Dixon v Lehane (Official Assignee in Bankruptcy of the Estate of Henry Dixon)
| Jurisdiction | Ireland |
| Judge | Ms. Justice Pilkington |
| Judgment Date | 10 October 2022 |
| Neutral Citation | [2022] IECA 220 |
| Year | 2022 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Court of Appeal Record Number: 2021/301 and 2021/309 |
In the Matter of Section 79 of the Bankruptcy Act 1988 and in the Matter of Henry Dixon (A Bankrupt)
and
[2022] IECA 220
Barniville P.
Haughton J.
Pilkington J.
Court of Appeal Record Number: 2021/301 and 2021/309
High Court Record Number [Bankruptcy] 4630
THE COURT OF APPEAL
CIVIL
Bankruptcy – Proofs of debt – Bankruptcy Act 1988 – Applicant seeking orders that certain proofs of debt be disallowed – Whether the revised proof of debt remained as a proof of debt to be considered by the notice party within the administration of the bankruptcy estate of the applicant
Facts: The applicant/respondent, Mr Dixon, following an application by the Revenue Commissioners (the Revenue), was adjudicated bankrupt, by order of Costello J, on 11th June, 2018. Mr Dixon issued a notice of motion on 18th December, 2020, in which he sought orders pursuant to the Bankruptcy Act 1988 that certain proofs of debt submitted to the notice party/respondent, Mr Lehane, the Official Assignee (OA), by the Revenue Commissioners, be disallowed. The Revenue submitted a proof of debt to the OA on 10th September, 2019 in the amount of €784,501.60 (the original proof of debt) and subsequently on the 8th March, 2021 in the amount of €472,154.96 (the revised or amended proof of debt). On 21st October, 2021, the High Court (Humphreys J) disallowed both proofs of debt on different grounds. Whilst the OA was named as a notice party to the motion, he chose not to appear before the High Court, taking the view that the issues raised within it arose solely between the Revenue Commissioners and Mr Dixon. The OA did join in the appeal of the respondent/appellant, Mr Gladney, to the Court of Appeal. Within both written and oral submissions, counsel for the OA largely confined himself to those issues arising from the High Court judgment regarding the correct procedures to be adopted by the OA in dealing with proofs of debt in the administration of a bankrupt’s estate, with particular regard to the First Schedule of the 1988 Act.
Held by Pilkington J that the Revenue’s original proof of debt had been superseded by the revised proof of debt; it was superseded upon the OA’s acceptance of the Revenue’s revised proof of debt, which was without doubt in respect of the same indebtedness owed by Mr Dixon. In such circumstances Pilkington J did not consider it appropriate to disallow the original proof of debt which was no longer before the OA and would form no further part in the bankruptcy process. In considering the revised or amended proof of debt, Pilkington J noted that it was disallowed on the stated basis that “because the Official Assignee did not give the bankrupt a reasonable opportunity to dispute it or argue that it should be referred to the court, prior to admitting the debt”. On the facts of the case, Pilkington J found that Mr Dixon knew the extent of his indebtedness from the outset; his dispute related to how that indebtedness should be considered within the bankruptcy process. Pilkington J held that no statutory or other prohibition had been opened to the Court that operated to prevent the Revenue, as a secured creditor, exercising his right of his election within the bankruptcy process. In interpreting s. 23 (a), (b) and (c) of the 1988 Act, Pilkington J held that the initial entitlement to determine a creditor’s proof of debt must rest with the OA. Pilkington J held that there was no basis for disallowing this revised proof of debt for the reasons advanced by the High Court as the bankrupt’s recourse to the Courts was afforded to Mr Dixon within s. 23(e) of the First Schedule and s. 79 of the 1988 Act. Pilkington J held that the procedures for dealing with the administration of proofs of debt were those set out within the First Schedule to the 1988 Act. Pilkington J held that the revised proof of debt was not disallowed and remained as a proof of debt to be considered by the OA within the administration of the bankruptcy estate of Mr Dixon.
Pilkington J allowed the appeal and vacated the orders of the High Court of 21st October, 2021 (perfected on 10th November, 2021). Her provisional view was that as the appellant had succeeded in full on the appeal, the Revenue was entitled to its costs. She held that the notice party/respondent was entitled to its costs before the Court of Appeal only, as costs in the bankruptcy.
Appeal allowed.
JUDGMENT of Ms. Justice Pilkington on the 10 th day of October 2022
. This appeal concerns certain discrete issues that have arisen in the course of the administration of the bankruptcy estate of Henry Dixon (“Mr. Dixon” or “the bankrupt”).
. Following an application by the Revenue Commissioners (also “the Revenue”) as petitioning creditor, Mr. Dixon was adjudicated bankrupt, by Order of Costello J., on 11 th June, 2018. Mr. Dixon's bankruptcy adjudication remains in place, pending the resolution of this and other matters relating to his estate.
. This appeal from the judgment and orders of Humphreys J. of 21 st October, 2021, arises pursuant to a Notice of Motion, issued on behalf of Mr. Dixon on 18 th December, 2020, in which he seeks orders pursuant to the Bankruptcy Act 1988 (“the 1988 Act”), that certain proofs of debt submitted to the Official Assignee (“OA”) by the Revenue Commissioners, be disallowed.
. The facts and circumstances regarding the proofs of debt are set out within the affidavits filed in respect of the various applications that have arisen within this bankruptcy estate. In summary, the Revenue submitted a proof of debt to the OA on 10 th September, 2019 in the amount of €784,501.60 (“the original proof of debt”) and subsequently on the 8 th March, 2021 in the amount of €472,154.96 (“the revised proof of debt” and sometimes also referred to within the High Court judgment as “the amended proof of debt”). The High Court has disallowed both proofs of debt on different grounds.
. Whilst the OA is named as a notice party to the motion, he chose not to appear before the High Court, taking the view that the issues raised within it arose solely between the Revenue Commissioners and Mr. Dixon.
. The OA did, however, join in this appeal, with no objection being raised by either the appellant or the respondent. Within both written and oral submissions, counsel for the OA largely confined himself to those issues arising from the High Court judgment regarding the correct procedures to be adopted by the OA in dealing with proofs of debt in the administration of a bankrupt's estate, with particular regard to the First Schedule of the 1988 Act.
. In order to properly consider this appeal it is necessary initially to examine the bankruptcy process as it concerns Mr. Dixon.
. Whilst there was no appeal from Mr. Dixon's adjudication as a bankrupt (“adjudication”) pursuant to s. 16 of the 1998 Act seeking to show cause against the validity of that adjudication, or on any other grounds, nevertheless issues were raised within the affidavits grounding the application that help explain the ongoing issues within this appeal.
. The bankruptcy summons which issued on 20 th February, 2017, the subsequent bankruptcy petition of 4 th July, 2017 and the verifying affidavit of debt sworn by Michael Gladney (the then Collector General of the Revenue Commissioners) on 4 th July, 2017 all confirm the application by the Revenue, as petitioning creditor, seeking Mr. Dixon's adjudication as a bankrupt on the basis of a debt of €82,821.44 (comprising the judgment amount in proceedings entitled Harrahill v. Dixon [2008] 813 R, being the principal sum of €55,650.80, together with interest and costs).
. Within the exchange of affidavits prior to his adjudication, Mr. Dixon's affidavit sworn on 29 th November, 2017 sets out a history of his indebtedness to the Revenue. Humphreys J. commences his judgment by pointing out that Mr. Dixon's tax difficulties have, in some shape or form, been ongoing for the past 26 years.
. From the documentation exhibited to this affidavit the following facts emerge;
The letter continues (para 2(b)):
‘As we indicated to the Court on 13 November 2017, in so far as our client has a liability to Judgment in the amount of circa €82,821.44, we are instructed that he is in a position to address any such liability. Our client's proposals with regard to resolving any such liability will however be dependent on what Revenue's position is with regard to any sums claimed by it pursuant to the 2002 Judgments’.
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(a) Within paragraph 5, Mr. Dixon confirms his ownership of the lands comprised in Folio 44622F County Mayo, in respect of which he is registered as sole owner in any event.
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(b) Of relevance to this appeal are three judgment mortgages obtained by the Revenue Commissioners registered on Folio 44622F arising from the following proceedings instituted against Mr. Dixon:
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(i) Circuit Court proceedings — Liam J Irwin v Henry Dixon, Record No 2002/62, judgment obtained 18 th April, 2002, (“the 2002 Circuit Court proceedings”)
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(ii) High Court proceedings — Liam J Irwin v Henry Dixon, Record No 2002/530R, judgment obtained 24 th October, 2002, (‘the 2002 High Court proceedings’),
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(iii) High Court proceedings – Gerard Harrahill v Henry Dixon, Record No 2008/813R, judgment obtained 10 th February, 2009, (‘the 2008 High Court proceedings’).
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(c) Folio 44622F notes the registration of the respective judgment mortgages, the 2002 Circuit Court proceedings on 6 th September, 2005, the 2002 High Court proceedings on 7 th March, 2005 and the 2008 High Court proceedings on 28 th April, 2009.
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(d) By Order of Dunne J. dated 19 th July, 2010 (perfected 9 th...
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