Neutral Citation [2015] IEHC 640
THE HIGH COURT
COMMERCIAL
[2015 No. 1736 P.]
BETWEEN
THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND
AND TOM KAVANAGH
PLAINTIFFS
AND
BRIAN O’DONNELL AND MARY PATRICIA O’DONNELL
DEFENDANTS
JUDGMENT of Ms. Justice Costello delivered on 22nd day of October, 2015.
1. There have been a number of cases involving the parties to these proceedings and related parties which have been the subject of written judgments of the High Court, the Court of Appeal and the Supreme Court. The facts have been set out in detail in those decisions and I propose only to set out an outline of the relevant facts in this judgment.
2. In this case the plaintiffs seek injunctions restraining the defendants, their servants and/or agents or any other person acting on their behalf, or having notice of the making of the Order from trespassing, interfering with, entering upon or otherwise attending at the property known as Gorse Hill, Vico Road, Killiney, Co. Dublin (“Gorse Hill”); an order directing the defendants and others to vacate Gorse Hill and other interlocutory orders restraining the same persons from impeding or obstructing the second named plaintiff (“the Receiver”), and directing the defendants and others to deliver up to the Receiver any keys, alarm codes and/or other security and access devices; and damages for trespass and breach of contract and other related reliefs.
3. The defendants are a husband and wife and they were each adjudicated bankrupt on 3rd September, 2013, pursuant to a judgment obtained by the first named plaintiff (“the Bank”) in the High Court on 12th December, 2011, in the sum €71,575,991.29.
4. On 1st June, 2006, a company known as Vico Limited (which is registered in the Isle of Man) (“Vico”) mortgaged and charged to the the Bank its interest in the property known as Gorse Hill by two separate Deeds of Mortgage and Charge. They were to provide security in relation to guarantees which Vico had provided to the Bank in respect of borrowings of the defendants and related companies from the Bank.
5. The judgment of 12th December, 2011, remained unsatisfied and the Bank called in the indebtedness of Vico to the Bank pursuant to its guarantees by letters dated 18th May, 2012. As the debt was not discharged, the Bank appointed the Receiver as receiver and manager over the assets of Vico on 7th June, 2012. Following his appointment, solicitors acting for the Bank and the Receiver wrote to the secretary of Vico informing it of the appointment of the Receiver and informing it that the Receiver intended to take possession of Gorse Hill on 1st August, 2012.
6. Gorse Hill had for many years been occupied by the defendants and their four children. As of the date of the appointment of the Receiver the defendants were resident in London and Gorse Hill was occupied by their four adult children. The children instituted proceedings bearing High Court Record Number 2012/7554 P. challenging the Bank’s security and seeking to restrain the Receiver from taking possession of the property. They were unsuccessful in both the High Court and the Supreme Court and ultimately the defendants’ children were directed to vacate Gorse Hill by 2nd March, 2015.
7. The defendants state that they have a right of residence in Gorse Hill. This is based on a letter written on 20th October, 2000, to the trustees of a trust company which holds the shares in Vico on trust for the children of the defendants. The handwritten letter provides as follows:-
“Re: Settlement 16th December, 1997.
Dear Sirs,
Following due consideration we the undersigned confirm and assure you the trustees that we shall at all times care and support the beneficiaries of the settlement namely Blake, Bruce, Blaise and Alix [Alexandra] O’Donnell.
We confirm that we shall use the residence Gorse Hill, Vico Road as a residence of ourselves and the beneficiaries for as long as the trustees on behalf of the beneficiaries shall permit. It is acknowledged by the trustees + the beneficiaries that any notice given to us to vacate the residence shall be in writing + shall in the absence of our consent be at least 2 calendar years prior to the vacation date to allow sufficient time for alternative arrangements to be made”.
The letter went on to state that they would keep the premises in good repair and pay all outgoings and was signed by the defendants.
8. Since 2012, the defendants were living in London but when they returned to Dublin they resided at Gorse Hill with their children. The defendants returned to Gorse Hill at sometime in February, 2015 and continued to reside there after their four adult children vacated the property on 2nd March, 2015, in accordance with an order of court. The defendants refused to vacate the property at the request of the plaintiffs and accordingly the plaintiffs instituted these proceedings on 3rd March, 2015.
9. The plaintiffs sought interlocutory injunctions against the defendants in the terms set out above. The injunctions were granted by the High Court on 12th March, 2015, and the defendants appealed to the Court of Appeal. On 15th April, 2015, the Court of Appeal dismissed the defendants’ appeal.
10. The plaintiffs delivered a statement of claim on 8th May, 2015, and on 22nd June, 2015, the defendants delivered a defence and counterclaim.
11. In the Defence and Counterclaim the defendants plead that they are a married couple and they live at Gorse Hill and that their right of residence still subsists and has not been terminated. They also challenged the validity of the Deeds of Mortgage and Charge on the basis that the second named defendant did not consent to the granting of the mortgage and charge and that therefore the Deeds do not comply with the provisions of the Family Home Protection Act 1976. In the alternative they plead that, while she was represented in the transactions by her husband’s firm of solicitors, Brian O’Donnell and Partners, she did not have the benefit of independent legal advice. It is also alleged that the judgment of 12th December, 2011, was obtained by fraud, that the trial judge held undisclosed shares in the Bank and therefore was judge in his own cause and that the Motion for Judgment was never properly served upon them. They seek to appeal the judgment and there is a motion listed for hearing before the Supreme Court on 23rd October, 2015, seeking leave to extend time in which to appeal the judgment of 12th December, 2011, based on the grounds advanced in the Defence and Counterclaim.
12. The defendants applied to annul the orders adjudicating them bankrupt. The grounds upon which they sought the annulment are set out in my judgment of 16th April, 2015, where I refused to annul the bankruptcies pursuant to s. 85C of the Bankruptcy Act 1988. Without rehearsing what is set out in that judgment, part of the argument related to the fact that it was claimed that the judgment of 12th December, 2011, was obtained by fraud and that the Motion for Judgment had not properly been served upon them. The defendants have appealed against the judgment and Order of 16th April, 2015, and the appeal is listed for hearing in the Court of Appeal on 8th December, 2015.
13. In the Counterclaim delivered in these proceedings the defendants seek a declaration that the judgment of 12th December, 2011, is a nullity and of no legal effect or in the alternative that the judgment be rescinded. They also seek damages for fraud and the second named defendant seeks a declaration that the following documents be declared void by reason of an alleged breach of s. 3 of the Act of 1976. The documents are:-
(i) The Deeds of Mortgage and Charge dated 1st June, 2006, between Vico Limited and the first named plaintiff in respect of Gorse Hill, Vico Road, Killiney, Co. Dublin and Folio 211;
(ii) Guarantee and Indemnity dated 1st June, 2006, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of the defendants;
(iii) Guarantee and Indemnity dated 1st June, 2006, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of Hibernia (2005) Limited;
(iv) Guarantee and Indemnity dated 19th October, 2006, executed by Vico Limited and the first named plaintiff in respect of the obligations of the defendants;
(v) Deed of Confirmation dated 15th June, 2007, executed by Vico Limited in favour of the first named plaintiff in respect of the Guarantee and Indemnity dated 19th October, 2006;
(vi) Guarantee and Indemnity dated 24th March, 2011, executed by Vico Limited in favour of the first named plaintiff in respect of the liabilities of the defendants, Vico Swiss Holdings AG and Grey Stoke Societe Anonyme; and
(vii) Any other deed or instrument which purports to create a charge or other security of any kind in favour of the first named plaintiff over Vico Limited in respect of, inter alia, the liabilities of the defendants and “various corporate entities”.
In the alternative it is sought that these documents be declared void on the basis that the second named defendant was not separately legally advised on the transactions that formed the subject matter of the security documents, though it is pleaded that her husband’s firm, Brian O’Donnell and Partners, represented her.
14. The defendants also issued a motion on 26th June, 2015, seeking liberty to issue and serve a third party notice on Bank of Ireland Private Banking Limited in these proceedings and also seeking an order under O. 18, r. 1 of the Rules of the Superior Courts in relation to related pleadings in which the defendants are plaintiffs.
Present application
15. The Official Assignee brought a motion seeking an order restraining the defendants from litigating the proceedings on the grounds that the subject matter of the proceedings form part of the estates of the Bankrupts and are vested in the Official Assignee in Bankruptcy.
16. Section 44 of the Bankruptcy Act 1988 provides as follows:-
“(1) Where a person is adjudicated bankrupt, then, subject to the provisions of this Act, all property belonging to that person shall on the date of adjudication vest in the Official Assignee for the benefit of the creditors of the bankrupt.
(2) Subject to the provisions of this Act, the title of the Official Assignee to any property which vests in him by virtue of subsection (1) shall not commence at any date earlier than the date of adjudication.
(3) The property to which subsection (1) applies includes—
(a) all powers vested in the bankrupt which he might legally exercise in relation to any property immediately before the date of adjudication;
(b) all property which was the subject of any conveyance or transfer which sections 57 , 58 and 59 declare void as against the Official Assignee, subject to the rights of any persons which are preserved by those sections.
(4) The property to which subsection (1) applies does not include—
(a) property held by the bankrupt in trust for any other person, or
(b) any sum which vests in the Official Assignee under section 7 (1) (a) of the Auctioneers and House Agents Act, 1967 , or section 30 (i) of the Central Bank Act, 1971
(5) Without prejudice to any existing principle or rule of law or equity, established practice or procedure in relation to damages or compensation recovered or recoverable by a bankrupt for personal injury or loss suffered by him, property which is acquired by or devolves on a bankrupt before the discharge or annulment of the adjudication order (in this Act called ‘after-acquired property’) shall vest in the Official Assignee if and when he claims it.”
17. The word “property” is defined in s. 3 of the Act of 1988, as amended, by the European Communities (Personal Insolvency) Regulations 2002 as including “things in action”. Thus litigation is included in definition of property. As was stated succinctly by Kelly J. in Quinn & Ors v. Irish Bank Resolution Corporation Ltd. & Ors [2012] IEHC 261 at para. 22:-
“[t]hese statutory provisions divest a bankrupt of his property automatically upon adjudication by operation of law. The bankrupt no longer maintains any interest in the property.”
In Quinn v. IBRC, Kelly J. quoted with approval from the judgment of Hoffman L.J. in Heath v. Tang [1993] 1 WLR 1421. Hoffman L.J., with whom Kelly J. agreed, stated at p. 1423, that there were certain causes of action personal to a bankrupt which do not vest in his trustee (or, in Ireland, the Official Assignee):-
“[t]hese include cases in which ‘the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate reference to his rights of property’”.
18. It is common case between the parties that personal causes of action as set out by Hoffman L.J. do not vest in the Official Assignee. The Official Assignee submits that the defendants’ Defence and Counterclaim in these proceedings relate to “things in action” which are not personal to the Bankrupts so that they comprise part of their respective estates. On the other hand, the Bankrupts say that the litigation is personal to them and therefore the right to defend the proceedings and to counterclaim does not vest in the Official Assignee. Therefore his application should be refused.
19. In Heath v. Tang, Hoffman L.J. had to consider the position of the bankrupt as a defendant. He stated as follows at pp. 1424-1425:-
“[i]n cases in which the bankrupt is defendant, there is of course usually no question of the cause of action having vested in the trustee. Unless the defence is set-off (a situation to which we shall return later) the bankrupt will not be asserting by way of defence any cause of action of his own. But in cases in which the plaintiff is claiming an interest in some property of the bankrupt, that property will have vested in the trustee. And in claims for debt or damages, the only assets out of which the claim can be satisfied will have likewise vested. It will therefore be equally true to say that the bankrupt has no interest in the proceedings. As we have seen, section 285(3) [of the Insolvency Act 1986] deprives the plaintiff of any remedy against the bankrupt’s person or property and confines him to his right to prove.
On the other hand, there are actions seeking relief such as injunctions against the bankrupt personally which do not directly concern his estate. They can still be maintained against the bankrupt himself and he is entitled to defend them and, if judgment is adverse, to appeal. This distinction was on the basis of the decision of the Court Appeal in Dence v. Mason [1879] W.N. 177 in which a bankrupt wished to appeal against an order made before the bankruptcy granting an injunction to restrain passing off and ordering him to pay costs. His trustee declined to appeal but the court said, at p. 177, that the bankrupt himself could appeal against the injunction
‘which was a personal order against him, notwithstanding the bankruptcy, though he had no interest in the order as to costs, his estate being now vested in the trustee.’
This implies that the bankrupt would not have been entitled to appeal against an order which was enforceable only against his estate. This appears clearly from the decision of the House of Lords in Rochford v. Battersby (1849) 2 H.L. Cas. 388. The bankrupt was entitled to estates in Ireland subject to an annuity in favour of his mother. He had mortgaged the estate to a creditor who brought foreclosure proceedings in which he joined the bankrupt, his assignees and the annuitant. The action raised the question of whether the mortgage had priority over the annuity and the Lord Chancellor of Ireland decided in favour of the annuitant. The bankrupt alone appealed to the House of Lords which dismissed his appeal on the ground that he had no locus standi. Lord Cottenham L.C. said, at p. 406, that the question was whether he had ‘that interest in the subject matter which would entitle [him] to appear here [as a party] questioning the propriety of the decision below.’ The bankrupt did not:
‘the courts have always considered these acts of Parliament as divesting the insolvent of all title and interest in the property, which would authorise and justify him in entering into any litigation respecting it.’”
20. At p. 1427 of the judgment, Hoffman L.J. continued:-
“[t]he insolvency law has of course changed a great deal since the time of Lord Eldon and In re Smith (A Bankrupt), Ex parte Braintree District Council [1990] 2 A.C. 215 is authority for taking a fresh look at the construction of the Insolvency Act 1986 in modern conditions. Nevertheless, the principle that the bankrupt is divested of an interest in his property and liability for his debts remains fundamental in the new code. The consequences for the bankrupt’s right to litigate do not seem to us inconvenient or productive of injustice. The bankruptcy court acts as a screen which both prevents the bankrupt’s substance from being wasted in hopeless appeals and protects creditors from vexatious challenges to their claim.”
21. In Quinn v. IBRC, Kelly J. held that Mr. Sean Quinn, being a bankrupt, did not have a personal entitlement to defend the third party proceedings in the case they were not personal claims. He held that the decision whether to defend the proceedings or not was vested in the Official Assignee. The Official Assignee had declined to defend them and in Kelly J.’s view he was entitled to so decide.
22. Thus it is clear that it is the law in this State, as in England and Wales, that it is for the Official Assignee to decide whether or not to defend proceedings brought against a bankrupt, save those which are of a personal nature. It follows that I must determine whether any of the issues raised in the defendants’ Defence and Counterclaim are of such a personal nature. If they are not, the right to litigate (which includes the right to defend litigation) forms part of their property which has been vested in the Official Assignee and he has the sole power to decide whether or not be defend these proceedings.
The judgment of 12th December, 2011
23. The first part of the defendants’ Defence and Counterclaim relates to the allegations that the judgment of Kelly J. of 12th December, 2011, should be set aside on the basis of fraud or on the basis that the Motion was not properly served or that Kelly J. ought not to have dealt with the matter in circumstances where he had a shareholding in the Bank. As stated above, a motion seeking leave to extend the time in which to appeal the judgment is pending before the Supreme Court. Unless and until the Order of 12th December, 2011, is set aside it is binding on all parties and the courts are required to give effect to the judgment. I previously dealt with this aspect of the defendants’ arguments in an application where they applied to annul their bankruptcies pursuant to s. 85C of the Act 1988 when I refused the application. It is a matter for the Supreme Court as to whether or not it will extend time in which the Bankrupts may appeal the judgment and, if so, whether they will grant the appeal. Any questions surrounding the validity of the judgment therefore falls to be determined by the Supreme Court. Unless and until the judgment is set aside it is binding and a collateral challenge to the judgment, such as is pleaded here, cannot be advanced as a defence to the plaintiffs’ claim in these proceedings or as the basis of a counterclaim.
24. Secondly, Heath v. Tang was concerned with a situation where the bankrupt wished to appeal a judgment obtained against him which he alleged had been obtained by fraud. It was the judgment which grounded the petition upon which he was adjudicated a bankrupt. His Trustee in Bankruptcy did not wish to appeal. Hoffman L.J. stated at p. 1427:-
“[The bankrupt] criticises the conduct of the trial and contends that the decision against him was obtained by false evidence and fraud. The trustee does not wish, or is not in a position, to pursue the appeal. In my judgment [the bankrupt] has no locus standi to do so and his application must be refused.”
25. This precise ruling was followed in the High Court of New Zealand in the case of De Alwis & Ors v. Luvit Foods International & Anor, 24th March, 2010, where, at paras. 25-26 of his judgment, Courtney J. held:-
26. The defendants rely upon the decision of Luordo v. Italy (App. No. 32190/96) (2005) 41 EHRR 26 to argue that the restriction of a their right to litigate by reason of their status as bankrupts infringes their rights under Article 6(1) of European Convention on Human Rights. In Luordo, the Court noted that the right of access to a court and the right to litigate was not absolute and considered whether or not the restrictions on a bankrupt’s capacity to take legal proceedings was proportionate to the legitimate aim pursued in limiting that right. At para. 87 of the judgment the Court held:-
“[t]he restriction on the applicant's right of access to a court is not in itself open to criticism. However, the risk with such a system is that it may unreasonably limit the right of access to a court, particularly if the proceedings are protracted, as they were in the instant case in which they lasted fourteen years and eight months. In that connection, referring to its findings with respect to Article 1 of Protocol No. 1, the Court considers that, contrary to what the Government have affirmed, the delays in the proceedings were not attributable to the failure of the attempts to sell the applicant's house at auction or to the applicant's conduct.
Consequently, it finds that there was no justification for restricting the applicant's right of access to a court for the full duration of the proceedings, since, while in principle a restriction on the right to take legal proceedings is necessary to achieve the aim pursued, the necessity will diminish with the passage of time. In the Court's view, the length of the proceedings thus upset the balance that had to be struck between the general interest in securing the payment of the bankrupt's creditors and the applicant's personal interest in having access to a court. The interference with the applicant's right was accordingly disproportionate to the aim pursued.”
27. It is quite clear that the limitation on a bankrupt’s right to litigate of itself does not infringe the provisions of Article 6(1) of the Convention. Luordo is authority for the proposition that if the restriction on the right continues for a very long period of time that it may become unlawful. It was not suggested by the defendants that the restriction on their right to litigate personally had become unlawful because of the duration of their bankruptcy. This is not surprising given the fact that the date of adjudication was 3rd September, 2011. It could not be said in all the circumstances that the restriction was disproportionate to the aim as set out in the judgment of the Court in Luordo.
28. As stated above, the Supreme Court is due to hear a motion brought by the defendants seeking leave to extend the time in which to appeal the judgment of the High Court of 12th December, 2011. At the hearing of that Motion the Supreme Court will rule whether or not the defendants have locus standi to bring the appeal against that judgment or whether that right to appeal has vested in the Official Assignee. Accordingly I shall refrain from expressing a view on this point in this judgment. For the purposes of this decision I remain bound to treat all existing orders as valid.
Right of residence
29. The plaintiffs say that the Bankrupts have no interest at all in the property at Gorse Hill. In reply, the Bankrupts say that they have a right of residence which has not being terminated. On the one hand, they say that this is sufficient to resist the applications by the plaintiffs for an injunction. On the other hand, they submit to this Court that the right of residence is not a property right which vests in the Official Assignee following their adjudication as bankrupts. They say that they each enjoy a personal right which is not assignable and which does not form part of their respective estates.
30. In response the Official Assignee says that if the Bankrupts are in a position to resist the plaintiffs’ claims in these proceedings it can only be on the basis that they have an interest in, or relating to Gorse Hill. It follows that the defence must be on the basis that they have a property interest in Gorse Hill or, at the very least, the litigation has immediate reference to their rights of property within the meaning of Heath v. Tang and Quinn v. IBRC. Therefore it must be a property right which vested in the Official Assignee upon their adjudication.
31. The defendants’ argument is based on a misunderstanding of the provisions of s. 81 of the Registration of Title Act 1964. Section 81 provides:-
“[a] right of residence in or on registered land, whether a general right of residence on the land or an exclusive right of residence in or on part of the land, shall be deemed to be personal to the person beneficially entitled thereto and to be a right in the nature of a lien for money's worth in or over the land and shall not operate to create any equitable estate in the land.”
The defendants submit that because the right is personal to the person beneficially entitled thereto that it therefore is not a property right.
32. This submission is clearly incorrect. A right of residence has long been recognised as constituting an interest in land. A right of residence may be registered as a burden on the folio of registered land. The defendants sought to rely upon the decision of Lavan J. in Johnston v. Horace [1993] 1 I.R.L.M. 594 to support the argument that a right of residence was not an interest in land because it could not be quantified in monetary terms. This is to misunderstand the decision in Johnston v. Horace. In that case it was clearly conceded by all parties and acknowledged by the Court that the right of residence asserted by the plaintiff was an interest in property and the issue for the Court was firstly whether the right had been abandoned and secondly, if it had not, whether it could or should be valued or whether it should be protected by an injunctive relief. Lavan J. granted an injunction because he held, at p. 601, that “the defendant has not the means nor the intention to make proper provision for the plaintiff’s right of residence.” It was not because the right of residence was a personal as opposed to a property right, as the defendants in this application argued.
33. In Bracken v. Byrne [2005] IEHC 80, Clarke J. considered the decision of Lavan J. in Johnston v. Horace and, at p. 6 of his judgment, held as follows:-
“[i]t is clear therefore, that the reason why Lavan J. was not persuaded to convert the plaintiff’s entitlement to money was that it was impractical on the facts of that case so to do. The case is therefore not authority for the proposition that a court could not convert the right of residence to money in an appropriate case.
However that begs the question as to what would be such an appropriate case. Neither counsel in the case before me argued that there was an entitlement, as of right, on the part of either the owner of the property or the beneficiary of the right to have the right converted into money.”
In a case where the owner of such rights is effectively excluded from the enjoyment of those rights by the owner of the property there maybe circumstances where the appropriate form of redress which the court should grant would be to value the rights and direct that the beneficiary be paid for those rights rather than to grant injunctive relief.”
34. It is absolutely incontestable that a right of residence, such as is asserted by the defendants in their Defence and Counterclaim in these proceedings, is an interest in property. Thus the right to litigate in respect of the claimed right of residence is one which vests in the Official Assignee. It is not personal to the Bankrupts. It is solely for the Official Assignee to decide whether or not he wishes to litigate in respect of this asset of the estates of the Bankrupts.
Family Home Protection Act 1976
35. The second named defendant pleads in the Defence and Counterclaim that there was a failure to comply with the requirements of s. 3 of the Family Home Protection Act 1976 and that accordingly the mortgage and charge granted by Vico to the Bank is void.
36. It is common case that Vico is the owner of Gorse Hill. It was Vico who granted the Deeds of Mortgage and Charge over its interest in Gorse Hill. Thus the provisions of the Family Home Protection Act 1976 can have no application to the granting of the Deeds of Mortgage and Charge of 1st June, 2006. In Walpoles (Ireland) Limited v. Jay (Unreported, High Court, McWilliam J., 20th November, 1980), McWilliam J. had to consider whether s. 3 applied to a sale of a house where a married couple had resided, by a person other than a spouse, in that case, a limited company. He expressly held that s. 3(1) of the Act only avoided a conveyance by a spouse. It therefore follows that s. 3 of the Family Home Protection Act 1976 has no application at all to the validity of the Deeds of Mortgage and Charge of 1st June, 2006, and the other documents pleaded in the Counterclaim. While it is of course both possible and indeed probable that a married couple occupying a dwelling house held by a limited company might have an interest in that dwelling to which the provisions of the Act could apply, it does not arise in this case. The defendants have clearly asserted that their interest in Gorse Hill is a joint right of residence. There is no requirement to obtain a spouse’s prior consent in writing to the conveyance of an interest (of whatever nature) in a family home where the interest is held jointly, as both spouses will be required to convey their joint interest.
37. It is abundantly clear from the submissions of Mr. O’Donnell, on behalf of the defendants, that the Act had no application to the transactions sought to be impugned. He was asked to identify what he, as a spouse of Mrs. O’Donnell, had done which was relevant to s. 3 of the Act of 1976. He said that he had arranged the loans which were guaranteed by Vico. Clearly this cannot amount to a conveyance of an interest in a family home within the meaning of the Act. I therefore conclude that the Act has no application to the case advanced by the defendants.
38. In any event, if there is a purported conveyance of an interest in land to which the Act applies and the conveyance fails to comply with the requirements of s. 3 of the Family Home Protection Act 1976, the result is that the conveyance in question is void. This means that any right or argument to be advanced by a spouse in proceedings based upon a failure to comply with the requirements of s. 3 of the Act of 1976 must be a case which has immediate reference to his or her rights of property. To put it another way, it is not a personal right where a bankrupt may seek damages to be estimated by reference to the pain felt by the bankrupt in respect of his body, mind or character. The right to litigate in respect of an alleged failure to comply with s. 3 of the Act is a “thing in action” within the meaning of the definition of property in the Bankruptcy Act 1988, as amended. It does not fall into the exceptional category of causes of action personal to the bankrupt which do not vest in the Official Assignee.
Conclusion
39. The defendants have not established that any of the arguments they wish to advance are personal to them such that they do not form part of the “things in action” which have vested in the Official Assignee by operation of law upon their adjudications as bankrupts. Therefore they may not proceed to defend much less to counterclaim in these proceedings on the basis of the Defence and Counterclaim delivered on 22nd June, 2015.
40. However, that does not dispose of the matter entirely. As was made clear by Hoffman L.J. in Heath v. Tang, a bankrupt may defend an action where injunctive relief is sought against the bankrupt personally and which does not directly concern his estate. In this case the plaintiffs seek injunctions personally against the defendants. The question is, do the injunctions directly concern their estates?
41. The injunctions sought relate to possession of Gorse Hill. They seek to restrain the defendants from trespassing or interfering with Gorse Hill or from impeding or obstructing the Receiver in attempting to secure and deal with Gorse Hill. The plaintiffs’ case is based upon their claimed right to possession of Gorse Hill pursuant to the two Deeds of Mortgage and Charge of 6th June, 2006, and the appointment of the Receiver on 7th June, 2012. The plaintiffs’ case is that the defendants have no interest of any kind whatsoever in Gorse Hill. If that is the case, then the injunctions sought paradoxically are entirely personal in nature and do not directly concern their estates in bankruptcy. On the other hand, the defendants have asserted that they have interests in Gorse Hill as outlined above. On that basis it must be taken that the injunctions sought by the plaintiffs do directly concern the estates of the Bankrupts. The only basis upon which they seek to defend and counterclaim is on the basis of matters which do relate to their estates. Had they wished to defend these injunctions on purely personally bases, they would be entitled so to do. However, they are not entitled to defend the proceedings on the bases they have advanced. Neither are they entitled to counterclaim as they have sought to do. The balances of the relief sought by the plaintiffs are claims for damages against the defendants. These clearly can only be dealt with by their estates.
42. For these reasons I therefore grant the Official Assignee the relief sought at para. 1 of the Notice of Motion.
