Sean Dunne (A Bankrupt)

• Jurisdiction: Ireland
• Judge: Humphreys J.
• Judgment Date: 05 May 2021
• Neutral Citation: [2021] IEHC 291
• Docket Number: [Bankruptcy No. 2478]
• Court: High Court
• Date: 05 May 2021

In the Matter of Sean Dunne (A Bankrupt)

[2021] IEHC 291

[Bankruptcy No. 2478]

THE HIGH COURT

BANKRUPTCY

Bankruptcy payment order – Third party discovery – Contempt – Bankrupt seeking an order varying or setting aside a bankruptcy payment order – Whether the bankrupt’s income level warranted being the subject of a bankruptcy payment order

Facts: Three motions were before the High Court at the outset of dealing with the matter and two more were added during the currency of proceedings. Those motions were as follows: (i) a motion dated 6th March, 2019 by the Official Assignee under ss. 19(a) and 21(3) of the Bankruptcy Act 1988 seeking production of various documents - that was determined on 19th November, 2019 by Pilkington J in an ex tempore judgment, but the motion was re-entered for consequential matters (in particular, costs); (ii) a motion dated 16th July, 2019 by the bankrupt, Mr Dunne, under s. 85D(5) of the 1988 Act seeking an order varying or setting aside a bankruptcy payment order (BPO); (iii) a motion dated 4th March, 2020 by the Official Assignee under O. 44, rr. 1 and 2 RSC seeking contempt remedies for failure to comply with the BPO; (iv) a motion dated 17th December, 2020 seeking an order striking out paras. 2-84 of the bankrupt’s affidavit; and (v) a motion issued on 22nd February, 2021 seeking third-party discovery against Mr Ryan.

Held by Humphreys J that the impugned averments in the bankrupt’s affidavit would be struck out on the grounds that they were not relevant. Regarding third-party discovery, as far as the Irish matters were concerned, Humphreys J did not think that, leaving aside the pension documents which had been provided, the materials sought were relevant or necessary for anything that was live. As far as the foreign matters were concerned, Humphreys J did not think that a stand-alone motion for third-party discovery was the correct procedure; the way to get documents relevant to a foreign proceeding is either to apply in that proceeding in a foreign court or alternatively to bring an originating application under some procedure for international cooperation regarding the taking of evidence. Humphreys J noted that Mr Dunne indicated a net personal income of €34,292.22 for a period of 25 months which equates to €1,371.69 per month. Humphreys J did not think that such an income level on the facts warranted being the subject of a BPO for four main reasons: (i) the Official Assignee did not in fact suggest that such an income level would warrant a BPO; (ii) this was so far below the monthly amount of €2,373.74 that the Official Assignee was prepared to recognise as permissible, even factoring in that that amount itself included provision for children, that a BPO would be unfair in the circumstances; (iii) significant payments for the children impose some obligation on their custodial parent to accompany them and participate in activities thus funded, thereby imposing a requirement for a somewhat more elevated level of personal expenditure than might apply to a person living on their own; and (iv) the application for the BPO involved significant costs, which were not warranted given the modest sums of net income. Humphreys J held that the appropriate order was simply to set aside the BPO in full from the date of its making.

Humphreys J held that: (i) the motion for third party discovery would be dismissed, without prejudice to the applicant seeking any such discovery in future in any application to which that information is relevant and necessary; (ii) under ss. 85D(5) and 135 of the 1988 Act he would set aside the BPO in full with effect from the date of its making; (iii) it followed that the order under the court’s inherent jurisdiction enjoining dealing with the pension should be discharged; (iv) it also followed that the contempt motion should be formally dismissed; and (v) he confirmed that the in camera order would not apply to this judgment and would only apply to past, present and future pleadings, affidavits and proceedings insofar as they reference the family law proceedings.

Motion for third party discovery dismissed. Motion to set aside BPO granted. Contempt motion dismissed.

JUDGMENT of Humphreys J. delivered on Wednesday the 5th day of May, 2021

1 The bankrupt was born in 1954. His first marriage took place in 1979 and he was subsequently divorced in the State in 2001.

2 His second marriage took place in 2004.

3 The bankruptcy petition was presented on 12th February, 2013. Six weeks later, Mr. Dunne voluntarily filed for bankruptcy in the US on 29th March, 2013.

4 On 12th June, 2013, Judge Alan H. W. Shiff, US Bankruptcy Judge, of the US Bankruptcy Court, District of Connecticut, varied the automatic stay under US law to allow Irish bankruptcy proceedings [ Ulster Bank v. Dunne 2013 No. 798P] to proceed [Order in In re Dunne: Ulster Bank Ireland Ltd. v. Coan, Case No. 13-50484 (AHWS)].

5 Mr. Dunne was adjudicated bankrupt in the State on 29th July, 2013.

6 On 6th December, 2013, a motion to show cause against the adjudication was dismissed: In re Dunne (a bankrupt) [2013] IEHC 583, [2013] 2 I.R. 796 (McGovern J.).

7 Separately, the bankrupt had brought a motion on 3rd December, 2013 to prevent the Official Assignee from accessing certain documentation seized from the K Club. On 6th March, 2014, an application to cross-examine the Official Assignee was not acceded to, but a further motion was permitted: In re Dunne (a Bankrupt) [2014] IEHC 113 (Unreported, High Court, McGovern J., 6th March, 2014). McGovern J. ultimately decided that the documentation could be accessed: ( [2014] IEHC 433 Ulster Bank Ireland Ltd. v. Dunne Unreported, High Court, 13th August, 2014). Cross-examination of the Official Assignee was again refused: In re Dunne (a Bankrupt) [2014] IEHC 285 (Unreported, High Court, McGovern J., 10th April, 2014).

8 An appeal against the refusal of the show-cause motion was dismissed ( In re Dunne (a Bankrupt) [2015] IESC 42, [2015] 2 I.L.R.M. 103), Laffoy J. noting at para. 1 that “Although it is disclosed in the Bankruptcy Law Committee Report, a report of a committee under the chairmanship of Budd J., which was established on 23rd August, 1962 and which reported in 1972, which will be referred to as ‘the Budd Report’, that legislation governing bankruptcy in Ireland has been on the statute books since as long ago as 1772, it is very surprising that there is no record of the principal issue addressed on this appeal having been raised and addressed before the courts in Ireland previously”, that issue being jurisdiction in cases of concurrent bankruptcy in two states simultaneously.

9 The bankrupt says that his wife moved to the UK in 2013, that he was between the UK and the US for the following number of years, and that by 2017 he had moved residence to the UK.

10 In the meantime, on 25th November, 2015, Judge Shiff made an order in In re Dunne, Case No. 13-50484, Memorandum of Decision and Order on Trustee's Motion for Order (ECF No. 476), that the automatic stay did not prohibit the Official Assignee from prosecuting proceedings against the wife in the Irish bankruptcy. He noted at p. 17 that “Both this Court and the High Court of Ireland are cognizant of the principles of comity and have each proceeded in a manner which is respectful of that principle. The integrity of the US bankruptcy system, together with the respect for the High Court of Ireland and its interests in the efficient administration of the corresponding Irish Bankruptcy Proceedings, requires an order that will promote the efficient management of this case and hopefully provide assistance to the High Court of Ireland”.

11 On 26th May, 2016, the Official Assignee brought a motion to extend the period of bankruptcy under s. 85A of the Bankruptcy Act 1988. Costello J. rejected an application to cross-examine the Official Assignee in that context: ( [2017] IEHC 66 In re Dunne, a Bankrupt Unreported, High Court, 13th February, 2017). An appeal to the Court of Appeal against that refusal was allowed: In re Dunne, a Bankrupt [2017] IECA 304 (Unreported, Court of Appeal, Peart J. (Finlay Geoghegan and Hogan JJ. concurring), 27th November, 2017).

12 In the meantime, the bankrupt's wife had sought and been refused an order for cross-examination in a related application ( Lehane v. Dunne [2016] IEHC 96 (Unreported, High Court, Costello J., 19th February, 2016)). Costello J. also rejected arguments regarding forum non conveniens and abuse of process, and directed discovery ( ( [2016] IEHC 690 Lehane v. Dunne Unreported, High Court, 27th July, 2016) and Lehane v. Dunne [2016] IEHC 679) ( Unreported, High Court, 25th November, 2016).

13 On 30th January, 2018, an appeal from the forum non conveniens and abuse of process decision was allowed by the Court of Appeal in Lehane v. Dunne [2018] IECA 7 (Unreported, Court of Appeal, Hogan J. (Peart and Whelan JJ. concurring), 30th January, 2018). Hogan J. commented: “I cannot conclude this judgment without making two observations. First, events in the last two and a half years or so have entirely confirmed the anxieties which Laffoy J. expressed in Dunne regarding the complex questions which were likely to emerge arising from the inter-action of any dual bankruptcy regime in both the United States and Ireland. While I appreciate that the Official Assignee and the Chapter 7 Trustee are determined to work together co-operatively (and have done so to date), the potential for overlapping jurisdiction, inconsistent judgments, dual recovery, additional costs and even opportunistic legal stratagems are all the inevitable by-products of parallel bankruptcy proceedings in two separate jurisdictions. If it can at all be done, the case for centralizing all these claims in one single jurisdiction is, I should think, a pressing one.” (para. 44). “Second, this litigation has...