Exceptional Circumstances in Applications for Sale

Grant & Another v Baker [2016] EWHC 1782 (Ch)

The trustee had applied for the sale of the bankrupt’s home which he jointly owned with his wife. They had a disabled adult daughter (aged 30) living with them, who had global developmental delay, dyspraxia and obsessive compulsive disorder, and the mental age of an 8/9 year old, and who was incapable of living on her own.

The District Judge, accepted that the home was owned in equal shares and that the trustee was entitled to the bankrupt’s former share. A sale of the home was ordered but this was suspended until the daughter was no longer resident at the home, an indefinite period.

The trustee appealed.

S335A(2) IA 1986 (Rights under trusts of land) provides that where an application is made in respect of a bankrupt’s house which is or has been the home of the bankrupt or the bankrupt’s spouse the court must consider:

• the conduct of the spouse…, so far as contributing to the bankruptcy,

• the needs and financial resources of the spouse, and

• the needs of any children, and

• all the circumstances of the case other than the needs of the bankrupt.

S.335A(3) provides”… after the end of the period of one year beginning with the first vesting … of the bankrupt’s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt’s creditors outweigh all other considerations.

The trustee therefore appealed on the grounds that an indefinite postponement was not justified as the DJ had placed too much weight upon “the needs of any children”
Henderson J agreed and allowed the appeal and ordered a postponement in the sale for 12 months to July 2017. He agreed that there were exceptional circumstances such that a suspension of the order was justified, however in exercising that discretion he found the DJ had made an error in not placing more weight upon the purpose of the bankruptcy legislation, being the realisation of the assets for distribution to creditors.

On the facts the Judge found that it was reasonable for the child to move to rented accommodation and that a year was sufficient period for this to be organised.
Exceptional circumstances are often pleaded but this case is a reminder that once a year has passed from vesting the scope for significant suspension is , while fact specific, very limited, see Brittain v Haghighat (21010) ECHA 1524 for truly exceptional circumstances leading to a suspension of 3 years.

If you wish to discuss this case, or any other matter, please call Gary Player on 01403 711869.

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