It is usual for a family’s biggest asset to be the family home and, in many cases, the value of the house dwarfs the value of the rest of the assets. In such cases, when a marriage breaks up the financial arrangements often allow one spouse to remain living in the house, with the other spouse entitled to a share of the proceeds when it is sold. In normal circumstances, that is the end of the matter, but a rceent case raises an unpleasant possibility when one of the spouses is subsequently made bankrupt.
Recently, the Court of Appeal had to consider a case in which just such an arrangement had been made. After their divorce, Mr and Mrs Avis agreed a consent order under which Mrs Avis stayed in the house and owned two thirds of it. Her ex-husband’s entitlement was agreed as one third of the value of the house, which he could only have when it was sold.
Mr Avis was subsequently made bankrupt and some years later his trustee in bankruptcy sought an order for the sale of the house. Mrs Avis argued that the trustee took over the rights that Mr Avis had been granted under the consent order – i.e. the right to a third of the eventual sale proceeds of the house.
The Court of Appeal could not accept Mrs Avis’s argument and ruled that the trustee in bankruptcy could apply for an order to sell. Mrs Avis’s right to resist a sale was qualified by the right of the other person interested in the property – in this case the trustee, who had acceded to her ex-husband’s rights.