In January 2019 he was made bankrupt.
The trustees in bankrupt sought a sale of the matrimonial home on the basis that it was owned 50%-50% in equity by the couple.
Read the judgment in Re Hussain – a bankrupt [2023] EWHC 493 (Ch)
Miles previously represented the ex-wife in Jackson v Song who successfully defended her former husband’s trustee in bankruptcy’s claim to set aside an out-of-court divorce settlement under section 339 of the Insolvency Act 1986.