Bank of Ireland v O'Donnell
| Jurisdiction | Ireland |
| Judge | O'Donnell J. |
| Judgment Date | 27 July 2016 |
| Neutral Citation | [2016] IECA 227 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Appeal No.: 2015/620 |
| Date | 27 July 2016 |
[2016] IECA 227
COURT OF APPEAL
CIVIL
O'Donnell J.
Appeal No.: 2015/620
O'Donnell J.
Finlay Geoghegan J.
Peart J.
and
and
and
Right of residence – Bankruptcy – Injunction – Appellants seeking right of residence – Whether the subject matter of the proceedings was vested in the Official Assignee
Facts: The appellants/defendants, Mr and Mrs O?Donnell, were adjudicated bankrupt on the 2nd September, 2013. That date their property vested in the Official Assignee. On the 8th May, 2015, it was pleaded that Vico Ltd had mortgaged and charged to the first respondent/plaintiff, the Bank of Ireland, its interest in the property at Gorse Hill, Vico Road, Killiney, Co. Dublin, as security in relation to guarantees which Vico had provided to the bank in respect to indebtedness of inter alios both appellants. In December, 2010 the bank initiated summary proceedings seeking summary judgment relating to the indebtedness of the appellants to the bank. On the 4th March, 2011, a settlement agreement was entered into, under which the defendants agreed that they would provide full vacant possession of the premises. Judgment was obtained on the 12th December, 2011, in the summary proceedings for the sum of excess of ?71 million. On the 18th May, 2012, the bank called in the indebtedness of Vico to the bank, and as the debt was not discharged, the bank sought to rely on its security, and on the 7th June, 2012, appointed the second plaintiff, Mr Kavanagh, a receiver and manager of the assets of Vico. The receiver sought to take possession of the property. On the 27th February, 2015 a letter was received from Mr O?Donnell stating that he and his wife had a right of residence in the property. The plaintiffs commenced proceedings and sought and obtained an interlocutory injunction restraining the defendants from interfering with the receiver and directing the defendants to vacate the premises. On the 12th March, 2015, the High Court granted an injunction in those terms which was affirmed on appeal by the Court of Appeal on the 15th April, 2015. Leave to appeal that decision was refused by the Supreme Court. Mr and Mrs O?Donnell vacated the property. The plaintiffs? claimed a permanent injunction restraining the defendants from trespassing, interfering with, entering upon or otherwise attending at the property. The defendants issued a defence and counter-claim on the 22nd June, 2015. On the 13th July, 2015, the Official Assignee brought an application for an order restraining the defendants from litigating the proceedings by way of either defence or counter-claim on the grounds that the subject matter of the proceedings formed part of the estate of the bankrupts and was therefore vested in the Official Assignee. On the 22 October, 2015, the High Court granted the Official Assignee the reliefs sought. The appellants appealed to the Court of Appeal the entirety of the High Court judgment. The appellants raised four points: two procedural objections being in essence, (1) that the proceedings should not have been commenced by plenary summons seeking injunction, and (2) that the decision of the Official Assignee was invalid as being in breach of the European Convention on Human Rights Act 2003; and two further points of substance, (3) that the right to assert a right of residence in property in defence of an injunction seeking possession of that property was a personal right which did not vest as part of the bankrupt?s estate on adjudication in bankruptcy, and (4) that the right to assert a breach of the Family Home Protection Act 1976 was similarly a personal right which did not vest on bankruptcy and was a personal claim which could be maintained by the bankrupt, and in this case the second appellant.
Held by O?Donnell J that the Court would affirm the decision of the High Court insomuch as it held that all the claims and asserted defences (such as invalidity of the judgment, and claims for damages for fraud, deceit and misrepresentation) now vest in the Official Assignee, with the exception only of the claim made in respect of the Family Home Protection Act 1976 on behalf of Mrs O?Donnell, and the claim made in respect of the right of residence. O?Donnell J held that these were the only matters which may be raised by the bankrupts in the defence to the claim. O?Donnell J held that the counter-claim added nothing to the strength or otherwise of these matters and even if the appellants were to succeed the only relief would be a refusal of the injunction.
O?Donnell J held that the matter can proceed where these two claims may be maintained as defences to the claim for an injunction by the bankrupts.
Appeal allowed in part.
Does a right of residence in a house on unregistered land become part of a bankrupt's estate so that any claim in relation thereto is to be taken, in the first place at least, by the Official Assignee? When it is sought to restrain a bankrupt from trespassing on property, and the bankrupt seeks to defend the proceedings either by denying trespass or by challenging the title of the plaintiff to the property for example by reference to the Family Home Protection Act 1976, may he or she defend the proceedings in his or her own right, or is this a matter for the estate of the bankrupt and therefore again, at least in the first place, for the Official Assignee? It does not appear that these issues have been addressed specifically in Irish law or in any jurisdiction with a similar bankruptcy code. Until relatively recently bankruptcy was a neglected by-water of Irish law, rarely invoked and only occasionally the subject of serious litigation. The applicable law in this area could readily be traced to decisions of the English courts in the Victorian era and was little changed. However circumstances have changed and bankruptcy today is a more pressing and controversial issue. The right to residence is a uniquely Irish concept and the Family Home Protection Act 1976 is a piece of Irish legislation, which was an innovation when promulgated, has no precise equivalent in the law of comparable common law countries with similar provisions in relation to personal insolvency. This appeal involves an analysis therefore of parts of the Irish law in a context which has not previously been the subject of judicial consideration.
In this respect, the Court is required to consider some principles which were originally laid down in an era remote in time, place and circumstances from the world in which the appellants here, a solicitor and a doctor, amassed an international property portfolio, which collapsed in value leading to their adjudication as bankrupts in 2013. This task is complicated by the fact that the bankrupts in this case represented themselves, and the submissions made have covered many topics of complaint against both the petitioning creditor and the Official Assignee. It has not always been easy to isolate the legal points, or see, necessarily, the benefit of raising them.
The appellants in this case are Mr. Brian O'Donnell and his wife, Mrs. Mary Patricia O'Donnell. This appeal is only a part of the constellation of the litigation involving them, their principal creditor, the Bank of Ireland, a company Vico limited, and other entities and individual, much of it related to a substantial house at Gorse Hill, Killiney, County Dublin. On this appeal, only Mr. O'Donnell appeared. He said that his wife was not well and wished him to advance argument on her behalf. Neither of the other parties to this appeal (the Bank of Ireland nor the Official Assignee) raised objection to this course. Given the circumstances of the case, the very substantial overlap between the issues raised in respect of each appellant the fact that this is a single issue of law and only part of the wider litigation between the various parties, and recognising therefore that if Mrs. O'Donnell had appeared her involvement in the case might have been no more than adopting arguments already made by her husband, the Court decided to permit this course. The Court wishes to emphasise however, that if the issues involved were more substantial and distinct, then the Court would expect first, that it be proved by evidence, rather than merely asserted that one party was so ill that he or she could not attend court, and second, that he or she unambiguously authorised the co-defendant (or plaintiff as the case may be) to make submissions on their behalf.
The appellants were adjudicated bankrupt on the 2nd September, 2013, and an appeal was dismissed on the 25th February, 2015. From the date of adjudication therefore, their property vested in the Official Assignee. This much is not in dispute. What does arise for decision is what is comprehended by the property or estate of the bankrupt, and what is the consequence of the adjudication and consequent vesting of the estate in the Official Assignee, particularly in relation the capacity of the parties to bring or defend legal proceedings?
As the title to the proceedings indicates, these proceedings were commenced in 2015 (and at a time therefore when the appellants had been adjudicated bankrupt). The proceedings related to the premises at Gorse Hill. The statement of claim delivered on the 8th May, 2015, pleaded that Vico Limited, a company registered in the Isle of Man, had mortgaged and charged to the Bank of Ireland its interest in the property at Gorse Hill, Vico Road, Killiney, County Dublin, as security in relation to guarantees which Vico had provided to the bank in respect to indebtedness of inter alios both appellants. In December, 2010 the bank initiated summary proceedings seeking summary judgment relating...
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