O' Maoileoin v The Official Assignee

• Jurisdiction: Ireland
• Judge: MR JUSTICE FENNELLY
• Judgment Date: 06 March 2006
• Neutral Citation: [2006] IESC 10
• Court: Supreme Court
• Docket Number: No. 18/00
• Date: 06 March 2006

[2006] IESC 10

THE SUPREME COURT

Fennelly J.

Kearns J.

Macken J.

No. 18/00

No. 447/04

O'MAOILEOIN v OFFICAL ASSIGNEE

IN THE MATTER OF MICHAEL B O'Maoileoin, a Bankrupt

BETWEEN

MICHAEL B O'MAOILEOIN

Applicant

and

THE OFFICIAL ASSIGNEE

Respondent

BANKRUPTCY ACT 1988 S85(5)(b)

BANKRUPTCY ACT 1988 S135

O MAOILEOIN v OFFICIAL ASSIGNEE 1989 IR 647

O MAOILEOIN (A BANKRUPT) v OFFICIAL ASSIGNEE UNREP HIGH COURT LAFFOY 21.12.1999 1999/21/6659

HUSSEY, IN RE UNREP HIGH COURT HAMILTON 23.9.1987 1987/6/1762

IRISH BANKRUPT & INSOLVENT ACT 1857 S116

PRIMOR PLC v STOKES KENNEDY CROWLEY 1996 2 IR 459

GILL v PHILIP O'REILLY & CO LTD & ORS [GILL (A BANKRUPT), IN RE] 2003 1 IR 434

BANKRUPTCY:

Appeal

Application for annulment of adjudication as bankrupt - Application to re-enter application to annul based on additional evidence - Delay - Whether inordinate and inexcusable delay -Whether bankrupt estopped by conduct - Whether absence of sworn verifying affidavit basis for annulment irrespective of delay - Whether Official Assignee estopped from reliance upon delay as had notice of absence of sworn affidavit - Balance of justice - In re John Gill: Gill v Phillip O'Reilly & Co Ltd [2003] 1 IR 434 considered - Appeal dismissed in both (18/2000 & 447/2004 - SC- 6/3/2006) [2006] IESC 10 O'Maoileoin v Official Assignee

Facts: The appellant appealed against the decision of the High Court declining to make an order pursuant to s. 85(5)(b) of the Bankruptcy Act 1988 on foot of a motion seeking annulment of the appellant’s adjudication as a bankrupt and declining to make an order pursuant to s. 135 of the Bankruptcy Act 1988 setting aside the order permitting the Official Assignee to seek an order in aid in bankruptcy in the High Court of England and Wales. The appellant also appealed against the decision declining to re-enter the matter which had been before the High Court based on additional evidence.

Held by the Supreme Court (Fennelly J; Kearns and Macken JJ) in dismissing the appeals that in addition to the extreme delay, the balance of justice was against the granting of an order for annulment. The application for re-entry was without merit.

Reporter: R.W.

MR JUSTICE FENNELLY

1 There are two separate appeals before the Court in the matter of the Appellant's bankruptcy:

2 1. An appeal against a decision of Laffoy J of 21st December 1999 declining (a) to make an order pursuant to section 85(5)(b) of the Bankruptcy Act1988 on foot of a motion seeking annulment of the Appellant's adjudication as a Bankrupt; (b) to make an order pursuant to section 135 of the same Act setting aside an order dated 9th November 1995 permitting the Official Assignee to seek an order in aid in bankruptcy in the High Court of Justice of England and Wales;

3 2. An appeal against a decision of Finlay-Geoghegan J dated 23rd July 2004 declining to re-enter the matter which had been before Laffoy J in 1999, based on additional evidence.

4 The Appellant was a solicitor practising in Ireland from 1964 to 1986 and says he has practised as a barrister in England since 1986.

5 He was adjudicated a Bankrupt by Hamilton J (as he then was) on 12th January 1987. The petitioning creditor was one Patrick McDonald. Mr McDonald had been a client of the Appellant, when he practised as a solicitor. Mr McDonald had recovered judgment against the Appellant in a sum of some in an action for professional negligence. The finding of negligence was based on the settlement of a personal injury action, which Mr McDonald claimed successfully had been effected without his authority. The judgment was affirmed by this Court. That judgment was unsatisfied.

6 The Appellant did not show cause against his adjudication of 12th January 1987. He applied to the High Court by notice of motion dated 27th October 1987 for an order annulling the adjudication on the ground that the debtor's summons served by the petitioning creditor had been defective, because the petitioning creditor had caused a receiver by way of equitable execution to be appointed in respect of part of the sum due. On 21st September 1988, Hamilton P., as he then was, gave judgment dismissing that application. His judgment is reported at [1989] I.R. 647. It contained the following statement:

"In this particular case, the position is that the debtor's summons claimed the entire of the amount due on foot of the judgment of the High Court dated the 6th November, 1985. No amount has been paid in respect thereof to either the petitioning creditor or to the receiver and the entire of the amount is due and owing and was due at the date of the issue of the debtor's summons."

7 Hamilton P. held that the debtor's summons had been correct in matter of form and that the failure of the Appellant to comply with it had constituted an act of bankruptcy. There was no appeal from that order.

8 In November 1988, it is alleged, according to evidence presented to the High Court in the present proceedings, that there was a compromise of claims between the petitioning creditor and the Appellant. The former had accepted sums in discharge of his claims. The petitioning creditor applied to the High Court ex parte for annulment of the bankruptcy. In the affidavit of the petitioning creditor grounding that application, it was alleged, as it is in the present application, that the affidavit verifying the bankruptcy petition had never been sworn by him. It has been sworn on behalf of the Official Assignee in the present proceedings, and not contradicted, that the Appellant was represented by Senior Counsel at that hearing. The application for annulment of the bankruptcy was refused. However, the High Court noted that the applicant was withdrawing all claims against the Appellant and relieved him of all further obligations in the bankruptcy matter.

9 It is obvious that a very long period elapsed between the adjudication combined with the steps taken by the Appellant and the petitioning creditor in 1988 and the step taken to seek annulment of his Bankruptcy in 1999. It is material to consider what happened in that period.

10 Laffoy J recorded in her High Court judgment that,"because of lack of funds and the Bankrupt being out of the jurisdiction, the bankruptcy was dormant from the end of 1988 to the beginning of March 1995 when the Official assignee became aware that the Bankrupt was practising as a barrister in London."

11 An affidavit sworn on behalf of the Official Assignee recounts some of the events of these years. The Official Assignee did not advertise for creditors, in the absence of apparent assets. Nonetheless, he received claims in the bankruptcy in the amount of IR£424,468. He made many unsuccessful efforts to persuade the Appellant to furnish a statement of affairs. It is material to the issue on the present appeal that on 22nd March 1995, the Appellant wrote to the Official Assignee stating the following:

"Mr Michael O'Maoileoin……draw[s] attention to an affidavit of Mr Patrick McDonald……The said affidavit confirms that Mr O'Maoileoin is not indebted to Mr McDonald in any sum and also confirms that at no time did Mr McDonald ever swear an affidavit for Messrs Vincent & Beatty Solicitors which would have enabled that firm to file an affidavit and petition of the type required by …… the Rules of the Superior Courts."

12 The Official Assignee learned that the Appellant was a member of Lloyds of London and that, in that capacity, he was the owner of assets amounting to a total of some £45,654.39 sterling. The Official Assignee applied, with the authority of an order of the High Court, (the order which is challenged in these proceedings) to the High Court of Justice (in Bankruptcy) of England and Wales for an order in aid in bankruptcy. He secured significant payments from Lloyds to the credit of the bankruptcy. The Official Assignee incurred costs in a total sum of I.R.£49,989.

13 The Appellant applied anew to the High Court, by Notice of Motion dated 18th October 1999, for an order pursuant to section 85(5)(b) of the Bankruptcy Act1988 annulling his adjudication as a Bankrupt.

14 It was assumed, for the purposes of the application, and it continues to be assumed for the purposes of the appeal that the allegation made by the petitioning creditor in his affidavit in 1988 was correct, i.e., that the affidavit grounding the bankruptcy was not sworn. The parties agreed to have it decided as a preliminary issue whether, on the stated assumption, the adjudication should be set aside.

15 The application was resisted on the ground that the Appellant was estopped from seeking annulment of his bankruptcy. It was too late, after the lapse of so many years, for the Appellant to rely on what, though an essential step, was in truth, looked from the point of view of the merits, a technical point.

16 Laffoy J, in her judgment relied on the judgment of Hamilton P in the case ofIn re Sean Hussey (Unreported, High Court 23rd September 1987). It was there established that there had been several technical defects affecting the correctness and regularity of the original adjudication. There had been a delay of some two years prior to the application for annulment. Hamilton P. said, at p. 7:-

"However, I am satisfied that it is not open to the bankrupt to rely on this point at this stage to have the adjudication of bankruptcy annulled.

He did not raise this point on the motion to show cause, allowed the bankruptcy to proceed, allowed the realisation of the assets to proceed, allowed the proof of debt sittings to proceed, allowed the interim dividend herein before referred to be paid, negotiations with his creditors for the purpose of making an offer of composition after bankruptcy and generally the bankruptcy to proceed in the ordinary way, and...