Monday, 24 May 2010

Distributive Justice, Family Home Rights and the HRA


Under the Bankruptcy Act 1914 Courts could exercise their discretion to prevent trustees from evicting insolvents or selling their family homes for substantial periods (“bankruptcy equity”). The Cork Report recommended that Courts should continue to exercise the equitable jurisdiction in order to protect innocent family members. The Insolvency Act 1986 allows the bankrupt and his family to stay in the family home for 12 months after which they may be evicted unless there are “exceptional circumstances.” It is arguable that the grace period would give the family ample time to make suitable alternative arrangements especially where they have lived in the family home for a very long time. Nonetheless, the discretion given to Courts to extend the grace period reflects the anticipated problems with the procedural justice model governing insolvency and the need for distributive justice in certain circumstances. This is reinforced by the fact that it is generally unclear what constitutes the “exceptional circumstances.” In Re Citro (Bankrupts) [1991] Ch. 142 C.A., it was held that the “distress” of an evicted family was not “exceptional.” However, the wife’s illness (Judd v Brown [1997] BPIR 470) and the need to look after a senior terminally-ill spouse (Re Bremner [1999] BPIR 185) have been held to be exceptional circumstances. Equally, in Claughton v Charalamabous [1998] BPIR 558, the sale of the family home was postponed until such a date when the disabled and frail wife vacated or passed on.


One may therefore advance that after the one year period, the Court may still exercise an equitable jurisdiction to protect the innocent family member where the latter is gravely ill or house-bound. This no doubt reflects the recommendation by Cork Committee. Nonetheless, where the Court holds that it would be socially unjust to protect the family members and disregard the interests of the creditors in the circumstances, the aggrieved family member may actually feel injustice due to the fact that although the outcome may be deemed to be fair the process by which the Court made the decision was not fair. In other words, the aggrieved family member that would be evicted after the 12 months period may argue that his human rights (family home rights) were unfairly disregarded. This means that the Court may not sacrifice procedural justice on the altar of distributive justice despite the unfairness of the outcome. Nonetheless, it is very much uncertain whether the application by a trustee (acting on behalf of the creditors) for an order for sale under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 may be subjugated by the invocation of home rights under the Human Rights Act 1998 (HRA) after the 12 months period and where there are no exceptional circumstances. Given that the rights of the creditors do not constitute the pressing social needs or national security concerns that may legitimately constrain rights enshrined in the HRA, it is difficult to argue that the Court may exercise its equitable jurisdiction to disregard family home rights despite the fairness of the outcome. It is true that the grace period of 12 months is unreasonably short in many cases, however, giving regard to the hierarchy of rules in all cases would ironically result in the consistent neglect of creditors in a process that is aimed at paying debt owed to them.

1 comment:

George said...

Interesting write up thank you.

I have used your refferences in my case

best regards

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