Patrick J. Daly, a Bankrupt

• Jurisdiction: Ireland
• Court: Court of Appeal (Ireland)
• Judge: the President
• Judgment Date: 18 December 2019
• Neutral Citation: [2019] IECA 491
• Date: 18 December 2019
• Docket Number: [2019 IECA 345] [2018 No. 491]

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

AS AMENDED

IN THE MATTER OF PATRICK J DALY, A BANKRUPT

[2019] IECA 491

[2019 IECA 345]

[2018 No. 491]

THE COURT OF APPEAL

CIVIL

Bankruptcy – Extension – Discharge – Official Assignee seeking an order postponing the automatic discharge from bankruptcy of the bankrupt – Whether the High Court lacked jurisdiction to extend the disqualification

Facts: This was an appeal to the Court of Appeal from a decision of the High Court (Costello J) of 18th October 2018. On that occasion, the High Court ordered that the bankruptcy of Mr Daly should be discharged on 23rd November 2025, that being ten years from the date of the making of the adjudication order on 23rd November 2015. The matter came before the High Court on foot of an application brought by the Official Assignee, Mr Lehane, for an order pursuant to s. 85A(1) and (4) of the Bankruptcy Act 1988, as amended, to postpone the automatic discharge from bankruptcy of the bankrupt. The reasons relied upon in support of the application were that Mr Daly had purportedly failed to cooperate with the Official Assignee in the realisation of the assets of his estate or had hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors. The core contention was that as the originating Notice of Motion had sought an extension of five years, and that said Notice of Motion was never amended, that the Court lacked jurisdiction to extend the disqualification by a ten-year period, and in purporting to do so, acted in excess of and without jurisdiction.

Held by Birmingham P that the trial judge was correct to conclude that the non-cooperation was at the serious end of the spectrum and that a very significant extension was, in the circumstances, inevitable. Birmingham P could not conclude that the period decided upon fell outside the available range; it fell well short of the midpoint of the eight to fifteen-year period for serious cases provided for in s. 85A(1)(4)(ii) of the 1988 Act. Birmingham J had not been persuaded that the sanction was so severe as to be disproportionate and not such that it should be set aside or varied by the Court.

Birmingham P held that the appeal would be dismissed.

Appeal dismissed.

JUDGMENT of the President delivered on the 18th day of December 2019

1 This is an appeal from a decision of the High Court (Costello J) of 18th October 2018. On that occasion, the High Court ordered that the bankruptcy of Patrick J Daly should be discharged on 23rd November 2025, that being ten years from the date of the making of the adjudication order on 23rd November 2015.

2 The matter came before the High Court on foot of an application brought by the Official Assignee, Mr. Christopher D. Lehane, for an order pursuant to s. 85A(1) and (4) of the Bankruptcy Act 1988, as amended, to postpone the automatic discharge from bankruptcy of the bankrupt. The reasons relied upon in support of the application were that Mr. Daly had purportedly failed to cooperate with the Official Assignee in the realisation of the assets of his estate or had hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of the creditors.

3 It was the case on behalf of the Official Assignee that the bankrupt, Mr. Daly, had made no effort whatsoever to comply with his obligation under the 1988 Act until his risk of not being discharged from bankruptcy began to crystallise. In particular, it is pointed out that the appellant did not file a Statement of Affairs, nor did he initially file a Statement of Personal Information. The High Court considered that such cooperation as was forthcoming was limited in nature, aimed solely at achieving his discharge from bankruptcy. While Mr. Daly did participate in an interview with the Official Assignee, it was apparent that he was not forthcoming during that process, particularly with respect to the involvement of a Ms. Devon Anne McNeill, otherwise “Devon Anne Ralls”, in a Panamanian investment consortium.

4 It will be necessary to say a little more about the background facts shortly, but before that it is worth considering the history and nature of the proceedings to date. The matter came before the High Court by way of a Notice of Motion dated 25th October 2016. It sought a number of reliefs including:

(i) An order extending the bankruptcy period of Mr. Patrick J Daly by five years pursuant to s. 85A(1) and (4) of the 1988 Act;

(ii) an order pursuant to s. 85(3) of the 1988 Act that the bankruptcy period should not stand discharged until after investigation and pending the making of a final determination under the application; and

(iii) for such relief as the Court deemed appropriate.

The matter was initially returnable for 7th November 2016, and on that occasion, an order in terms of the alternative relief sought at (ii) i.e. an order pursuant to s. 85(3) of the 1988 Act that the bankruptcy period should not stand discharged until after investigation and pending the making of a final determination under the application was made.

5 While a number of issues are raised in the course of this appeal, the core contention is that as the originating Notice of Motion had sought an extension of five years, and that said Notice of Motion was never amended, that the Court lacked jurisdiction to extend the disqualification by a ten-year period, and in purporting to do so, acted in excess of and without jurisdiction.

History of the Bankruptcy

6 Mr. Daly was adjudicated bankrupt on 23rd November 2015 on foot of a petition presented by the Bank of Ireland. It appears that prior to that, in May 2015, Mr. Patrick Daly left Ballinagore House, his former residence, a large family home in Westmeath. It is suggested that from there he went to live in Kent with his son. However, he did not provide the Official Assignee with an address or a telephone number. Further, he did not respond to emails sent to what had been his personal email address.

7 The Official Assignee obtained an email address for the bankrupt from the petitioner. His office emailed Mr. Daly on 1st December 2015, and furnished him with an information leaflet, a draft Statement of Personal Information, and a draft Statement of Affairs to be competed and returned to the Official Assignee. Mr. Daly was reminded in relation to his failure to comply with his statutory obligations by email of 8th January 2016. He was informed that if he did not provide the information sought within two weeks, that the Official Assignee would have to consider bringing an application to extend the period of his bankruptcy. A further and final letter of reminder was issued on 23rd February 2016 which read as follows:

“[o]ur office has attempted to contact you in relation to fulfilling your statutory obligations as a bankrupt on numerous occasions since December 2015, by post, email and phone, with no response. It is advised that your ongoing failure to cooperate with this office means that you are in breach of your duties pursuant to s. 19 of the Bankruptcy Act 1988, a copy of which I enclose for your reference.” Mr. Daly was informed that a failure to disclose the assets set out in the aforementioned Statement of Affairs would result in an application by the Official Assignee for an extension of his discharge date. The Official Assignee brought a motion seeking to extend the bankruptcy. This motion was advertised in February 2017 in the ‘Irish Independent’ and ‘Westmeath Examiner’ newspapers, an order providing for service in this manner having been obtained. Up to this point, Mr. Daly had effectively ignored his bankruptcy.

8 On 24th March 2017, Mr. Daly swore a Statement of Affairs, and on 6th April 2017, delivered a Statement of Personal Information. He swore his first replying affidavit in response to the motion on 28th April 2017, and attended for interview with the Official Assignee on 25th May 2017.

Factual Background

9 Mr. Patrick Daly and his wife, Ann Daly, were engaged in construction and property development over a number of years, operating through a number of companies and partnerships. They owned a substantial dwelling in Westmeath known as Ballinagore House, Ballinagore, County Westmeath. They were also the sole shareholders and directors of two companies, Star Alliance Ltd. and Jalpa Properties Ltd. Star Alliance owned property adjoining Ballinagore House which comprised an Equestrian Centre set upon approximately fifty acres. Mr. and Mrs. Daly also owned a holiday apartment which they held through a Spanish company.

10 Mr. and Mrs. Daly were in considerable difficulties. They were seriously insolvent and Bank of Ireland had instituted one set of proceedings and was threatening to commence a second set of proceedings. In May 2012, Mr. and Mrs. Daly took legal and financial advice in relation to their affairs. They then proceeded to enter into a number of transactions in relation to the assets referred to and those were as follows:

The first transaction concerned Mr. and Mrs. Daly entering into a contract for the sale of Ballinagore House on 1st July 2012 which had been valued by Sherry Fitzgerald on 3rd July 2012 at €550,000. There were a number of unusual aspects to the sale. It involved reserving exclusive rights of residence in favour of Mr. and Mrs. Daly and their daughter, Laura. This had the effect of reducing the value of the house from €550,000 to €100,000. The house was sold to a friend and sometime business associate of Mr. Daly who resided in America, Ms. Devon Anne McNeill. Another unusual aspect of the sale was that the purchase price was to be paid by way of an initial payment of €5,000 and then subsequent annual instalments of €5,937.50 per year over a period of 16 years.

A second transaction involved the issuing of shares in Star Alliance Ltd. to Jalpa...