The court will not always set aside a property transfer order in matrimonial proceedings where the party transferring the property, as part of a clean break order, becomes bankrupt shortly afterwards, and there are allegations of lack of consideration or transfer at an undervalue.
In Hill and Bangham v Haines, the Court of Appeal held that the ability of one spouse to apply to court for an order under the Matrimonial Causes Act 1973 was a right conferred and recognised by law. It had value in that its exercise might lead to court orders entitling one spouse to property or money, from or at the expense of the other, and the value of that right was the value of the property or the money.
A property adjustment order was therefore made for consideration. Such an order could still be set aside under s339 Insolvency Act despite the court order if there was evidence of collusion between the parties in order to prejudice the bankrupt's creditors, or there had been fraud or mistakes or misrepresentations. However, it would be contrary to the objectives of the 1973 Act if every ancillary relief order was automatically subject to nullification by a trustee in bankruptcy where one party had become bankrupt after the order was made.
Things to consider
Trustees in bankruptcy will now have an uphill struggle in setting aside such orders unless there is evidence of fraud, mistake, misrepresentation or collusion.