'Devious' bankruptcy tactic is brought into line.

SENIOR judges yesterday highlighted the tactic of "devious" husbands who declare themselves bankrupt to stop the courts ordering divorce settlements with their former wives.

They dismissed an appeal by businessman William Paulin against a ruling annulling his bankruptcy and ordering him to pay a pounds 1m lump sum to his former wife, Nancy.

Lord Justice Wilson, giving the judgment of the Court of Appeal, said the sums owed by the husband were more than covered by the value of his assets.

The judge started his ruling: "A tactic now occasionally adopted by a devious husband confronted with an application by his wife for financial relief ancillary to divorce proceedings is to issue proceedings for a bankruptcy order to be made against himself."

This resulted in the divorce court being unable to order a settlement for the wife, who then must apply to the courts to annul the bankruptcy. Lord Justice Wilson said Mrs Paulin had won such an order from a deputy High Court judge who went on to award her the "substantial lump sum payment".

He said the husband, an entrepreneur described by his wife as an "asset-stripper", was no longer challenging the High Court judge's "adverse findings" about his honesty. Mr Paulin had been disqualified for acting as a company director for seven years in December 2004 for breaching financial duties. Lord Justice Wilson said Mr Paulin then became a business consultant earning pounds 100,000 a year and even when he declared himself bankrupt, he continued working, earning in excess of pounds 100,000, had the use of a Rolls-Royce and enjoyed a "generally lavish lifestyle".

Lord Justice Wilson said he had made a "substantially dishonest statement" for his bankruptcy hearing and held assets which more than covered his debts.