Christopher D Lehane (as Official Assignee in Bankrupcy in the Estate of John Hoey, a Bankrupt) v John Hoey

• Jurisdiction: Ireland
• Judge: Mr. Justice Birmingham,Edwards J,Kennedy J
• Judgment Date: 26 May 2021
• Neutral Citation: [2021] IECA 158
• Year: 2021
• Court: Court of Appeal (Ireland)
• Docket Number: [2020 No. 178]

In the Matter of the Bankruptcy Act and in the Matter of John Hoey (A Bankrupt)

Between

Christopher D Lehane (As Official Assignee in Bankrupcy in the Estate of John Hoey, A Bankrupt)

Respondent

and

John Hoey

Appellant

[2021] IECA 158

The President

Edwards J

Kennedy J

[2020 No. 178]

THE COURT OF APPEAL

CIVIL

Bankruptcy – Extension – Bankruptcy Act 1988 s. 85A – Respondent seeking an extension of the period of the appellant’s bankruptcy – Whether there were grounds for extending the period of the appellant’s bankruptcy

Facts: The appellant, Mr Hoey (the Bankrupt), was adjudicated bankrupt on 29th February 2016. In the ordinary way, there would have been an expectation that he would have been discharged from bankruptcy on 28th February 2017. However, the respondent, Mr Lehane (the Official Assignee), brought a motion before the High Court, dated 13th February 2017, seeking to extend the bankruptcy period by ten years pursuant to s. 85A(1) of the Bankruptcy Act 1988 (as amended), or such other period as the Court regarded as appropriate, on the basis that the Bankrupt had: (a) failed to cooperate with the Official Assignee in the realisation of the assets of the Bankrupt; or (b) hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors of the Bankrupt. The Bankrupt appealed to the Court of Appeal against the judgment of the High Court (Pilkington J) of 8th April 2020 postponing the discharge of the appellant from bankruptcy. The question that arose was whether the order made by the High Court judge was one that was open to her, or whether it was an impermissible order as falling outside the available range.

Held by Birmingham P that the extension ordered was a significant one and represented a severe sanction. However, in his view, a significant extension was called for in the circumstances of the case. He held that the order made by the High Court was an appropriate one and could not be said to fall outside the available range.

Birmingham P held that the appeal would be dismissed. His provisional view was that the costs of the appeal should be paid by the unsuccessful appellant.

Appeal dismissed.

JUDGMENT of Mr. Justice Birmingham, President of the Court of Appeal, delivered (via electronic delivery) on the 26th day of May 2021

1 This is an appeal against a judgment of the High Court (Pilkington J.) of 8th April 2020 postponing the discharge of the appellant from bankruptcy.

2 The background to this application was that the appellant was adjudicated bankrupt on 29th February 2016. In the ordinary way, there would have been an expectation that he would have been discharged from bankruptcy on 28th February 2017. However, the respondent brought a motion before the High Court, dated 13th February 2017, seeking to extend the bankruptcy period by ten years pursuant to s. 85A(1) of the Bankruptcy Act 1988 (as amended), or such other period as the Court regarded as appropriate, on the basis that the Bankrupt has:

• (a) failed to cooperate with the Official Assignee in the realisation of the assets of the Bankrupt; or

• (b) hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors of the Bankrupt.

3 Of note is that prior to the hearing of the motion, the solicitors for the Official Assignee wrote to the solicitors for the Bankrupt on 27th February 2020. The pertinent portion of that letter, as quoted by the trial judge, was as follows:

“… the primary remaining issue to be dealt with in our client's administration of this estate is the sale of Anna Croft. This application to extend Mr. Hoey's bankruptcy proceeds in part because of his conduct to date but also in part because the estate remains to be concluded and regulated.

If your client confirms that he will cooperate in the sale of Anna Croft and its surrounding lands and will so undertake to the court on Tuesday [when the matter was listed for hearing], then our client is prepared to seek no further extension of his bankruptcy.”

It appears there was no response to that letter.

4 The significance of this is that the High Court judge concluded her reserved judgment by saying that whilst, in her view:

“…there are grounds under both criteria set out within s. 85A(1)(a) and (b) of the Bankruptcy Act 1988 for extending the period of Mr. Hoey's bankruptcy, I would be happy to consider, having heard the parties, whether this matter should be adjourned for a short period of time to see if any further cooperation might arise, in which case this could well determine the extent of any bankruptcy extension concerning Mr. Hoey.”

This is particularly in light of the contents of the Official Assignee's solicitor's letter of 27th February 2020 referred to above.

5 The grace period was not availed of, and instead, the trial judge extended the period of bankruptcy, directing that the bankruptcy would stand discharged on 28th February 2024.

6 That date has been referred to in the course of the proceedings as being an eight-year extension. In fact, while 28th February 2024 will be the eighth anniversary of the bankruptcy adjudication, the extended period is actually seven years.

7 In the written submissions at paragraph 6, which appears at page 48 of the Core Book, it is stated:

“The [a]ppellant accepts the trial judge in her reserved judgment in April 2020 was entitled to make the findings of fact which she did. In that sense, apart from developments in May 2020, which touch upon the last 4th ground (no S.O.A. [statement of affairs] “…suggests little short of obstinacy”), this appeal, by light analogy with the criminal jurisdiction or procedure is not against conviction; – but against severity only.”

8 In light of that acknowledgement, it is unnecessary to rehearse the factual background to this matter in any great detail. Suffice it to say that the application generated what might be described as a volley of affidavits: a grounding affidavit, and later, a supplemental affidavit from the Official Assignee and three affidavits from the appellant. Those affidavits have been described, without exaggeration, as “replete with conflicts”. In those circumstances, the trial judge proceeded on the basis that she could not resolve the issues of conflict, and to the extent that there was conflict, she took the view more favourable to the Bankrupt but based her decision on matters that were not in controversy. The approach taken by the trial judge was consistent with what emerges as the correct approach from cases such as Thomas McFeely, A Bankrupt [2016] IEHC 299, and the Supreme Court decision in Killally v. The Official Assignee [2014] IESC 76.

9 At paragraph 15 of the judgment, the trial judge recorded that counsel for the Official Assignee was explicit in identifying four specific grounds (and only four) upon which the application for the extension of time of the bankruptcy was sought, those being:

The judge commented that the first three grounds were advanced pursuant to the criteria within s. 85A(1)(a) with the fourth ground being pursuant to s. 85A(1)(b).

• “(a) That a substantial amount of our machinery [farm machinery and vehicles] was moved from the family farm into storage (hidden) within the grounds of a local hotel.

• (b) The...