Section 61(6) of the Bankruptcy Act 1988 (as Amended) and the Estate of Samuel Snoddy, a Discharged Bankrupt

• Jurisdiction: Ireland
• Judge: Mr Justice Mark Sanfey
• Judgment Date: 23 June 2023
• Neutral Citation: [2023] IEHC 363
• Court: High Court
• Docket Number: Bankruptcy No. 4009 BANKRUPTCY NO. 5171 CIRCUIT COURT RECORD NO: 2017/0025A

In the Matter of Section 61(6) of the Bankruptcy Acts 1988 to 2015

and

In the Matter of the Estate of Samuel Snoddy, A Discharged Bankrupt

In the Matter of Section 61(6) of the Bankruptcy Act, 1988 to 2015

and

In the Matter of the Estates of Samuel Snoddy, Thomas Snoddy and Paul Browne, Discharged Bankrupts

David Mavroudis

Respondent

and

Fergal Browne

Notice Party

South Eastern Circuit County of Carlow

Between

David Mavroudis

Plaintiff

and

Sam Snoddy, Tom Snoddy, Fergal Browne and Paul Browne

Defendants

[2023] IEHC 363

Bankruptcy No. 4009

BANKRUPTCY NO. 4008

BANKRUPTCY NO. 5171

CIRCUIT COURT RECORD NO: 2017/0025A

THE HIGH COURT

Bankruptcy – Settlement – Judgment mortgage value – Official Assignee in Bankruptcy seeking directions in relation to the sums to be paid to a secured creditor – Whether proceedings between Carlow County Council and the Official Assignee in Bankruptcy should be compromised

Facts: Mr S Snoddy was adjudicated bankrupt on 6 February 2017 and had since been discharged. The applications before the High Court were as follows: (1) an application by the Official Assignee in Bankruptcy (the OA) pursuant to s. 61(6) of the Bankruptcy Act 1988 as amended to direct the OA to compromise certain proceedings between Carlow County Council and the OA in terms set out in a negotiated settlement agreement of 19 October 2021 (the settlement application); (2) a further application by the OA pursuant to s. 61(6) seeking directions in relation to the sums to be paid to a secured creditor, Mr Mavroudis, on foot of judgment mortgages registered by him against the interests of Mr S Snoddy, Mr T Snoddy, Mr P Browne (the discharged bankrupts) and Mr F Browne, who together compromised the “Snoddy-Browne” partnership, in respect of a number of properties – the interests of the said bankrupts vest in the OA for the benefit of their respective creditors (the judgment mortgage value application); (3) an appeal by Mr Mavroudis from an order of the Circuit Court (Judge Doyle) of 20 October 2021 in proceedings issued by Mr Mavroudis seeking a well charging order and an order for the sale of lands contained in folio CW1789F – the issue related primarily to the respective priorities of judgment mortgages registered over the property by Mr Mavroudis, and a legal and beneficial interest in the property contended for by a Ms Keenan which is referenced at special condition 16 of a contract for sale of the property (the Circuit Court appeal).

Held by Sanfey J that the settlement agreement was a pragmatic solution which sought to give effect, in as far as possible, to the 2005 agreement Mr S Snoddy entered into with the Council; it kept the legal costs to a minimum; it produced tangible benefits for the estates of the discharged bankrupts; it set at nought the risk of substantial liabilities to costs being incurred by the OA if his defence of the Circuit Court proceedings, or prosecution of other proceedings, were unsuccessful; and the factors set out in the OA’s submissions, which would militate against a successful pursuit of Mr Mavroudis’ objectives, would be avoided. The settlement agreement seemed to Sanfey J to be in the best interests of the creditors and the estates of the discharged bankrupts. Sanfey J proposed making an order in the terms set out at para. 1 of the OA’s notice of motion. Sanfey J made orders directing that: (1) the amounts secured by judgment mortgages registered by Mr Mavroudis on folio 1789F County Carlow were as follows – (a) the sum of €243,087.97, (b) interest of 8% on the sum of €197,632.50 for a period of six years from 1 July 2013, (c) the sum of €19,816.61 in respect of the costs of proceedings 2013 54MCA and 2013 68MCA, (d) interest of 2% on the VAT exclusive portion of the said costs from 2 February 2022, and (e) less the instalments already paid to Mr Mavroudis of €41,240; and (2) the parties were to agree the quantum of the appropriate amounts and should have liberty to apply in the event of difficulty.

Sanfey J held that: (i) Ms Keenan had established a vendor’s lien on the property the subject of the proposed contract of 19 October 2021 for a sum payable in discharge of consideration due to Ms Keenan pursuant to special condition 16 of the 2003 contract for sale in writing; (ii) to the extent that the contract approved by order of the Circuit Court of 20 October 2021 provided for deduction of a sum from the sale proceeds to be paid to Ms Keenan, that provision was in accordance with the rights and obligations of the parties and secured creditors; and (iii) the said vendor’s lien must be discharged in priority to the judgment mortgages registered against the folio pertaining to the lands in sale.

Judgment approved.

JUDGMENT of Mr Justice Mark Sanfey delivered on the 23 ^rd day of June 2023 .

Introduction

1 . This judgment relates to three separate but related matters set out in the titles above, primarily concerning the estate of Samuel Snoddy, who was adjudicated bankrupt on 6 February 2017 and has since been discharged. The applications before the court are as follows:

(1) An application by the Official Assignee in Bankruptcy (‘ the OA’) pursuant to s.61(6) of the Bankruptcy Act 1988 as amended to direct the OA to compromise certain proceedings between Carlow County Council and the OA in terms set out in a negotiated settlement agreement of 19 October 2021 (‘ the settlement application’);

(2) A further application by the OA pursuant to s.61(6) seeking directions in relation to the sums to be paid to a secured creditor, David Mavroudis (‘ Mr Mavroudis’), on foot of judgment mortgages registered by him against the interests of Samuel Snoddy, Thomas Snoddy, Paul Browne (all three of whom are discharged bankrupts) (‘ the discharged bankrupts’) and Fergal Browne, who together compromise the “Snoddy-Browne” partnership, in respect of a number of properties. The interests of the said bankrupts vest in the OA for the benefit of their respective creditors (‘ the judgment mortgage value application’);

(3) An appeal by Mr Mavroudis from an order of the Circuit Court (Her Honour Judge Alice Doyle) of 20 October 2021 in proceedings issued by Mr Mavroudis seeking a well charging order and an order for the sale of lands contained in folio CW1789F. The issue relates primarily to the respective priorities of judgment mortgages registered over the property by Mr Mavroudis, and a legal and beneficial interest in the property contended for by a Ms Mary Keenan which is referenced at special condition 16 of a contract for sale of the property (‘ the Circuit Court appeal’).

2 . All of the foregoing applications were heard at one sitting of this Court. The OA was represented by senior and junior counsel, and various of the notice parties were also represented by counsel. Mr Mavroudis, who was a respondent to the first two applications and the moving party in the third, represented himself. All of the parties delivered written submissions in each of the three applications, and supplemented them with detailed oral submissions during the hearing. In this regard, I have had access to transcripts of the hearing, and the digital audio recording where necessary.

3 . There was some debate at the outset of the hearing as to the order in which the applications should be heard. As the first application mentioned above traversed comprehensively the extremely complicated and indeed convoluted history of the matter, I heard the applications in the order set out above, and propose to deal with them in this judgment in the same order.

1. THE SETTLEMENT APPLICATION

4 . The relief sought by the OA in this application is expressed in the notice of motion as follows:

“1. An order pursuant to s.61(6) of the Bankruptcy Act 1988, (as amended) directing the Applicant herein, the Official Assignee in the Estate of Samuel Snoddy, to compromise proceedings bearing record no. 00154/2019 in the County of Carlow as between Carlow County Council and the Applicants herein in the terms as set out in the settlement agreement dated 19 October 2021.”

5 . The grounding affidavit for the application was sworn on 11 November 2021 by Michael Ian Larkin, who is the Official Assignee in Bankruptcy. This affidavit set out the background to the matter in detail, and the rationale for the reliefs sought. Mr Mavroudis, who is a secured creditor in the bankruptcy of each of the discharged bankrupts above, was served with the application and acted as a legitimus contradictor in respect of the application. Mr Mavroudis swore a very lengthy replying affidavit of 10 December 2021, and a subsequent affidavit of 01 February 2022. Carlow County Council (‘ the Council’) was also placed on notice of the application, and Mr Pat Delaney, Chief Financial Officer of the Council, swore a brief affidavit supporting the OA's application on 12 January 2022. Mr Larkin also swore a short affidavit on 14 January 2022 in response to the first affidavit of Mr Mavroudis.

6 . It should be noted that Mr Mavroudis and the Council have been put on notice of the OA's application pursuant to directions of the court (Humphreys J) given on 23 June 2021. The Council initiated proceedings in the Circuit Court (record no. 00154/2019) (‘ the Circuit Court proceedings’) in which various reliefs were sought against the OA, including a declaration that the Council hold the beneficial interest in Entry 1 on part 1(A) of folio CW25036F, which consists of a partially built road and bridge at Ballinacarrig, County Carlow, and an order for specific performance to compel the OA to execute the transfer of that folio.

7 . Mr Mavroudis is a secured creditor in the bankruptcy of each of the discharged bankrupts on foot of a High Court judgment in the amount of €243,087.97, together with interests and costs, against the Snoddy-Browne partnership. The judgment was obtained by Mr Mavroudis due to non-payment of fees for...