Barca v Mears [2004]
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Barca v Mears [2004] EWHC 2170 revolved around the issue of whether the balance struck in Re Citro [1991], particularly in relation to the postponement of a sale of a property under Section 335A of the Insolvency Act 1986, might have been too much in favour of creditors and whether it was compatible with the European Convention on Human Rights (ECHR).
The claimant was declared bankrupt, and the defendant was appointed as his trustee in bankruptcy. The trustee sought a sale of the property under Section 335A of the Insolvency Act 1986. The judge ordered the sale to proceed, with the proceeds being held until the beneficial interests could be determined. The claimant sought a postponement of the sale until his son completed his education, arguing that it would cause disruption to his son's special needs education.
The High Court ruled that the sale was not to be postponed, and the creditors' interests were preferred over the child's interests. Deputy Judge Strauss emphasised that, absent exceptional circumstances, Section 335A of the Insolvency Act 1986 prefers the interests of creditors over all other considerations.
The judge noted that the categories of exceptional cases are not strictly circumscribed by statutory wording or earlier case law but require circumstances that are inherently unusual. Referring to Re Citro, the judge mentioned that substantial postponement would typically require some form of terminal illness of the bankrupt or the bankrupt's spouse.
In relation to the compatibility of Re Citro with Article 8 of the ECHR, the judge expressed skepticism. It was questioned whether the narrow approach to exceptional circumstances in Re Citro was rights-compatible with the ECHR. Re Citro had held that exceptional circumstances covered unusual circumstances and not the usual melancholy consequences of bankruptcy. The judge in Barca v Mears noted that this approach seemingly favoured the property rights of the bankrupt's creditors over the rights of family members who owed nothing. However, a conclusive decision on the compatibility with the ECHR was not reached in this case.
The court, in this case, leaned towards a strict interpretation of exceptional circumstances under Section 335A, emphasising the preference for creditors' interests. The judge expressed skepticism about the narrow approach in Re Citro and questioned its compatibility with Article 8 of the ECHR. The balancing act between creditors' rights and the rights of family members in bankruptcy cases is complex, and the definition of exceptional circumstances plays a crucial role in determining the outcome.
The claimant was declared bankrupt, and the defendant was appointed as his trustee in bankruptcy. The trustee sought a sale of the property under Section 335A of the Insolvency Act 1986. The judge ordered the sale to proceed, with the proceeds being held until the beneficial interests could be determined. The claimant sought a postponement of the sale until his son completed his education, arguing that it would cause disruption to his son's special needs education.
The High Court ruled that the sale was not to be postponed, and the creditors' interests were preferred over the child's interests. Deputy Judge Strauss emphasised that, absent exceptional circumstances, Section 335A of the Insolvency Act 1986 prefers the interests of creditors over all other considerations.
The judge noted that the categories of exceptional cases are not strictly circumscribed by statutory wording or earlier case law but require circumstances that are inherently unusual. Referring to Re Citro, the judge mentioned that substantial postponement would typically require some form of terminal illness of the bankrupt or the bankrupt's spouse.
In relation to the compatibility of Re Citro with Article 8 of the ECHR, the judge expressed skepticism. It was questioned whether the narrow approach to exceptional circumstances in Re Citro was rights-compatible with the ECHR. Re Citro had held that exceptional circumstances covered unusual circumstances and not the usual melancholy consequences of bankruptcy. The judge in Barca v Mears noted that this approach seemingly favoured the property rights of the bankrupt's creditors over the rights of family members who owed nothing. However, a conclusive decision on the compatibility with the ECHR was not reached in this case.
The court, in this case, leaned towards a strict interpretation of exceptional circumstances under Section 335A, emphasising the preference for creditors' interests. The judge expressed skepticism about the narrow approach in Re Citro and questioned its compatibility with Article 8 of the ECHR. The balancing act between creditors' rights and the rights of family members in bankruptcy cases is complex, and the definition of exceptional circumstances plays a crucial role in determining the outcome.
