Re Sean Dunne (a bankrupt)

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 02 October 2018
• Neutral Citation: [2018] IEHC 813
• Court: High Court
• Docket Number: [No. 2478]
• Date: 02 October 2018

IN THE MATTER OF SEAN DUNNE, A BANKRUPT

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

[2018] IEHC 813

[No. 2478]

THE HIGH COURT

BANKRUPTCY

Postponement– Discharge from bankruptcy – Bankruptcy payment order – Whether the High Court should make an order postponing the automatic discharge from bankruptcy of the bankrupt – Whether the High Court should make a bankruptcy payment order

Facts: The issue for decision in this case was whether the High Court should make an order postponing the automatic discharge from bankruptcy of the bankrupt, Mr Dunne, pursuant to s. 85A (4) of the Bankruptcy Act 1988 on the grounds that the bankrupt had failed to cooperate with the Official Assignee in the realisation of his assets 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 of the bankrupt. The second issue for consideration was whether the court should make a bankruptcy payment order pursuant to s. 85D of the 1988 Act and, if so, for how much?

Held by Costello J that the bankrupt had failed to cooperate with the Official Assignee in the realisation of assets of the bankrupt and had hidden from or failed to disclose to the Official Assignee income or assets which could be realised for the benefit of creditors for the bankrupt. Costello J held that it was appropriate to make an order pursuant to s. 85A (4) postponing the discharge from bankruptcy until the 29th April, 2028. Costello J reduced the maximum possible duration by three months to take account of his age as she did in the case of In Re McFeely [2016] IEHC 299.

Costello J held that she would make a bankruptcy payment order on the basis that the information before the court was limited and incomplete; this was so because the bankrupt had failed to provide the Official Assignee or the court the necessary information. Costello J held that if either party adduces further evidence, it may be possible to vary this order either upwards or downwards in the light of such evidence. In particular, Costello J had been given no information regarding the tax liability which may attach to the salary paid to the bankrupt by Mountbrook USA. In the absence of such information Costello J ordered the bankrupt to pay the sum of €7,000 per month commencing on the 25th September, 2018 and ending on the 25th May, 2021.

Orders granted.

JUDGMENT of Ms. Justice Costello delivered on the 2nd day of October 2018

1 The issue for decision in this case is whether the court should make an order postponing the automatic discharge from bankruptcy of the bankrupt pursuant to s. 85A (4) of the Bankruptcy Act, 1988 as amended on the grounds that the bankrupt has failed to cooperate with the Official Assignee in the realisation of his assets or has 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. The second issue for consideration is whether the court should make a bankruptcy payment order pursuant to s. 85D of the Act of 1988 as amended and, if so, for how much?

The facts

2 On the 29th March, 2013 Mr. Sean Dunne (‘the bankrupt’) petitioned for bankruptcy in the United States and Mr. Richard Coan was appointed his trustee (‘the US trustee’). The order of adjudication included a worldwide stay on creditor action against the bankrupt and his estate.

3 On the 12th February, 2013 Ulster Bank Ireland Ltd (‘the petitioner’) presented a petition to the High Court to have the bankrupt adjudicated bankrupt in this jurisdiction.

4 On 28th May, 2013 while the petition was still pending in the High Court, the petitioner filed an amended motion in the US bankruptcy court for entry of an order granting limited relief from the automatic stay to permit the petitioner to take all actions necessary

(i) To perfect service upon the bankrupt and

(ii) To obtain an order adjudicating the debtor ‘bankrupt’ in the proceedings pending in the High Court.

5 The US trustee filed a statement in partial support of the petitioner's motion for relief from the worldwide stay. The bankrupt objected to the relief and on the 4th June, 2013 the US bankruptcy court, Judge Shiff, granted the relief sought by the petitioner and ordered:

‘(a) to permit the petitioner and/or its successors and assigns to take all actions necessary under Irish law to perfect service upon the [bankrupt] in the ‘Irish bankruptcy proceedings’

(b) to permit parties in interest to continue with the ‘Irish bankruptcy proceeding’ and to take all actions necessary in connection with or relating to the petitioner's application to have the [bankrupt] adjudicated ‘bankrupt’ in the ‘Irish bankrupt proceeding’, with the proviso ‘that nothing in this order shall deprive this court of jurisdiction over the [bankrupt] or over the property of the bankruptcy estate.

(c) to permit the parties in interest, in the event that the [bankrupt] is adjudicated ‘bankrupt’ in the ‘Irish bankrupt proceeding’, ‘to attend and participate in any proceeding for the nominating and/or voting in respect of the appointment of a trustee pursuant to s. 110 of the [Act of 1988], as amended, and to take all actions set forth under the laws of Ireland in connection therewith’.

The order specifically provided that ‘…except as explicitly set forth herein the automatic stay shall not be modified or waived, and no party in interest in this case shall, except by leave of this court, take any affirmative action in the Irish bankruptcy proceeding that violates the terms of the automatic stay.’

6 Following on from this order and after the petitioner obtained an order for substituted service of the petition, the bankrupt was adjudicated a bankrupt on the 29th July, 2013.

7 The bankrupt brought an application to show cause and on the 6th December, 2013 the High Court dismissed the bankrupt's application. The bankrupt appealed to the Supreme Court and on the 15th May, 2015 Laffoy J. delivered the judgment of the court and dismissed the appeal and affirmed the order of adjudication.

8 On the 31st July, 2013 the Official Assignee wrote to the bankrupt's solicitors notifying him of his duty ‘to fully cooperate with me in the administration of your estate which includes providing me with full contact details (i.e. address, phone numbers and email address)’. He was asked to complete the enclosed statement of affairs and statement of personal information and return it completed to the Official Assignee by the 16th August, by email with originals in the post as soon as possible. A copy of s. 19 of the Act was enclosed to inform the bankrupt of his duties to the Official Assignee.

9 On the 28th November, 2013 the Official Assignee's solicitors, Messrs. O'Gradys, wrote to Clarkin Lynch, solicitors for the bankrupt, referring again to the obligation of the bankrupt to deliver a written statement of affairs and to attend for interview and to give every reasonable assistance to the Official Assignee in the administration of the estate. The letter stated that the bankrupt had failed to attend for interview and failed to file a statement of affairs and highlighted the provisions of ss. 19, 44 and 123 (1) (c) of the Act of 1988.

10 Messrs. O'Gradys wrote again on the 11th December, 2013 saying that in light of a finding of fact inimical to the bankrupt in in camera proceedings, ‘the failure of the bankrupt to file a statement of affairs and attend for interview clearly puts the Official Assignee on notice that there may not be full disclosure of assets and there may be a breach of the bankrupt's duties and obligations pursuant to the Bankruptcy Act, 1988’. He was again requested to file a statement of affairs forthwith and to attend for interview without delay.

11 On the 22nd May, 2014 the bankrupt was in Dublin but he did not contact the Official Assignee either in advance or while in Dublin to arrange to attend for interview. Messrs. O'Gradys wrote on the 29th May, 2014 pointing this out and asking that he advise when he would attend for interview. His solicitors replied four weeks later on the 18th June, 2014 suggesting that the interview be conducted by teleconference. He said he had been interviewed over four days as part of the proceedings in bankruptcy in the United States and the transcript of the s. 341 meeting (as it was called) had been made available by the US trustee to the Official Assignee. The letter stated:

‘It cannot now be in dispute that he has made comprehensive and voluminous disclosure to your client. We understand that two of his former in-house accountants have agreed to meet with your client. Accordingly, there can be no suggestion that our client is not cooperating fully.’

12 On the 19th February, 2015 the Official Assignee wrote to the bankrupt at 22 Stillman Lane, Greenwich, Connecticut, CTO 6831, being the address obtained by the Official Assignee from the records in the US bankruptcy as the bankrupt had not provided the Official Assignee with his address. The letter was headed ‘request for attendance at interview’. It stated that since the date of adjudication the bankrupt had failed to cooperate with the Insolvency Service of Ireland and had not attended for interview. It continued:

‘We are aware that you have been in the jurisdiction on numerous occasions since 29th July, 2013 and have made no effort to seek an appointment with the office to attend and discharge your obligations under the Bankruptcy Act, 1988. Requests to Clarkin Lynch to have you detail your visits to Ireland over the last two years have been ignored. Given that you are from past experience likely to be in Ireland for Sunday week's rugby match against England in the Aviva, I am again requesting you to attend my office on a date suitable to you on your visit, so that we can discuss your bankrupt estate.’

13 The bankrupt did not...