John Gaynor (A bankrupt)

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 23 January 2017
• Neutral Citation: [2017] IEHC 27
• Court: High Court
• Date: 23 January 2017

IN THE MATTER OF SECTION 85 OF THE BANKRUPTCY ACT 1988 AS AMENDED

IN THE MATTER OF JOHN GAYNOR (A BANKRUPT – 3411)

[2017] IEHC 27

Costello J.

THE HIGH COURT

BANKRUPTCY

Bankruptcy – S. 85 (1) of the Bankruptcy Act 1988 – Extension of duration of bankruptcy – Failure of bankrupt to co-operate – Benefit of creditors

Facts: The official liquidator in bankruptcy sought an order for the extension of bankruptcy period under s. 85 (1) of the Bankruptcy Act 1988. The official liquidator claimed that more time was required to complete investigation and realisation of assets as the bankrupt did not co-operate with the official liquidator and had hidden certain assets from the official liquidator. The bankrupt, too, had filed the application for adjourning the present matter for hearing to the President of the High Court on the basis that the petitioning creditors were the solicitors.

Ms. Justice Costello extended the duration of bankruptcy for a period of five years from the date on which the bankrupt would have been discharged by operation of law. The Court held that the mere fact that the creditors were solicitors was not a ground to adjourn the present matter. The Court found that it was evident from the documents presented before the Court and the conduct of the bankrupt that he did not co-operate with the investigation carried out by the official liquidator. The Court objected to the claims made by the bankrupt for challenging his adjudication as bankrupt as those issued had attained finality and the appeal of the bankrupt in that regard had been dismissed by the Court of Appeals.

JUDGMENT of Ms. Justice Costello delivered on the 23rd day of January, 2017

1 The Official Assignee in bankruptcy brought an application seeking an order extending the bankruptcy period of John Gaynor pursuant to s. 85A(1) of the Bankruptcy Act 1988 on the basis that the bankrupt had failed to co-operate with the Official Assignee in the realisation of the assets of the bankrupt or had 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. If necessary he also sought an order pursuant to s. 85(3) of the Act that the bankruptcy period shall not stand discharged until the investigation and pending the making of a determination under the application.

2 The application was grounded upon the affidavit of Christopher Lehane, the Official Assignee, sworn on 24th November, 2016.

3 Mr. Gaynor ('the bankrupt') was adjudicated a bankrupt on 7th December, 2015 by me on foot of a petition presented by his former solicitors Messrs. Noel Sheridan and Peter Quinn. The bankrupt brought an application to show cause against the adjudication. That application was dismissed by O'Connor J. on 20th April, 2016. The bankrupt argued that this order ought not to have been made on the basis that he was ill and O'Connor J. ought not to have proceeded with the application. I am unaware of the details of what occurred before O'Connor J. On the face of it, there is a valid order of the High Court which has not been set aside on appeal.

4 The bankrupt appealed the adjudication to the Court of Appeal. Apparently this was out of time. The Court of Appeal (Ryan P., Irvine and Fulham JJ.) dismissed the appeal on 10th October, 2016 on the basis that the appeal was bound to fail.

5 It follows that the order of adjudication stands as a valid order, though the bankrupt is apparently applying to the Supreme Court for leave to appeal.

6 In his affidavit of 24th November, 2016 the Official Assignee said that the bankrupt had completely failed to co-operate in the bankruptcy. His position is summarised by an e-mail of 1st February, 2016 where he stated 'I reject the nonsense that I am a bankrupt'.

7 Initially he refused to co-operate with the bankruptcy inspector by giving him the necessary contact details. However, as the bankrupt wished to bring a show cause application, he arranged for the order of adjudication to be served upon him by consent on 1st February, 2016. That was the full extent of his co-operation in the bankruptcy.

8 On 10th December, 2015 the bankruptcy inspector sent the bankrupt a copy of a statement of affairs and a statement of personal information to be completed by him, as well as correspondence advising him of issues arising in his bankruptcy. As of the date of the hearing before me no statement of affairs had been filed and no personal information had been given to the Official Assignee.

9 The bankrupt did not attend for an interview in relation to his assets and he did not engage in any way with the process. On 17th October, 2016 the Official Assignee's office wrote to the bankrupt stating as follows:—

'Failure to comply — reminder

I refer to your adjudication as a bankrupt on 7th December 2015 on foot of a petition brought by Noel Sheridan and Peter Quinn.

Our office has previously attempted to contact you in relation to fulfilling your statutory obligations as a bankrupt. An e-mail issued on 10th December 2015 informing you that you were adjudicated bankrupt and requesting that you submit to this office a statement of personal information and a statement of affairs. To date you have not returned these completed documents.

It is advised that your ongoing failure to co-operate with this office means that you are in breach of your duties pursuant to s. 19 of the Bankruptcy Act 1988 a copy of which I enclose for your reference.

Please complete the enclosed statement of affairs and statement of personal information and return to this office by Wednesday 26th October 2016.

Please be advised that if you fail to provide this information by Wednesday 26th October 2016, the Official Assignee will have no alternative but to consider taking legal action in this case (e.g. High Court application to extend your bankruptcy discharge period).

I trust that this will not be necessary but wish to remind you that it is the duty of the Official Assignee to ensure compliance with the legislation in the best interests of the creditors of your estate.'

10 The bankrupt did not reply to this letter and did not provide the information sought. On Thursday, 17th November, 2016 the bankruptcy inspector once again called to the bankrupt's house in an effort to have him complete his statement of affairs and statement of personal information. The Official Assignee averred that the bankrupt refused to engage with the inspector.

11 In addition to his complete failure to co-operate with the bankruptcy process, the bankrupt failed to disclose any assets at all to the Official Assignee. The Official Assignee was advised by the petitioning creditors that the bankrupt has assets. The Official Assignee says that the bankrupt has land comprised in folios 5864, 2299, 2538, 11873F, 11874F, 10753 and 7609, all in the County of Westmeath. He further understands that the bankrupt has livestock, farm machinery and motor vehicles. He is unable to give any indication as to the value of these assets and whether or not they are encumbered. He states:—

'I do not have a proper picture of the assets of the bankrupt as he has not disclosed same in any way.'

12 At para. 10 of his affidavit he states:—

'I further say that my office understands that the bankrupt withdrew the sum of €46,567.41 from his bank account in the days immediately following his adjudication and those funds remain unaccounted for.'

13 Accordingly the Official Assignee sought the reliefs set out in his notice of motion on the basis of the non co-operation of the bankrupt and his non-disclosure of assets.

14 I am satisfied that the evidence adduced by the Official Assignee establishes a prima facie case of very grave non co-operation and a failure to disclose assets in this particular bankruptcy.

15 The first issue for the Court to consider therefore is whether the bankrupt has anything to say in relation to these matters. Far from seeking, albeit belatedly, to co-operate with his bankruptcy, the bankrupt persists in his obstruction and defiance of the process. The non co-operation continued in relation to service of proceedings. Niall Hayes, Bankruptcy Inspector, swore an affidavit of service of the papers on the bankrupt on 30th November, 2016. He stated as follows:—

'b. That I served a copy of the s. 85 motion papers by attempting to hand same to John Gaynor which he declined to accept. However I still managed to affect service by touching his shoulder and forearm with the s. 85A(1) motion papers at 1.40 pm on 29th November 2016 at Farthingstown, Rathconrath, Co. Westmeath, he having identified himself to me.

c. When the envelope containing the papers subsequently fell to the ground he took them up and threw them across the road, however I am fully satisfied that proper service was affected and John Gaynor was aware of what the papers were in the envelope. I was accompanied by a Garda from Ballynacargy Garda Station who witnessed this service.'

16 The bankrupt did not sweat an affidavit controverting any of the matters set out in the affidavit of the Official Assignee. He did not offer any explanation or excuse for his failure to complete a statement of affairs or a statement of personal information other than to insist that he was not properly adjudicated a bankrupt.

17 On the return day for the notice of motion, 5th December, 2016, the defendant produced an affidavit which he swore on that day and a document described as a notice of motion but which apparently had not been issued. He invited me to recuse myself from hearing any further matter relating to him. His grounds for the application were that I had a personal interest in the continuation of his bankruptcy and that he had not been afforded a proper or fair hearing when he was adjudicated a bankrupt on 7th December, 2015.

18 In relation...