Re Petition for Adjudication of Bankruptcy by Governor and Company of Bank of Ireland Against Brian O'Donnell and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 23 August 2013
• Neutral Citation: [2013] IEHC 395
• Court: High Court
• Docket Number: Record number 736P/2012
• Date: 23 August 2013

[2013] IEHC 395

THE HIGH COURT

Record number 736P/2012

Record number 737P/2012

Bank of Ireland v O'Donnell

BANKRUPTCY

IN THE MATTER OF A PETITION FOR ADJUDICATION OF BANKRUPTCY BY THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND AGAINST BRIAN O'DONNELL

-and-

IN THE MATTER OF A PETITION FOR ADJUDICATION OF BANKRUPTCY BY THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND AGAINST MARY PATRICIA O'DONNELL

GOVERNOR & COMPANY OF BANK OF IRELAND v O'DONNELL & ORS UNREP KELLY 2.11.2011 2012/17/4764 2012 IEHC 475

INSOLVENCY ACT 1986 S375(1) UK

EEC REG 1346/2000

SHIERSON v VLIELAND-BODDY 2005 EWCA CIV 974 2005 1 WLR 3966 2005 BCC 949 2006 2 BCLC 9 2005 BPIR 1170

STAUBITZ-SCHREIBER, IN RE 2006 ECR I-701 2006 BCC 639 2006 BPIR 510 2006 AER (D) 65 (JAN) (CASE C-1/04)

INTEREDIL SRL (IN LIQUIDATION) v FALLIMENTO INTEREDIL SRL 2012 BUS LR 1582 2011 ECR I-9915 2012 BCC 851 2011 BPIR 1639 2011 All ER (D) 195 (OCT) (CASE C-396/09)

EEC REG 1346/2000 RECITAL 4

EEC REG 1346/2000 RECITAL 6

EEC REG 1346/2000 RECITAL 13

EEC REG 1346/2000 RECITAL 22

EEC REG 1346/2000 ART 2(A)

EEC REG 1346/2000 ART 2(G)

EEC REG 1346/2000 ART 2(H)

EEC REG 1346/2000 ART 3

VIRGOS & SCHMIDT REPORT ON THE CONVENTION ON INSOLVENCY PROCEEDINGS 1996 PART B ART 3

VAN BINSBERGEN v BESTUUR VAN DE BEDRIJFSVERENIGING VOOR DE METAALNIJVERHEID 1974 ECR 1299 1975 1 CMLR 298 (CASE C-33/74)

CUSSENS & ORS v BROSNAN (INSPECTOR OF TAXES) UNREP CHARLETON 11.6.2008 2008/10/1986 2008 IEHC 169

CHARLETON & KELLY THE ORACLE SPEAKS: CASE C-128/11 BAR REVIEW 2013 VOL 18 NO 2 33

IRISH BANK RESOLUTION CORP LTD v QUINN UNREP DEENY 10.1.2012 2012 NI CH 1

O'DONNELL v BANK OF IRELAND & ORS UNREP MCGOVERN 31.7.2013 2013/41/11934 2013 IEHC 375

MCDERMOTT RES JUDICATA & DOUBLE JEOPARDY 1999 CHAP 14

RSC O.76 r25

RSC O.9 r15

LANCEFORT LTD v BORD PLEANALA UNREP MORRIS 13.5.1997 1998/23/8994 1997 IEHC 83

LOCAL GOVERNMENT (PLANNING & DEVELOPMENT) ACT 1963

RSC O.76

SHELDON v BROWN BAYLEY'S STEEL WORKS LTD & DAWNAYS LTD 1953 2 QB 393 1953 2 AER 894 1953 3 WLR 542

VOLKES v EASTERN HEALTH & SOCIAL SERVICES BOARD & ANOR 1990 NI 388

MANDER v FALCKE 1891 3 CH 488

DPP, PEOPLE v KEHOE 1985 IR 444

BANKRUPTCY ACT 1988 S11(1)

BANKRUPTCY ACT 1988 S11(2)

WESTON LTD v BORD PLEANÁLA UNREP CHARLETON 1.7.2010 2010/53/13257 2010 IEHC 255

O'CONNELL v DUNGARVAN ENERGY LTD UNREP FINNEGAN 27.2.2001 2001/18/5119

LEVER (FINANCE) LTD v WESTMINSTER CORP 1971 1 QB 222 1970 3 WLR 732 1970 3 AER 496

SIMONS PLANNING & DEVELOPMENT LAW 2ED 2007 18

RSC O.124

RSC O.124 r1

OCS EX PARTE DEBTOR, IN RE 1904 2 KB 161 1903-1904 52 WR 595

DEBTOR (NO 478 OF 1908), IN RE 1908 2 KB 684

DANSKE BANK A/S T/A NATIONAL IRISH BANK v MCFADDEN UNREP DUNNE 21.9.2011 2012/9/2457 2011 IEHC 551

O MAOILEOIN v OFFICIAL ASSIGNEE 1989 IR 647 1989/3/644

COMPANIES ACT 1963

O GRIOFAIN v EIRE & ORS UNREP CHARLETON 23.4.2009 2009/45/11296 2009 IEHC 188

SOCIETY OF LLOYDS v LOUGHRAN UNREP FINLAY GEOGHEGAN 2.2.2004 2013/48/13618

RSC O.76 r19(1)(A)

RSC O.76 r19(1)(G)

RSC O.76 r19(4)

BANKRUPTCY ACT 1988 S7(1)(F)

RSC O.76 r20(2)

Bankruptcy – Bankruptcy petition - Centre of main interest - Jurisdiction - Requirements - Service - Compliance - Court"s discretion - Jurisdiction of the court - Preservation measures - Council regulation (EC) number 1346/2000 of 29 May 2000 on insolvency proceedings - Insolvency Regulations - Rules of the Superior Court

Facts: The debtors in these proceedings were a husband and wife who were involved in the business of property investment with both holding positions of directorship in companies in Ireland that had been established for that purpose. As a result of the pair"s investments, a substantial portfolio of properties was acquired. However, the debtors were forced to borrow large sums of money from creditors to finance these investments. The petitioner was one such creditor. On the 23rd December 2010, the petitioner initiated proceedings against the debtors seeking judgment for the sum of €69,379,394.87 in respect of unpaid borrowings made to them. On the 4 ^th March 2011, it was agreed between the parties that the debtors would consent to judgment being entered against them if they failed to fulfil a number of obligations that included complying with a repayment schedule. The debtors subsequently failed in this regard, and on the 12 ^th December 2011, after the petitioner had applied to the court, judgment was entered in its favour in the amount of €71,575,991.29 and costs.

On the 22 ^nd December 2011, the petitioner requested a statement of affairs form the debtors. The debtors subsequently moved to a property they owned in London. On the 23 ^rd February, a statement of affairs was sent to the petitioner from the debtors" London based solicitor along with an individual voluntary arrangement proposal – this proposal was subsequently rejected. The petitioner subsequently applied to the court for examination of the debtors which was granted following a hearing on the 27th March 2012. On that day, the debtors advised the court that they had presented bankruptcy petitions in London that morning. The petitioner executed bankruptcy petitions in Ireland against the first and second named debtors on the 25th May 2012 and 7th June 2012 respectively. The petitioner also successfully applied to be joined as a party in regards to the bankruptcy proceedings in the United Kingdom from where they sought to challenge the debtors" assertion that their centre of main interest was in London. The bankruptcy proceedings in Ireland were adjourned until the proceedings in London had concluded. It was subsequently decided in the United Kingdom proceedings that the debtors" centre of main interest was not in England and after the appeal processes were unsuccessful and exhausted, the Irish bankruptcy proceedings were reconvened.

Held by Charleton J that in determining whether an adjudication of bankruptcy should be made, the court had to determine whether the date of the presentation of the bankruptcy petition or the date of the hearing of the application was relevant in deciding where the debtors" centre of main interest was. On that basis, the court then had to decide whether the centre of main interest was Ireland or England; if it was ruled to be England, the court also had to determine whether that fact was ascertainable by creditors. Finally, the court was also required to decide whether there were any defects in the service of the bankruptcy petition or in the petition itself, and if so, whether the defect(s) could be excused.

In regards to the first question, it was held that the relevant date for determining a debtor"s centre of main interest was the date the bankruptcy petition was presented, because this was the date on which a petitioner made their case that an insolvent person should be adjudicated bankrupt. Such a determination was also considered useful because it prevented a new centre of main interest being established for an improper motive. This ruling was held to be in accordance with the Court of Justice of the European Union cases of Staubits-Schreiber (Case C-1/04) [2006] E.C.R. I-701 and Interedil v. Fallimento (Case C-396/09) [2011] E.C.R. I-0000. With this in mind, it was held that on the 25 ^th June 2012 and 7 ^th June 2012, the dates on which petitions were executed in relation to the first and second named debtors respectively, both debtors" centre of main interest was Ireland. This was determined on the basis that their tangible property and property rights were chiefly situated in Ireland as stipulated by Council regulation (EC) number 1346/2000 of 29 May 2000 on insolvency proceedings.

Regarding the question on the service of the bankruptcy petition, it was held that the service could not be considered defective. The first named debtor averred that he had been handed two sealed envelopes (one for him and one for his wife) but he was not informed of the contents. As these were not immediately opened, and because his wife was not personally served, it was argued that they had not been properly served a copy of the petition at least 7 days before the hearing of the petition in breach of Order 76 Rule 25 of the Rules of the Superior Courts. However, it was held that the account given by the petitioner in regards to service was more convincing – that there had been discussions prior to service that petitions were to be executed and that the first named debtor had agreed that he would accept his wife"s petition when it came due to her being ill. The first named debtor was also noted to be an experienced solicitor. On that basis, it was determined that the debtors could be in no doubt that they had been served with a bankruptcy petition therefore the service was not defective.

In regards to the question of the bankruptcy petition notice itself, the debtors had argued that it was defective due to there being an overstatement of the amount owed. However, it was held that in this case, a judgment for the debt had already been proven which had in effect been made with the consent of the debtors. Even if this overstatement was held to be an error, it was further held that the court was entitled to overlook errors depending on their severity. On the basis of all of the above, it was held that the debtors should be adjudicated bankrupt.

Application to adjudicate the debtors bankrupt granted.

1 Judgment of Mr. Justice Charleton delivered on the 23rd day of August 2013.

2 The Bank of Ireland petition to have Brian O'Donnell and Mary Patricia O'Donnell adjudicated bankrupt. The application arises out of a debt by way of borrowing or guarantee of borrowing amounting to €71,575,991.29. This debt is proven. Judgment in that sum was entered by consent of the debtors by Kelly J. on the 12 ^th December, 2011.

3 There are six questions for determination on the...