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Exceptional circumstances in section 335A of the Insolvency Act 1986.

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Exceptional circumstances in section 335A of the Insolvency Act 1986.

Maxine Reid Roberts and another (as Joint Trustees of the insolvent estate of Audun Mar Gudmudsson) v Mei-Lin [2024] EWHC 759 (Ch)

This case considered exceptional circumstances within the meaning of sections 335A and 336 of the Insolvency Act 1986 (IA 1986).  An immediate order for possession and sale of the former matrimonial home was sought by the Joint Trustees in Bankruptcy. Ms Lin, a former wife, who opposed the application on the basis that it was not just and reasonable under section 335(A) of the Insolvency Act 1986, cited the effect the behaviour of the Bankrupt had had on the mental health of herself and her son and whether it would be exacerbated by the making of an immediate order for possession of the former matromonial home. Further Ms Lin’s evidence cited that she suffered “quite significant levels of emotional and physical abuse from the bankrupt”, along with having to cope with the consequences of his methamphetamine and cocaine abuse. Ms Lin gave evidence that the bankrupt had left drug use paraphernalia in his flat which his children discovered on an access visit. Ms Lin gave evidence also that she felt very unsafe in the bankrupt’s company, particularly in relation to his violent and unpredictable outbursts. Further, that Ms Lin often worried for her and her children’s safety whilst in the bankrupt’s company. Evidence from the Islington Drug Abuse and Alcohol Service in the case stated that Ms Lin had profound and yet unresolved consequences of domestic abuse, and exhibited the primary symptoms of post traumatic stress disorder as a result. The court considered the question as to whether the medical evidence amounted to an exceptional circumstance within section 335A of the Insolvency Act 1986. The Judge found that when taken with the bankrupt’s misconduct the consequences of his behaviour must have had a significant effect on the mental health of his former wife and their son, and that they continued to trial prolonged unnecessarily by the misconduct of the Bankrupt.  The Judge found that the circumstances of the case were exceptional within the meaning of s.335A IA 1986, and were distinguishable from the circumstances Nourse LJ described in Re Citro. Further that the misconduct of the Bankrupt coupled with the delay in the conclusion of the Family Court represented exceptional circumstances under the terms of s 335A IA 1986. An immediate order for possession and sale was not made.

Judgement dated 10th April 2024.

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