For Richer, For Poorer, Till Death Do You Part?

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Trinny Woodall is facing a fresh legal battle in relation to the estate of her ex husband Johnny Elichaoff. The couple married in 1999 and had a child together but later divorced in 2009 whilst remaining on reportedly good terms.

Johnny Elichaoff died in 2014 after falling from a car park roof. An Inquest in 2015 heard that he had battled an addiction to painkillers for 20 years and had taken his own life after ‘losing everything’ in a series of failed investments.

As part of the divorce proceedings, the couple reached an agreement in relation to the financial aspects of the separation which included provision for Mr Elichaoff to pay maintenance of £24,000 per annum and to repay £1.4 million that Ms Woodall had lent to him. However, despite this agreement, Ms Woodall did not actually receive anything.

Following the making of that order, it later emerged that Mr Elichaoff had been declared bankrupt prior to the agreement having been reached. Neither Ms Woodall, nor the judge approving the order had been made aware of this.

When a person is bankrupt, their property immediately transfers to their Trustee in Bankruptcy. This meant that Mr Elichaoff was unable to agree a settlement with regards to the finances and the court was unable to approve any order without the agreement of the Trustee in Bankruptcy. This meant that the order was void and this was confirmed earlier this year.

Mr Elichaoff died owing hundreds of thousands of pounds to his creditors and at the time that the order was set aside the Trustee in Bankruptcy sought to persuade the court that he should be able to take the place of Mr Elichaoff and seek a revised order to obtain a lump sum sufficient to pay off the creditors and legal costs. The court refused and now the Trustee of Bankruptcy is pursuing an appeal in the High Court.

This is a bizarre and unprecedented case with a potential to have far reaching consequences. The Trustee is suggesting that Mr Elichaoff would have been entitled to received a substantial settlement from Ms Woodall and that following the bankruptcy the right to pursue that claim passed to the Trustee.

Ms Woodall defends the application on the basis that such a right is personal to Mr Elichaoff and the court ability to consider such a claim ended in any event when Mr Elichaoff died.

It is correct that when a person is made bankrupt the right to bring certain claims transfers to a trustee in bankruptcy. However, solely personal claims such as for personal injury or slander are not included.

The insolvency service’s own technical manual states;
“The Matrimonial Causes Act 1973 (MCA 1973) allows a spouse to seek financial relief following divorce. Such a right does not constitute property (and even if it did, it would be property personal to the bankrupt) and cannot, therefore, form part of a bankrupt’s estate or vest in the official receiver, as trustee.
Generally speaking, any right arising from a marriage would not vest in a trustee in bankruptcy. In short, the trustee is not party to a marriage and cannot, therefore, be party to any rights arising in relation to the marriage.”

In the event that the Trustee is successful in his appeal this will give rise to a potential for claims to be bought by a Trustee within divorce proceedings or even many years later to seek to obtain a financial order to secure money to pay off the creditors. This is because parties rights to bring claims against each other do not automatically terminate when the divorce is finalised. My personal view is that this can not be correct. A spouse or ex spouse can not be forced to pay debts that are not in their name and there is no provision for a court within financial proceedings to consider the right of creditors except for the purpose of identifying the assets available and to establish the parties needs.

We await the decision with baited breath.

Karen Johnson is Director and Family Mediator of Breeze and Wyles Solicitors Ltd. Karen is a highly skilled and experienced Family Solicitor with in excess of 15 years experience of working in Family Law. She is a Resolution Accredited Specialist in the fields of Domestic Abuse and Financial Matters. Karen is additionally a Family Mediator trained by and a member of the Family Mediators Association (The FMA). For more information on how Karen or a member of our specialist team can help you please call 01992 558411 or complete our online enquiry form.

 

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