Lehane v A.R (A Discharged Bankrupt No. 3040) and J.L.R

JurisdictionIreland
JudgeMr. Justice David Barniville
Judgment Date12 November 2019
Neutral Citation[2019] IEHC 771
CourtHigh Court
Date12 November 2019

[2019] IEHC 771

THE HIGH COURT

BANKRUPTCY

David Barniville

IN THE MATTER OF THE BANKRUPTCY ACT (AS AMENDED)

BETWEEN
CHRISTOPHER D. LEHANE IN HIS CAPACITY AS THE OFFICIAL ASSIGNEE IN BANKTRUPTCY
APPLICANT
AND
A.R. (A DISCHARGED BANKRUPT NO. 3040)

AND

J.L.R.
RESPONDENTS

Bankruptcy – Order for sale – Property – Applicant seeking an order sanctioning and directing the sale of property – Whether there should be a postponement or stay on the sale of the property

Facts: The applicant, Mr Lehane, the Official Assignee in Bankruptcy, applied to the High Court for an order pursuant to s. 61(4) of the Bankruptcy Act 1988 and s. 31 of the Land and Conveyancing Law Reform Act 2009 sanctioning and directing the sale of a dwelling house and property in Tallaght, Dublin 24 and for certain consequential orders.

Held by Barniville J that it was appropriate to make an order for sale of the property under s. 61(4) of the 1988 Act. Barniville J held that the equity representing the interest in the property (vested in the Official Assignee under s. 44(1) of the 1988 Act) of approximately €65,000.00 was an asset available for the benefit of the creditors of the first respondent, the discharged bankrupt. However, Barniville J held that it was necessary to consider not only the interests of first respondent’s creditors but also the interests of the second respondent, the first respondent’s spouse, and the first respondent’s dependants (being his and the second respondent’s children, three of whom continued to reside in the property). Barniville J was expressly required to have regard to their interests under s. 61(5) of the 1988 Act. Under that provision, the court has the power to order postponement of the disposition of the relevant family home having regard to the interests of the creditors, the spouse and the dependants of the bankrupt. The Official Assignee confirmed that he did not oppose a postponement of the disposition of the property of up to two years. Barniville J believed, having regard to the factors which must be taken into account, as appeared from Re O’Shea [2018] IEHC 181, that it was appropriate having regard to the respective and competing interests of the creditors and of the second respondent and her and the first respondent’s dependants, that there should be a postponement or stay on the sale of the property for two years. Barniville J held that he would make an order granting carriage of the sale of the property to the Official Assignee subject to the postponement or stay for the period of two years. Barniville J held that he would hear counsel for the Official Assignee further in regard to an order that certain accounts and enquiries be taken and made in the Examiner’s Office. Barniville J held that while it was appropriate that an order for possession be made, there should also be a stay on that order for a period of two years from the date of the making of the order.

Barniville J held that he would make orders to give effect to this judgment, the precise terms of which could be discussed with counsel and with the respondents.

Application permitted.

JUDGMENT of Mr. Justice David Barniville delivered on the 12th day of November, 2019
Introduction
1

This is my judgment on an application by the applicant, the Official Assignee in Bankruptcy, for an order pursuant to s. 61(4) of the Bankruptcy Act, 1988 (as amended) (the “1988 Act (as amended)”) and s. 31 of the Land and Conveyancing Law Reform Act, 2009 (the “2009 Act”) sanctioning and directing the sale of a dwelling house and property in Tallaght, Dublin 24 (the “property”) and for certain consequential orders.

Factual Background
2

The property is jointly owned by the first respondent, A.R. (a discharged bankrupt), and by the second respondent, J.L.R., Mr. R's estranged wife. In this judgment, for ease of reference, I will refer to the discharged bankrupt as “Mr. R” and to his estranged wife as “Ms. L”. While the property is jointly owned by Mr. R and Ms. L (with each having a 50% interest) Mr. R does not currently reside in the property and is the subject of a barring order (the legality of which Mr. R contests and he apparently intends to challenge the legality of that order in High Court proceedings which he says he intends to bring in the near future). Ms. L continues to reside in the property. The respondents have four children ranging in ages from 10 to 20. Three of the children reside in the property. The eldest (the 20-year-old) resides abroad but considers the property to be his family home.

3

The property is the subject of a mortgage in favour of IIB Homeloans Ltd (now KBC Bank Ireland plc) (“KBC”). On the date on which the Official Assignee's application was issued (7th February, 2018), the sum of approximately €275,000.00 was due under the mortgage. As of the date of the hearing of this application on 21st October, 2019, approximately €261,000.00 was outstanding under the mortgage (including a sum of approximately €53,000.00 by way of arrears). The Official Assignee exhibited to his grounding affidavit a valuation in respect of the property of €400,000.00 (as of 19th September, 2017). Mr. R does not accept that this represents the current value of the property in light of what he says are falling property prices. However, no other valuation has been put before the court.

Mr R's Bankruptcy
4

Mr. R was adjudicated a bankrupt on his own petition on 23rd February, 2015. On the date of adjudication, all his property became vested in the Official Assignee for the benefit of his creditors (by virtue of s. 44(1) of the 1988 Act (as amended)). The property so vested in the Official Assignee included Mr. R's 50% interest in the property. By virtue of s. 85 of the 1988 Act (as amended), Mr. R was discharged from bankruptcy on the first anniversary of the date of the making of the adjudication order (i.e. on 23rd February, 2016). However, under s. 85(3), subject to s. 85(3A), where Mr. R's bankruptcy was discharged pursuant to s. 85, his unrealised property remained vested in the Official Assignee for the benefit of his creditors. Under s. 85(3A), on the third anniversary of the date of the making of the adjudication order, Mr. R's interest in the property would have stood revested in Mr. R if the Official Assignee had not applied to the court for an order for the sale of the property. The property is a family home and Mr. R's unrealised property includes an estate or interest in what was, at the date of the making of the adjudication order, the family home. The Official Assignee brought his application for an order for the sale of the property on 7th February, 2018 (the application was issued on that date and was made returnable for 19th February, 2018). The Official Assignee, therefore, applied for an order for the sale of the property prior to the third anniversary of the date of adjudication. In those circumstances, Mr. R's 50% interest in the property remained vested in the Official Assignee and did not revest in Mr. R under s. 85(3A) of the 1988 Act (as amended).

The Official Assignee's Application
5

As noted earlier, the Official Assignee issued his application for an order under s. 61(4) of the 1988 Act (as amended) sanctioning the sale of the property on 7th February, 2018. The application was adjourned by the court on several occasions between 19th February, 2018 and 29th April, 2019. On various of the adjourned dates, one or both of Mr. R and Ms. L attended in court. Neither was legally represented, although for a period, New Beginnings appear to have been advising Mr. R. Ms. L swore an affidavit on 6th December, 2018 in response to the affidavit sworn by the Official Assignee on 6th February, 2018. Mr. R swore a document purporting to be an affidavit (albeit not in the correct form) on 24th April, 2019.

6

On 24th April, 2019, the Official Assignee's application was listed for hearing on 21st October, 2019. The Official Assignee obtained liberty to file a further affidavit in advance of the hearing. That affidavit was sworn by Peter Kearney on behalf of the Official Assignee on 14th October, 2019. It exhibits correspondence and emails, mainly of a procedural nature, between the Official Assignee's solicitors and the respondents in the period from February, 2018 to April 2019. It also exhibits a copy of family law proceedings issued by Ms. L against Mr. R in the Circuit Court in Dublin which had previously been sent by the Official Assignee's solicitors to Mr. R on 11th March, 2019.

The Hearing: Adjournment Application
7

At the hearing on 21st October, 2019, the Official Assignee was represented by solicitors and by senior counsel. Ms. L and Mr. R both appeared and were unrepresented. On the application of the Official Assignee, and with the agreement of Mr. R and Ms. L, I directed that the application would be heard in private in accordance with s. 134 of the 1988 Act (as amended).

8

Mr. R sought an adjournment of the Official Assignee's application. The grounds on which Mr. R sought the adjournment were that he said that he had instructed solicitors to challenge the barring order previously made against him which prevented him from residing in the property. He stated that he was hopeful that that application could be dealt with before Christmas and that, if successful, he would be able to return to reside in the property and to make an offer to the Official Assignee to purchase his interest in the property. He was also hopeful that if the Official Assignee's application was adjourned, he would have legal representation on the next occasion. Finally, he contended that he only received a copy of Mr. Kearney's affidavit on the day of the hearing.

9

Counsel for the Official Assignee opposed the application for the adjournment and sought to press ahead with the Official Assignee's application but indicated that, if granted, the Official Assignee would be agreeable to a...

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