Joseph Lennon, a Bankrupt

JurisdictionIreland
JudgeHumphreys J.
Judgment Date30 September 2021
Neutral Citation[2021] IEHC 594
CourtHigh Court
Docket Number[Bankruptcy No. 5221]
In the Matter of Joseph Lennon, a Bankrupt

[2021] IEHC 594

[Bankruptcy No. 5221]

THE HIGH COURT

BANKRUPTCY

Bankruptcy – Adjudication – Annulment – Bankrupt seeking order annulling adjudication – Whether there were alternatives to bankruptcy

Facts: The debtor/bankrupt, Mr Lennon, on 19th October, 2018 was served with a bankruptcy summons. A bankruptcy petition was presented on 31st January, 2019 and served on 23rd February, 2019. The first return date was 1st April, 2019 when there was no appearance by the debtor. The matter was adjourned to afford him an opportunity to engage with the process. From the first return date the matter appeared before the High Court on eleven occasions prior to the making of the order of adjudication. On 28th October, 2020 and 14th December, 2020, the petitioning creditor advised the debtor’s solicitors that the petition would be listed on 11th January, 2021, and on the latter date the order of adjudication was made. On 23rd February, 2021, the bankrupt brought a motion seeking in essence an order pursuant to s. 85C(1)(b) of the Bankruptcy Act 1988 annulling the adjudication and an order extending time pursuant to s. 16(1) of the 1988 Act to show cause against the validity of the adjudication. There appeared to be essentially four grounds, the first two being substantive defences and the second two being more procedural in nature: (i) the bankrupt made a proposal to the petitioning creditor’s solicitors involving the sale of his family home; (ii) it was submitted that there were alternatives to bankruptcy for the purposes of s. 14 of the 1988 Act; (iii) the bankrupt’s absence from the hearing seemed to be in itself relied on as an issue; (iv) a claim of default by the bankrupt’s previous solicitors was made.

Held by the High Court (Humphreys J) that, as regards the possible sale of the bankrupt’s house, he had had almost three years to sell it since the bankruptcy summons was served and his proposals or hopes were well short of the requirement for exceptional circumstances warranting an annulment of the bankruptcy. Humphreys J held that, as regards the submission that the court would have had more material under s. 14 had the debtor been in attendance, so would have had more to work with, that did not amount to an exceptional or compelling reason and indeed would apply in a vast number of cases where a debtor having been adjudicated could think of further matters for the court to consider. Humphreys J held that merely not being present for the making of an order, while perhaps unfortunate, does not in itself give rise to a right to set aside that order without some substantive basis being shown for a defence to the order. Even assuming there was some default on the part of previous solicitors, Humphreys J held that this in itself was not enough as there must be some actual defence to the bankruptcy. Humphreys J did not think that the bankrupt’s points provided adequate, still less exceptional, grounds for an order revisiting the adjudication.

Humphreys J dismissed the bankrupt’s motion.

Motion dismissed.

JUDGMENT of Humphreys J. delivered on Thursday the 30th day of September, 2021

1

On 19th October, 2018 the debtor was served with a bankruptcy summons. A bankruptcy petition was presented on 31st January, 2019 and served on 23rd February, 2019.

2

The first return date was 1st April, 2019 when there was no appearance by the debtor. The matter was adjourned to afford him an opportunity to engage with the process, although strictly speaking that was not necessary because if it is proved that the petition is properly served and if the court considers s. 14 of the Bankruptcy Act 1988 on the first return date then it can proceed to finalise the matter without further ado. Adjudication is perfectly lawful in such circumstances and one is not obliged to give a debtor multiple opportunities to engage with the process. Service of the petition is the primary opportunity, and debtors need to avail of that with the required degree of urgency.

3

From the first return date the matter appeared before the High Court on eleven occasions prior to the making of the order of adjudication, so that illustrates quite a degree of further opportunity to participate. This included a specific direction on 13th May, 2019 pursuant to s. 14(2) of the 1988 Act for the debtor to furnish a statement of affairs and to obtain the services of a personal insolvency practitioner. That direction was not complied with.

4

The matter was further adjourned on 24th June, 2019 and again on 22nd July, 2019 on the application of intended solicitors for the debtor.

5

On 29th July, 2019, the matter was again adjourned on the basis of certain information to be provided to the Collector General and on 4th November, 2019 on the debtor's application, following which the court directed him to file an affidavit setting out what steps were being taken to sell a property to discharge the debt.

6

The debtor applied for a further adjournment on 25th November, 2019 and the matter was adjourned again on 9th December, 2019 to enable the debtor to provide responses to questions regarding a proposed sale of the property.

7

The debtor applied again for an adjournment on 27th January, 2020 and the court indicated that if responses requested were not received by the adjourned date, the petition would be likely to proceed.

8

The matter was adjourned again on 17th February, 2020 with a view to facilitating the debtor in entering into a binding contract for sale, but that did not happen.

9

On 18th May, 2020, the matter was adjourned due to the COVID-19 emergency.

10

On 9th September, 2020, the petitioning creditor wrote to the debtor's solicitors asking for an update and advising that the matter was likely to be heard in October 2020.

11

On 14th September, 2020, the debtor's solicitors wrote to say that due to the COVID-19 emergency, the property had not been sold.

12

Further updates were sought on 1st October, 2020, 9th October, 2020 and 21st October, 2020.

13

On 28th October, 2020 and 14th December, 2020, the petitioning creditor advised the debtor's solicitors that the petition would be listed on 11th January, 2021, and on the latter date the order of adjudication was made.

14

On 23rd February, 2021, the bankrupt brought a motion seeking to annul the order of adjudication. That was listed on 15th March, 2021 when there was no appearance by the bankrupt. In yet a further attempt at facilitation of the debtor, I adjourned the application to 12th April, 2021 peremptorily as against the bankrupt. On the latter date I allowed three weeks for an affidavit by the bankrupt and a further week for an affidavit by the petitioning creditor.

15

On 10th May, 2021, I listed the matter for hearing on 14th June, 2021 but on that date the parties suggested that the matter might benefit from written legal submissions. I provided directions for those and the matter was listed again on 19th July, 2021 and given a hearing date of 22nd July, 2021.

Grounds of application
16

The motion of 23rd February, 2021 seeks in essence:

  • (i). an order pursuant to s. 85C(1)(b) of the 1988 Act annulling the adjudication; and

  • (ii). an order extending time pursuant to s. 16(1) of the 1988 Act to show cause against the...

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