Wendy Haines was awarded full ownership of the couple’s former matrimonial home in her Divorce settlement in February 2005. A month later, ex husband David Haines petitioned for bankruptcy.

His Trustee in bankruptcy was entitled to challenge transactions made shortly before the bankruptcy which he believed might have been designed to put assets beyond the reach of creditors. At the initial hearing before a District Judge in December 2006, Mrs Haynes successfully defended her right to keep the house, the Judge finding that she had given proper consideration (payment) in return for her husband’s share in the property.

However, upon appeal to the High Court in April this year the decision was overturned and Mrs Haines was ordered to give up half of the sale proceeds of the property. She appealed to the Court of Appeal.

Last month the Court of Appeal Judges unanimously overturned the High Court’s decision and reinstated the original Order that Mrs Haines was entitled to keep the house.

Former spouses of bankrupts can now rest easier in the knowledge that trustees in bankruptcy have an uphill struggle to overturning Orders unless there is clear evidence of dishonesty or collusion.