A woman won her court battle today over a divorce settlement that was slashed when her former husband went bankrupt.

Wendy Haines, 43, was awarded the proceeds of the sale of their matrimonial home, a detached five-bedroom farmhouse, by a judge during divorce proceedings in December 2004.

But her former husband, David, declared himself bankrupt a year later and the trustees in bankruptcy launched a court action to obtain the farm house so that they could pay off his creditors.

Mrs Haines, who owned a garage business with her husband in Kidderminster, was faced with the trustees’ demands for half of the sale proceeds after the mortgage was paid off, about £120,000.

In May this year, the trustees were granted their wish by Judge Pelling, QC, sitting in the High Court. But today, the Court of Appeal reversed that ruling.

The trustees are now petitioning the House of Lords for a final challenge over the case, which has far-reaching implications for “clean-break” divorces.

Lord Justice Rix, giving his ruling today, said it would be “unfortunate in the extreme” if a settlement approved in a divorce court could be undone for up to five years because the husband goes bankrupt.

“That could even encourage such bankruptcy on the part of a disaffected husband,” he said.

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