Published: 20 December 2016
A recent judgement has been published involving the dismissal of a claim by the trustee in bankruptcy under Sections 23 and 24 of the Matrimonial Causes Act 1973, where the bankrupt was deceased.
Elichaoff and Woodall married in 1999, with Woodall filing for their divorce in November 2008. This was only two months before a statutory demand was placed on Elichaoff, of which he was unable to pay, resulting in a bankruptcy petition being served against him in March 2009.
In a consent order agreed by the two in June 2009, Elichaoff was due to pay £24,000 to his wife and daughter each year, as well as an additional £1.4 million that he had previously borrowed from Woodall. The consent order was approved by a district judge in the months following the agreement. However, unbeknownst to the judge, between the agreement of the two parties and the approval of the consent order, Elichaoff was formally declared bankrupt.
Elichaoff’s trustee in bankruptcy then applied for the consent order to be made void after a period of six years had passed, during the 12 months following Elichaoff’s death. The declaration was on the basis that the order had not taken into account the fact that Elichaoff had been declared bankrupt. Ian Robert, the trustee, asserted that claims made under the Matrimonial Causes 1973 Act vested in him as part of the bankrupt’s estate, being property under s436 of the Insolvency Act 1986. He also suggested that a payment of £40,000 that Elichaoff made to his ex-wife was an undervalued amount and could therefore be voidable by the Insolvency Act. These allegations ledthe trustee to apply for an order that required Sarah Woodall to pay a sum of money equivalent to Elichaoff’s debts, under s23 and s24 of MCA 1973.
During a hearing in February 2016, Sarah Woodall fought against the demands, but the result of the hearing was that the dispositions under the consent order were void. However, the registrar also struck out the lump sum of Elichaoff’s debts and £40,000 sum of money at an undervalue, ordering the trustee to pay most of the costs Woodall incurred.
The trustee appealed the order to the High Court, which has also now ruled against him. Mr Robin Dicker QC agreed that Elichaoff’s rights under MCA 1973 came to an end after his death.
Robin Dicker QC confirmed that Matrimonial Causes applications by spouses ceased when one of them died. He then stated that his judgement did not affect cases where assets are obtained as after-acquired property in an order against a bankrupt or that, before the death of a spouse, an order for secured provision is obtained.
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