The family home will often be the most important matrimonial asset during any divorce case, and a...
In a recent appeal brought by the trustees in bankruptcy in Grant and another v Baker and another [2016] EWHC 1782 (Ch), [2016] All ER (D) 108 (Jul) the court allowed the trustee’s application to appeal against an order that the sale of the bankrupt’s home be postponed indefinitely.
Facts
Mr Baker had been made bankrupt on an HMRC petition that arose from failures on the part of his accountant in relation to his tax returns. Mr Baker was married and had three children. Two were independent adults. The oldest, Samantha, was born with global development delay, having at the age of 30 the mental age of an eight- or nine-year-old child. She also has dyspraxia and OCD. She has difficulty with moving, is incapable of living on her own and there is no prospect of her condition improving. Mr Baker’s trustee in bankruptcy applied to sell the family home (in which Mr and Mrs Baker each had a 50% share).
The Court at first instance made an order postponing the sale of the bankrupt’s home for as long as his adult daughter resided there. It held, on appeal, that the district judge had correctly ruled that there were exceptional circumstances, within the meaning of section 335A of the Insolvency Act 1986 (IA 1986), which included circumstances where a child of a bankrupt suffered from a medical or mental condition and would be impacted by being required to move due to the sale of the home.
However, it was further held that the judge had disproportionately erred in exercising her discretion by ordering an indefinite postponement of the sale of the property. The Court of appeal instead ordered a further postponement in the sale for 12 months.
This case shows the importance of understanding that while the presence of exceptional circumstances is a necessary precondition to displace the presumption that the interests of the creditors outweigh all other considerations, the simple fact of exceptional circumstances does not prevent the court from making an order for sale.