Call us free on 0800 8840 640

Everys Solicitors

Everys Solicitors News Everys on Twitter

Can an income payment order be retrospective?

An Income Payment Order (IPO) made under section 310 of the Insolvency Act 1986 can, according to the High Court, include income which arises in the period between the Bankruptcy Order and the date of the IPO.

In Official Receiver v Baker [2013] EWHC (Ch) the Official Receiver applied for an IPO in relation to a sum of money held in the bankrupts bank account. The funds represented gambling winnings accrued after the date of the bankruptcy order. The Judge dismissed the Official Receivers application on the grounds that the period referred to in section 310(1) IA 1986 related to the period after the making of an IPO, and not to income accrued prior to the date of the IPO.

The High Court overturned the decision, finding that the court can make an IPO for any income arising after the date of the Bankruptcy Order.

The rationale behind the courts decision was that section 310 should not be read in isolation, but together with the other asset protection provisions in the Insolvency Act.

Comment : the court made its decision on policy grounds. It would be plainly wrong if a bankrupt could avoid section 310  by receiving significant income after the date of the bankruptcy order but before the IPO application was heard.

It is interesting that the Official Receiver did not attempt to secure the gambling winnings as after acquired property under section 307. It is well established that a Trustee can claim property which has been acquired post bankruptcy. A lump sum derived from gambling would fall within section 307. Perhaps in this case the subtle distinction was that the sums in the bankrupts bank account represented the fruits of an ongoing professional gambling habit and were therefore akin to "income" ( to which section 307 does not apply).

Renewables

Have one of our team call you back

Please fill in your details below

© 2017 Everys Solicitors - Legal expertise for everyone. | Main office: Hertford House, Southernhay Gardens, Exeter EX1 1NP