The claimant appealed against a decision that her former husband’s one third interest in the matrimonial home vested in his trustee in bankruptcy (the first defendant) free from any rights asserted by her, so permitting an order for possession and sale of the property. The claimant argued that pursuant to a matrimonial consent order made prior to the bankruptcy, she had a right of exclusive occupation of the property until remarriage, cohabitation or death. The trustee’s rights were therefore fettered pursuant to s283(5) of the Insolvency Act 1986 and an order for possession and sale could not be made until one of the trigger events occurred.

The court found that although co-owners could agree the postponement of sale and who was to occupy a property, such an agreement was not determinative and did not give rise to any absolute rights, whether proprietary or personal. By virtue of ss 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996, any such agreement could be varied or discharged by the court. As no absolute rights had been acquired, there was no conflict between s283(5) and the principles to be applied under s335A of the Insolvency Act.

This decision means that, prior to a bankruptcy, a husband and wife cannot come to an occupation agreement to frustrate the claims of the creditors in the subsequent bankruptcy; the court retains jurisdiction to intervene and order a sale.

Avis v Turner and Avis