Lalor (a bankrupt)

• Jurisdiction: Ireland
• Judge: Ms. Justice Pilkington
• Judgment Date: 31 July 2019
• Neutral Citation: [2019] IEHC 599
• Court: High Court
• Date: 31 July 2019

[2019] IEHC 599

THE HIGH COURT

BANKRUPTCY

Pilkington J.

IN THE MATTER OF SECTION 85A OF THE BANKRUPTCY ACT, 1988

AND

IN THE MATTER OF GODFREY LALOR (A BANKRUPT)

Bankruptcy – Discharge – Extension – Official Assignee seeking an order extending the discharge from bankruptcy of the bankrupt – Whether there were grounds under both criteria set out within s. 85A and s. 85A(4) of the Bankruptcy Act 1988 for extending the period of the bankrupt’s bankruptcy

Facts: The Official Assignee sought an order pursuant to s. 85A and s. 85A(4) of the Bankruptcy Act 1988 extending the discharge from bankruptcy of Mr Lalor on the basis that he had failed to cooperate with the Official Assignee and the realisation of the assets of the bankrupt, and/or hidden from or failed to disclose income or assets which could be realised for the benefit of this creditors. A maximum period of extension (fifteen years) was sought by the Official Assignee.

Held by the High Court (Pilkington J) that, whilst there were grounds under both criteria set out within s. 85A and s. 85A(4) of the 1988 Act for extending the period of Mr Lalor’s bankruptcy, it would be happy to consider, having heard the parties, whether this matter should be adjourned for a short period of time (perhaps a period of months) to see if any further cooperation might arise, in which case this could well determine the extent of any bankruptcy extension concerning Mr Lalor.

Pilkington J held that she would hear the parties as to whether it would be appropriate to permit a short extension of this matter prior to any final adjudication upon the possible time extension of the bankruptcy of Mr Lalor and any other orders and reliefs that might be required.

Judgment approved.

JUDGMENT of Ms. Justice Pilkington delivered on the 31st day of July, 2019

1 The motion brought by the Official Assignee seeks an order pursuant to s. 85A and s. 85A(4) of the Bankruptcy Act, 1988 extending the discharge from bankruptcy of Godfrey Lalor on the basis that he has failed to cooperate with the Official Assignee and the realisation of the assets of the bankrupt, and/or hidden from or failed to disclose income or assets which could be realised for the benefit of this creditors. A maximum period of extension (now fifteen years) is sought by the Official Assignee.

2 Godfrey Lalor (a bankrupt) (‘Mr. Lalor’) was adjudicated bankrupt on 27 June, 2016. An order extending his period of bankruptcy pending this adjudication pursuant to s. 85A (3) was granted by the court on 19th June 2017.

3 The motion itself was originally issued on 9 June 2017. However, other issues arose within this bankruptcy process which were initially required to be dealt with. It is a matter in which extensive affidavits (and even more extensive exhibits) has been filed; within this application I have received five affidavits sworn by the Official Assignee and six from Mr. Lalor (who has represented himself throughout).

4 In addition, by order of Costello J. on 12 March, 2018 pursuant to s. 21 of the Bankruptcy Act, 1988 (‘the 1988 Act’), the court directed that a summons issue directing that Mr. Lalor appear before the court pursuant to s. 21 of the Bankruptcy Act, requiring him to be examined on oath and produce documentation in respect of his estate.

5 That hearing took place before O'Connor J. on 23 April 2018 and a transcript has been provided. At its conclusion O'Connor J. made certain orders for the collection, by an official of the Official Assignee's office, of documentation held by Mr. Lalor at a property known as Rosedale House (“Rosedale”) and that two firms of solicitors furnish documentation in respect of the title to a property known as Monte Rosa, Sorrento Road, Dalkey Co Dublin (“Monte Rosa”).

6 A number of complaints are raised against Mr. Lalor. Initially any bankrupt is obliged to furnish a sworn and completed statement of personal information and statement of affairs in a timely manner post adjudication as a bankrupt. Some degree of time is afforded any bankrupt in order to deal with this state of affairs. The initial documentation from the Official Assignee's office seeking that documentation dates from 29 June, 2016, 15 July, 2016 and 23 September, 2016. On 23 October, 2016 (four months' post adjudication), the SPI statement of affairs was furnished. In essence, the Official Assignee held it to be seriously defective and in part wholly illegible. On 1 March, 2017, additional documentation was furnished – again in the view of the Official Assignee incomplete and in part illegible. On 15 March, 2017, Mr. Lalor was asked to provide a proper original sworn copy by post together with various outstanding information that was still being sought.

7 On foot of various matters, the Official Assignee instructed the bankruptcy inspector to attend at certain properties to assess Mr. Lalor's assets. The reports of the bankruptcy inspector dated 4 August, 2016 (in respect of Rosedale House) and 26 April, 2017 (Monte Rosa) discloses some degree of cooperation only.

8 In the events that have happened, an ongoing difficulty arose in seeking to discern the beneficial ownership of Monte Rosa. It is fair to say that the Official Assignee seeks a significant extension to the period of Mr. Lalor's bankruptcy, in large part owing to what he alleges to be his conduct in withholding information in respect of his interest in Monte Rosa.

9 The position with regard to Monte Rosa was set out by Mr. Lalor at addendum 2 of his statement of personal information dated 1 March 2017 is as follows: -

‘Note 10 - Chateaubern SARL and Chateauberne SARL are companies registered in France and Luxembourg. I borrowed approximately €3.2 million and lent it to Berncastle Ltd. This was subsequently loaned to Chateaubern SARL which invested in a development property in France. The sale proceeds of this investment repaid the intercompany loan and Chateaubern SARL invested c.800k in another property in France, repaid the loan to Berncastle Ltd which in turn partially repaid the directors loan to me. Chateaubern SARL also invested approximately €5.5 million in a development property in Sorrento Road in Dalkey and this was purchased by me in trust. The asset is currently worth approximately €2.5 million. There is an outstanding CGT liability of approximately €3-4 million in France, the payment of which was intended to be by way of the development and sale of the Sorrento Road site. The €800k investment in a French Development Company Rinardoo SARL was invested through a company owned by Chateaubern SARL called Chateauberne SARL and registered in Luxembourg. Most of the €800 investment has been repaid to Chateaubern SARL and repaid to Berncastle Ltd in repayment of the inter company loan, which in turn, has been repaid to me as a directors loan repayment between approximately 2011 and 2016. There is approximately €10k remaining in Rinardoo SARL that remains to be paid to Chateauberne SARL as part of the final account as the property has been sold. The receipts and expenses relating to Chateaubern SARL and Chateauberne SARL are available for inspection if required.’

10 The company Berncastle Limited (‘Berncastle’) referred to above is a company in respect of which Mr. Lalor was a shareholder, his spouse holding the remaining shareholding. CRO records disclose it was dissolved on 21 May 2014.

11 Up until the s. 21 hearing before O'Connor J. on 23 April, 2018, the position regarding Monte Rosa was shrouded in confusion. Analysing the affidavits sworn by the Official Assignee, on the basis of the information then available to him, clearly shows how his understanding of Mr. Lalor's ownership or potential ownership of that property changes markedly over time.

12 He avers in his first affidavit, sworn on 8 June, 2017, that it was only following the interview meeting arranged with Mr. Lalor on 8 February, 2017 that Mr. Lalor indicated that he may be the beneficial owner of that property. He was, thereafter, asked to provide details and, in particular, supporting documentation of that claim. This was done by letters dated 9 February, 2017, 15 March, 2017 and 26 April, 2017. On 2 May, 2017, Mr. Lalor advised that he was trying to retrieve the trust documents. He again confirmed that he was seeking the documentation from storage in an email of 12 May, 2017.

13 The second affidavit of Christopher Lehane sworn on 8 March, 2018, grounded an application to examine Mr. Lalor pursuant to s. 21 of the 1988 Act. This affidavit discloses that the bankruptcy inspector had attended Monte Rosa on 14 November, 2017 and had met with a family member (the bankrupt's son) who stated that it was in fact the family home. Another feature of this matter is that Mr. Lalor has indicated throughout that he in fact resides at Rosedale House and I shall revert to this point.

14 At that time, the Official Assignee's understanding of the ownership was set out at para. 13 as follows: -

‘The bankrupt suggested that the property is owned by a French company called Chateauburn SARL (registration number 327096186)… From my investigations, the property may in fact be owned by a Luxembourg company Chateauberne SARL (company number B141753)… which I believe is in turn owned by a company called Berncastle Limited. It is possible that Monte Rosa was purchased by the bankrupt with money lent to him by either the French company or the Luxembourg company.’

15 It was on the basis of these matters that it proved necessary to examine the bankrupt before the court. That examination took place, as I said, before O'Connor J. on 23 April, 2018.

16 The third affidavit of Christopher Lehane is sworn on the 20th day of June, 2018. Within that affidavit, Mr. Lehane confirms that the s. 21 motion was adjourned to afford an opportunity to obtain the documents concerning Monte Rosa from Rosedale House, Pearse Mehigan Solicitors and Eversheds...