Paulin v Paulin & Anor

Judgment

Lord Justice Wilson:

A: THE ISSUES

A tactic now occasionally adopted by a devious husband confronted with an application by his wife for financial relief ancillary to divorce proceedings is to issue proceedings for a bankruptcy order to be made against himself. Following the making of such an order and upon the appointment or other emergence of a trustee in bankruptcy, all the husband’s assets vest in the trustee pursuant to s.306 of the Insolvency Act 1986 (“the Act of 1986”), with the result that the divorce court suddenly becomes disabled from ordering him to make capital provision for the wife. The wife’s response to the tactic is often to apply in the bankruptcy proceedings for the bankruptcy order to be annulled; and a convenient practice has arisen for the bankruptcy proceedings thereupon to be transferred to the court which is conducting the divorce proceedings so that the same judge, at the same time, can determine the wife’s application for annulment of the bankruptcy order and, in the light thereof, her application for ancillary relief.

Having duly conducted a substantial hearing of both such applications at the same time, the judge in the present case gave a long, reserved, judgment, by which he explained why he had decided to refuse the wife’s application for the bankruptcy order against the husband to be annulled and had thus decided to adjourn her application for ancillary relief. But, before his order was drawn, the wife’s counsel persuaded the judge to appoint a further hearing at which to receive further argument, following which he changed his mind and gave a second, long, reserved, judgment, by which he explained why he had decided to grant the wife’s application for the bankruptcy order to be annulled and had thus decided to order the husband to make a substantial lump sum payment to her.

In this appeal, brought by the husband, two issues arise:

(i) Was it proper for the judge to reverse his decision upon the central question whether to annul the bankruptcy order?

(ii) What principles govern the determination of an application to annul a bankruptcy order made on the bankrupt’s own petition and, in the light of them, did the judge err in ultimately annulling the bankruptcy order?

B: INTRODUCTION

The husband’s appeal is against two of the orders made in these proceedings by Mr Richard Anelay QC, sitting as a deputy judge of the High Court, Family Division, Principal Registry, on 23 May 2008, namely:

(a) an order that t