Brendan Hade (A Bankrupt)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Mark Sanfey |
| Judgment Date | 27 April 2022 |
| Neutral Citation | [2022] IEHC 236 |
| Court | High Court |
| Docket Number | [Bankruptcy No. 5052] |
[2022] IEHC 236
[Bankruptcy No. 5052]
[Bankruptcy No. 5053]
THE HIGH COURT
BANKRUPTCY
Bankruptcy – Adjudication – Annulment – Applicants seeking orders of annulment of their respective adjudications as bankrupt – Whether the error in the particulars annexed to the bankruptcy summons invalidated the summons itself
Facts: The applicants, Mr and Ms Hade (the former bankrupts) applied to the High Court to show cause against the adjudication of each of them as bankrupt on 11th November, 2019. The time for making the applications was extended by the court until 13th December, 2019, and the matter was first listed for hearing on 20th January, 2020. Various matters including pandemic restrictions resulted in the hearing being delayed and ultimately taking place on 1st February, 2022. By that stage, both bankrupts had been discharged on 11th November, 2020 from bankruptcy. Notwithstanding this, both sought to have their respective adjudications annulled. The application was served on Feniton Property Finance DAC (the petitioning creditor), which at all times contested the applications fully. It was said on behalf of the applicants that they were not afforded the requisite clarity, and that the error of specifying “€90,907.93” rather than €90,970.93” meant that the debtors were entitled to infer that the amount demanded was possibly overstated by €63. It was submitted that, in the absence of certainty as to the accuracy of the amount demanded, they were entitled to decline to pay that amount, as the summons was invalidated by the inaccuracy. In their written submissions, the applicants made the case that, if the bankruptcy summonses were deemed by the court to be valid, the adjudication orders should nonetheless be annulled pursuant to s. 85C(1)(b) of the Bankruptcy Act 1988 as amended; that is to say, on the grounds that it would be just and equitable to do so.
Held by Sanfey J that he did not consider that the error in the particulars annexed to the bankruptcy summons invalidated the summons itself, which demanded the correctly calculated amount of the debt. He could find no circumstances which would render the annulment of the adjudications of the applicants “just and equitable”, and accordingly he did not consider that orders under s. 85C(1)(b) were appropriate.
Sanfey J refused the applications on behalf of the former bankrupts for orders of annulment of their respective adjudications as bankrupt.
Applications refused.
JUDGMENT of Mr. Justice Mark Sanfey delivered on the 27th day of April, 2022
This matter concerns applications by Brendan Hade and Sheila Hade (‘the former bankrupts’ or ‘the applicants’) to show cause against the adjudication of each of them as bankrupt on 11th November, 2019. The time for making the applications was extended by the court until 13th December, 2019, and the matter was first listed for hearing on 20th January, 2020. Unfortunately, various matters including pandemic restrictions have resulted in the hearing being delayed and ultimately taking place on 1st February, 2022. By that stage, both bankrupts had in fact been discharged on 11th November, 2020 from bankruptcy. Notwithstanding this, both seek to have their respective adjudications annulled.
Although there are separate applications by the former bankrupts, those applications are to all intents and purposes identical, and submissions both written and oral made on their behalf by counsel have been treated by the applicants as relating to both of them. Likewise, this judgment and its conclusions apply to each of the applicants.
The application was served on Feniton Property Finance DAC (‘the petitioning creditor’ or ‘Feniton’), the petitioning creditor, which at all times contested the applications fully, and was represented by counsel at the hearing. Subsequent to the initiation of the present application, the petitioning creditor was placed in member's voluntary liquidation, although this fact does not affect its role in this application.
There was an extensive interchange of affidavits between the parties in the course of the present application. The affidavits of the applicants in particular set out the circumstances in which they got into financial difficulty. It is not necessary, for the purposes of this application, to set these out in detail. However, as the applicants, in addition to invoking the court's power under s.16(2) of the Bankruptcy Act 1988 as amended (‘the Act’) to annul the adjudications on the grounds that the requirements of s.11(1) of the Act have not been complied with, rely on the court's power set out at s.85C(1)(b) of the Act to annul an adjudication “in any other case where, in the opinion of the Court, [the debtor] ought not to have been adjudicated bankrupt”, it is necessary to consider the background to the matter.
In June 2008, the former bankrupts obtained a loan facility from Bank of Scotland (‘the bank’) in the sum of €2,210,000. This loan was secured on two properties in Rathfarnham, Dublin 16 (‘the Rathfarnham properties’) which they owned, one of which was their principal private residence.
The applicants were at that time each, with another party, trustees for the Victory Christian Fellowship (‘VCF’), which had substantial borrowings with the bank. The VCF was a church which had sought and obtained planning permission to build a “new church and centre” on lands at Firhouse Road in County Dublin. For this purpose, loans of €17.6m were advanced by the bank.
The applicants, who were deeply committed members of VCF, engaged a “financial broker” to deal with the financial and business affairs of VCF. As this person is not a party to the present proceedings and has therefore not had the opportunity to respond to the very serious allegations levelled against him by the former bankrupts, I will refer to him simply as ‘Mr. L’. The applicants contend that a request and proposal by Mr. L that he be given a “participation role and involvement with the applicants in their capacity as trustees of VCF” were considered by them but ultimately refused. It is asserted by the applicants that Mr. L was “bitterly disappointed” with this decision, and that he informed the Revenue Commissioners “…that he considered that there may have been inappropriate claims for and on behalf of the Victory Christian Fellowship in respect of the entitlement to claim relief from VAT on various items purchased by the Victory Christian Fellowship and/or its Agents, which items were used in the construction of our new Church and Centre at Firhouse” … [para. 17 grounding affidavit of Brendan Hade sworn 13th December, 2019].
The applicants claim that Mr. L then informed the bank of the likelihood that the Revenue Commissioners had concerns in relation to the reclaim of VAT expenses, and that this was likely to result in the Revenue Commissioners revoking VCF's charitable status. This did in fact come to pass on 14th May, 2013, retrospective to 1st January, 2009. It is asserted that Mr. L communicated the fact of this revocation to the bank, which called in the VCF borrowings and appointed Mr. Paul McCann and Mr. Patrick Dillon as receivers on 29th May, 2013. Mr. McCann (‘the receiver’) was on the same date appointed as receiver over the Rathfarnham properties.
It is fair to say that the applicants are aggrieved at their treatment by the bank. They contend that it was represented to them two months prior to the appointment of the receiver over the Rathfarnham properties that “…if [the applicants] agreed to sell No. 33/34 Main Street, Rathfarnham, the Bank would take the hit on any shortfall that might arise on the said sales and would accept the sum of €100,000.00 from us in full and final settlement of all monies due by us in respect of both properties…” [para. 25 grounding affidavit Brendan Hade]. They say that they were accordingly “greatly upset, shocked and distressed” that the bank called in the loan and appointed the receiver. They maintain that the alleged issues with VCF were “completely unrelated” to the Rathfarnham properties and that there was “no proper, lawful or equitable basis for the appointment of the Receiver by the Bank”. [Paragraph 27 grounding affidavit of Brendan Hade].
The travails of VCF and indeed the former bankrupts made their way into the media, which “…caused enormous upset and huge distress to I, this Deponent, and my wife, Sheila Hade, and indeed also to many members of our congregation in Victory Christian Fellowship Church…”. [Paragraph 30, grounding affidavit Brendan Hade].
The applicants in their affidavits refer to the “upset and distress… and exhaustion and stress that we were almost unable to cope with… [para. 31]. This caused them to adopt a certain stance in relation to legal matters, and in particular in relation to legal proceedings by Feniton, who by April 2016 had acquired legal ownership of the bank's debt in respect of the Rathfarnham properties:-
“32. I say and believe that we sought guidance, help and solace within our Church and its congregation and because of our state of mind and health at that time we decided to discharge our Solicitors and Legal Counsel and withdraw into our spiritual home of our ongoing Church at Victory Christian Fellowship. We duly, therefore, discharged our Solicitors and Counsel and withdrew from the legal turmoil and material loss and damage which we had suffered. I say that we did so because of the extreme difficulties we found ourselves in and the pressure we were no longer able to endure.” [This paragraph sworn by each of the applicants at para. 32 of their respective grounding affidavits].
As a result, the applicants failed to appear in response to an application for summary judgment by Feniton, with the result that this Court (Noonan J)...
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Brendan Hade, A Bankrupt; Sheila Hade, A Bankrupt
...bankrupts’ or ‘the applicants’) to show cause against the adjudication against each of them as bankrupt. This judgment is reported at [2022] IEHC 236. 2 . In the event, I refused the applications of the former bankrupts and gave the parties an opportunity to make written submissions in rela......