Lehane v Hoey
| Jurisdiction | Ireland |
| Judge | Ms. Justice Pilkington |
| Judgment Date | 08 April 2020 |
| Neutral Citation | [2020] IEHC 223 |
| Court | High Court |
| Date | 08 April 2020 |
IN THE MATTER OF SECTION 85 OF THE BANKRUPTCY ACT, 1988 (AS AMENDED)
AND
IN THE MATTER OF JOHN HOEY, A BANKRUPT NO. 3512
[2020] IEHC 223
Pilkington J.
THE HIGH COURT
BANKRUPTCY
Bankruptcy – Extension – Bankruptcy Act 1988 s. 85A – Applicant seeking an extension of the period of the respondent’s bankruptcy – Whether there were grounds for extending the period of the respondent’s bankruptcy
Facts: The applicant, Mr Lehane, the official assignee (OA), applied to the High Court, pursuant to s. 85A of the Bankruptcy Act 1988 (as amended), seeking an extension of the period of bankruptcy of the respondent, Mr Hoey, for a period of ten years, or such other period as the Court deemed appropriate, based upon the two criteria within that section being: (a) a failure to cooperate with the OA in the realisation of the assets of the bankrupt; (b) hiding from or failing to disclose to the OA income or assets which could be realised for the benefit of the creditors of the bankrupt. The four specific grounds relied upon by the OA for an extension of Mr Hoey’s bankruptcy comprised: (a) that a substantial amount of machinery was moved into storage at a local hotel; (b) the discovery of €12,000 in cash on the debtor’s premises; (c) the hiding of the Kepak money; (d) the failure by Mr Hoey throughout the entirety of the bankruptcy process to furnish a proper statement of affairs, to meet the OA’s requirement and those of s. 19 of the 1988 Act. The first three grounds were advanced pursuant to the criteria within s. 85A (1)(a), with the fourth ground being pursuant to s. 85A (1)(b).
Held by Pilkington J that whilst there were grounds under both criteria set out within s. 85A (1) (a) and (b) of the 1988 Act for extending the period of Mr Hoey’s bankruptcy, she was happy to consider, having heard the parties, whether this matter should be adjourned for a short period of time to see if any further cooperation might arise, in which case this could well determine the extent of any bankruptcy extension concerning Mr Hoey; this was particularly in light of the contents of the OA’s solicitor’s letter of 27th February 2020 to Mr Hoey’s solicitor.
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 Hoey and in respect of the terms of any orders that were required to be made, including any orders as to costs.
Judgment approved.
This application, pursuant to s. 85A of the Bankruptcy Act, 1988 (as amended) (the “1988 Act”) seeks an extension of the respondent's period of bankruptcy for a period of ten years, or such other period as this Honourable Court deems appropriate, based upon the two criteria within that section being:-
(a) a failure to cooperate with the Official Assignee (“OA”) in the realisation of the assets of the bankrupt;
(b) hiding from or failing to disclose to the OA income or assets which could be realised for the benefit of the creditors of the bankrupt.
After the issue of the s.85A application and within that application Mr. Hoey, the respondent, issued a motion on the 11th day of April, 2018 seeking an order to cross-examine the OA, pursuant to RSC Order 40, r. 1.
Order 40, rule 1 of the Rules of the Superior Courts, simply states that:-
“Upon any petition, motion, or other application, evidence may be given by affidavit, but the Court may, on the application of either party, order the attendance for cross-examination of the person making any such affidavit.”
Accordingly, whilst that provides the genesis for this application, it gives no guidance as to how, in circumstances such as this, the cross-examination of the OA is to take place. However the caselaw, whilst limited, is instructive.
That motion, seeking reliefs pursuant to RSC 40 r.1 was heard by Costello J. who delivered judgment in respect of this discrete issue on 15th day of October, 2018.
In granting the order sought Costello J. quoted from the Court of Appeal judgment in Sean Dunne, A Bankrupt [2017] IECA 304, where Peart J. held as follows:-
“The OA has given evidence of his belief or opinion which the High Court will be invited to take into account as relevant evidence and draw inferences adverse to the applicant. This may all culminate in findings which will have implications for the duration of the bankruptcy and, for that matter, the bankrupt's ability to exit the bankruptcy process. As this evidence cannot effectively be challenged absent the right of cross-examination, in my view he ought as a matter of procedural fairness be entitled to cross-examine the OA in respect of basis for his beliefs or opinions.”
Costello J. continued:-
“However, an application brought pursuant to s. 85A is not a lis inter partes. It is not an invitation to a bankrupt to criticise the conduct of the bankruptcy and the administration of the estate by the Official Assignee and his officials. It is not concerned with the evidence which was presented before the court on previous applications during the course of the administration of the bankruptcy estate, such as applications for orders pursuant to either s. 21 or s. 28 of the Act.
In para. 5 of his affidavit sworn on the 11th April, 2018 to ground the application seeking to cross examine the Official Assignee, the bankrupt listed fourteen matters in respect of which he said cross examination of the Official Assignee was necessary. In fact, the matters set out are not in fact matters upon which the Official Assignee can be cross examined in the s. 85A motion which is yet to be heard by the court. Peart J. made it crystal clear that the cross examination of the Official Assignee which a bankrupt is permitted to conduct on the basis of a bankrupt's entitlement to fair procedures relates to the belief of the Official Assignee as referred to above. He is not entitled to a wide ranging cross examination of matters which are not directed towards that belief.
On this basis, I will order that the Official Assignee be available for cross examination on his two affidavits sworn in support of the motion brought pursuant to s. 85A of the Bankruptcy Act, 1988 as amended. The bankrupt must identify the particular passages or paragraphs in the two affidavits upon which he wishes to cross examine the Official Assignee. These must be confined to the belief of the Official Assignee as to the alleged wrong doing of the bankrupt in relation to the recovery of assets or the concealing of assets. In accordance with the ruling of the Court of Appeal in Sean Dunne, a bankrupt, the passages must be identified in advance of the hearing of the motion and he may not attempt to cross examine the Official Assignee on matters which fall outside the scope of these passages or which is not addressed to the belief of the Official Assignee as set out in s. 85A(1) of the Act.”
The background to this matter is the adjudication of Mr. Hoey as a bankrupt on the 29th February, 2016. The present application issued on the 13th February, 2017 and, a number of affidavits have been sworn by each party; the OA on 13th February, 2017, Mr. Hoey in reply on the 2nd March, 2017, the supplemental affidavit of the OA on 21st April, 2017 and a second affidavit by Mr. Hoey on the 27th March, 2018.
By order dated 20th February, 2017, Mr. Hoey's bankruptcy period was, pursuant to s. 85A(3) extended up to 27th April, 2017 and, thereafter, the period of bankruptcy was extended pending the determination of this application.
Since the notice of motion to cross-examine was issued, there has been a further replying affidavit from Mr. Hoey on 2nd March, 2017 and a supplemental affidavit by the OA on 21st April, 2017. Thereafter, there were adjournments from time to time whilst the bankrupt indicated to the court that he was awaiting the outcome of his application for civil legal aid. On 22nd January, 2018, the bankrupt advised the court that this application had been unsuccessful and that he would be proceeding to represent himself.
In any event, he was represented in this application by senior and junior counsel.
Strictly speaking, in my view the Order of Costello J. only dealt with the affidavits that had been filed within this application up to that date. It was not prospective. However, as set out above, additional affidavits were subsequently filed by the OA (and Mr. Hoey) and the issues between the parties have, in my view, narrowed considerably over time. In such circumstances, I have considered this aspect of the matter on the basis of all of the affidavits which have been filed.
Before setting out or dealing with these matters in more detail, in seeking reliefs pursuant to s. 85A, it is necessary to identify the issues raised on the facts of this specific case.
Section 85A(1),(4),(5) and (6) states as follows:-
“85A.
(1) The Official Assignee, the trustee in bankruptcy or a creditor of the bankrupt may, prior to the discharge of a bankrupt pursuant to section 85, apply to the Court to object to the discharge of a bankrupt from bankruptcy in accordance with section 85 where the Official Assignee, the trustee in bankruptcy or the creditor concerned believes that the bankrupt has —
(a) failed to co-operate with the Official Assignee in the realisation of the assets of the bankrupt, or
(b) 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.
…
(4) Where the Court is satisfied that the bankrupt has —
(a) failed to co-operate with the Official Assignee in the realisation of...
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