Grace v Attorney General

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 07 March 2007
• Neutral Citation: [2007] IEHC 90
• Court: High Court
• Date: 07 March 2007

[2007] IEHC 90

THE HIGH COURT

No. 19638 P/2004

Grace v Ireland

BETWEEN/

PATRICK GRACE

PLAINTIFF

AND

IRELAND AND THE ATTORNEY GENERAL

DEFENDANTS

BANKRUPTCY ACT 1988 S85

BANKRUPTCY ACT 1988 S85(4)

CONSTITUTION ART 40.3.1

CONSTITUTION ART 40.3.2

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6.1

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 13

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003

BANKRUPTCY ACT 1988 S85(3)

BANKRUPTCY ACT 1988 S85(7)

RSC O.15

LUORDO v ITALY 2003 ECHR 372

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS PROTOCOL 1

TIERCE & ORS v SAN MARINO 2003 ECHR 372

DAVIES v UNITED KINGDOM 2006 2 BCLC 351

EASTWAY v UNITED KINGDOM 2006 2 BCLC 361

DUBLIN CITY COUNCIL v FENNELL & ORS 2005 2 ILRM 288 2005 17 3473 2005 IESC 33

HOUSING ACT 1966 S2

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S2

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S3

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S5

JACOBS & WHITE EUROPEAN CONVENTION ON HUMAN RIGHTS 4ED 2006 P187

CAHILL v SUTTON 1980 IR 269

STATUTE OF LIMITATIONS 1957 S11(2)(B)

E v E 1982 ILRM 497

BRENNAN v AG 1983 ILRM 449

BANKRUPTCY ACT 1988 S61(7)

CONSTITUTION

Personal rights

Locus standi- Implied right to conclusion of legal proceedings with reasonable expedition - Whether plaintiff having locus standi to raise constitutional issue - Bankruptcy - Plaintiff adjudicated bankrupt - Whether statutory requirement that payment of plaintiff's expenses and preferential debts constitutes live issue of prejudice to his interest - Whether plaintiff able to assert that his interest adversely affected by statutory requirement to discharge expenses and preferential payments as precondition to being discharged from bankruptcy - Bankruptcy Act 1988 (No 27), s 85(4) - Bunreacht na hÉireann, Article 40.3 - Cahill v Sutton [1980] IR 269 applied - Claim dismissed (2004/19638P - Laffoy J - 7/3/2007) [2007] IEHC 90

Grace v Ireland

section 85(4) of the Bankruptcy Act 1988, as it applied to the plaintiff, provides, inter alia, that “a bankrupt whose estate has…been fully realised shall be entitled to a discharge from bankruptcy when provision has been made for payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments…and the bankruptcy has subsisted for twelve years”. Article 6.1 of the European Convention on Human Rights provides, inter alia, that “in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…” The plaintiff sought a declaration of incompatibility with the State’s obligations under article 6 of the European Convention on Human Rights of the relevant requirements in section 85(4) of the Act of 1988 before he could be discharged from bankruptcy. He claimed that the continuance of the bankruptcy proceedings and his status as a bankrupt since 1991 infringed the reasonable time principle in art 6.1 of the Convention.

Held by Miss Justice Laffoy in dismissing the plaintiffs’ claim:

1. That, as the declaration of incompatibility would only operate prospectively and would not disentitle the Revenue Commissioners to the preferential payments due, the plaintiff was not barred from pursuing it.

2. That the State’s obligation in relation to the reasonable time principle was to ensure that a civil process was brought to conclusion by a judgment within a reasonable time and because the requirement in section 85(4) of the Act of 1988 to discharge expenses and preferential payments as a precondition to being discharged from bankruptcy might render the plaintiff a bankrupt for the rest of his life, did not render that requirement incompatible with article 6.1 of the Convention.

3. That, the primary rule as to standing in constitutional matters was that the person challenging the constitutionality of the statute had to be able to assert that, because of the alleged unconstitutionality, his interests had been adversely affected or stood in real danger or imminent danger of being adversely affected by the operation of the statute. The plaintiff had not discharged the onus of establishing that a precondition to his entitlement to a discharge had arisen. That as, therefore, even absent the statutory requirement, the plaintiff could not have procured his discharge from bankruptcy, he did not have locus standi to challenge the constitutionality of section 85(4) of the Act of 1988.

Reporter: L.O’S.

1 Judgment of Miss Justice Laffoy delivered on 7th March, 2007 .

Claim

2 The primary relief claimed, and in the event the only relief pursued, by the plaintiff in these proceedings are declarations that "all or part" of s. 85 of the Bankruptcy Act, 1988 (the Act of 1988) is repugnant to the Constitution and/or incompatible with the European Convention on Human Rights (the Convention). In response to a notice for particulars from the defendants, the plaintiff particularised the nature of his claim as follows:

3 (a) the part of s. 85 which he alleges is repugnant to the Constitution and incompatible with the Convention is the requirement in sub-s. (4) that all expenses, fees and costs due and also all preferential claims existing must be paid in full as a prerequisite for availing of the twelve years exit from bankruptcy, regardless of the circumstances that gave rise to the bankruptcy, the amount of those sums and how they were incurred, and supervening events;

4 (b) that Article 40.3.1 and 2 are the constitutional provisions against which it is alleged that s. 85 is repugnant on the basis of the requirement implied in those Articles that legal proceedings be prosecuted and brought to conclusion in a reasonably expeditious manner, bankruptcy being no more than a convenient mode of collective debt recovery; and

5 (c) that articles 6.1 and 13 of the Convention are the provisions of the Convention against which it is alleged that s. 85 is incompatible, for the same reasons as are stated at (b).

6 The plaintiff also sought the release, discharge or other termination of his present status as a bankrupt. However, counsel for the plaintiff informed the court that he accepted that that relief could not be an "automatic outcome". On that basis, my understanding is that that relief was not pursued. In fact, counsel for the plaintiff indicated that he accepted the position as pleaded in paragraph 11 of the defendant's defence (that this Court does not have jurisdiction to order the release or discharge from, or the termination of the plaintiff's status as a bankrupt other than in accordance with the appropriate procedure set out in the Act of 1988) is correct.

7 The foundation of the plaintiff's claim, as set out in the written submission made on his behalf, is the assertion that s. 85 permits a state of affairs where certain bankrupts, including the plaintiff, can be kept in a state of permanent bankruptcy - those whose liabilities involve substantial preferential debts, being mainly tax liabilities. Such a state of affairs, it was asserted, contravenes the right to a reasonably speedy resolution of legal disputes, to private property, to engage in various political and economic activities and to equality under the Constitution and under the Convention. The plaintiff has not pleaded any infringement of any constitutional or Convention right other than the right to a reasonably speedy resolution of legal disputes.

8 In broad terms, the defendants defended the proceedings on the basis that the plaintiff has not established any locus standi to present the claim. In any event, s. 85 is neither repugnant to the Constitution nor incompatible with the Convention. Further, it was asserted that the court does not have jurisdiction under the European Convention on Human Rights Act, 2003 (the Act of 2003) to award a declaration of incompatibility on the ground that the alleged cause of action occurred on a date prior to the coming into force of that Act.

The impugned provision

9 Section 85 of the Act of 1988 deals with discharge from bankruptcy and annulment of adjudication. Sub-section (4) provides as follows:

"A bankrupt whose estate has, in the opinion of the court, been fully realised shall be entitled to a discharge from bankruptcy when provision has been made for payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments, and -"

10 (a) his creditors have received fifty pence or more in the pound, or

11 (b) he and his friends have paid to his creditors such additional sums as would together with the dividend paid make up fifty pence in the pound, or

12 (c) the bankruptcy has subsisted for twelve years:

13 provided that in any application under paragraph (c) the court shall be satisfied that all after acquired property has been disclosed and that it is reasonable and proper to grant the application."

14 The plaintiff's challenge to that provision is grounded on the circumstance provided for in paragraph (c), that the bankruptcy has subsisted for twelve years. In that circumstance, the bankrupt is entitled to a discharge where -

15 (i) the court is of opinion that the bankrupt's estate has been fully realised, which is a pre-condition to an entitlement to discharge arising,

16 (ii) provision has been made for payment of the expenses, fees and costs due in the bankruptcy, as well as the preferential payments,

17 (iii) the court is satisfied that all after acquired property has been disclosed, and

18 (iv) it is reasonable and proper to do so.

19 In summary, the plaintiff's case is that, as regards circumstance (c), the requirement at (ii) should not apply.

20 As regards bankruptcies...