Judgment of Ms. Justice Laffoy delivered on the 9th day of November, 2015
Introduction
1. The only issue addressed in this judgment is whether the moving party, B.A., has locus standi to bring the application which is before this Court. The issue as to the locus standi of B.A. arises because he has been adjudicated a bankrupt in this jurisdiction. He is also subject to bankruptcy proceedings in the United States of America (the U.S. Bankruptcy). The proceedings in which the application is brought are matrimonial proceedings. Because of the novelty of the issue as to the locus standi of B.A. in this context in this jurisdiction, it is necessary to consider the background to the application now before this Court in some detail.
Background
Matrimonial proceedings
2. In 1997 A.A., the wife of B.A., initiated proceedings against B.A. in the High Court under the Judicial Separation and Family Law Reform Act 1989 and the Family Law Act 1995 (Record No. 1997/No. 58M). Those proceedings came on for hearing in the High Court on 11th October, 2001 and had been at hearing for twenty two days on 20th December, 2001. On the following day, 21st December, 2001, counsel for the parties informed the Court that a settlement had been reached, subject to the satisfaction of the Court, on the terms of a consent which had been reduced to writing. On the previous day, 20th December, 2001, B.A. had instituted proceedings against A.A. in the High Court under the Family Law (Divorce) Act 1996 (Record No. 2001/No. 168M). The order of the High Court (O’Higgins J.) made on 21st December, 2001 (the 2001 Order) relates to both A.A.’s action for judicial separation and B.A.’s action for divorce. A photocopy of the consent document headed “Terms of Settlement” executed by both A.A. and B.A. on 21st December, 2001 is annexed to the 2001 Order.
3. There are two components of the curial part of the 2001 Order which require to be distinguished. First, having recited, inter alia, that it had heard oral evidence of the applicant, B.A., and the respondent, A.A., in the proceedings initiated on 20th December, 2001, and “being satisfied with regard to the requirements of s. 5(1) of the Family Law (Divorce) Act 1996”, the Court granted “a Decree of Divorce in respect of the marriage” of B.A. and A.A. That component of the order was distinct from the remainder of the order and it did not bear a paragraph number. In the second component, having referred to the fact that the “Consent” (represented by the photocopy of the Terms of Settlement being annexed to the order) had been read, the Court made an order by consent which contained ten paragraphs, numbered 1 to 10. Each of those paragraphs, with the exception of paragraph 10, referred to a paragraph in the “Consent” (i.e. in the Terms of Settlement), so that each requires to be read in conjunction with the relevant provision of the Terms of Settlement. In general terms, each of paragraphs numbered 1 to 7 of the consent component of the 2001 Order related to property or to rights to property. For example, paragraphs 1 and 2 provided for the transfer of two properties in the Dublin area to A.A. and paragraph 4 provided for the payment of a lump sum by B.A. to A.A. in two tranches in May 2002 and June 2003. As regards the remainder of the paragraphs, paragraph 8 dealt with costs and provided that B.A. would be liable for A.A.’s costs of both matrimonial actions, the costs to be taxed in default of agreement. Paragraphs 9 and 10 dealt with formalities, in that paragraph 9 gave the parties liberty to apply and paragraph 10 provided that the consent be received and filed and be deemed to be part of the 2001 Order.
A.A.’s 2006 Application
4. On 15th December, 2006 a notice of motion was filed in the High Court on behalf of A.A. in the conjoined matrimonial actions seeking, inter alia, orders in the following terms:
“1. An order setting aside the Orders made on 21st December, 2001 by Mr. Justice O’Higgins in the above-entitled proceedings and each of them and, in particular, the Orders referred to at paragraphs 1, 2, 3, 4, 5, 6, 7 - 10 of the said Order.
2. In the Alternative, an Order setting aside the Orders made on 21st December, 2001 by Mr. Justice O’Higgins in the above entitled proceedings, and in particular, the Orders referred to at paragraphs 2, 3, 4, 5, 6, 7 - 10 of the said Order.
3. An Order re-entering the above entitled proceedings and each of them for the purpose of making further Orders pursuant to the provisions of the Family Law (Divorce) Act 1996, including Orders pursuant to ss. 13, 14, 15, 16, 17, 19. 21 and/or 22 of the said Act.”
The grounds relied on by A.A. in support of the foregoing relief, as set out in the notice of motion, all related to assets of B.A. and alleged that -
(a) B.A. had “failed to make a frank and complete disclosure in relation to his assets”,
(b) B.A. had “provided information which he knew was false and incomplete for the purpose of understating the value of the assets to the intent that [A.A.] would be misled as to the value of such assets”, and
(c) B.A. had “misled [A.A.] and the Court both in his evidence and in discovery as to the fact and extent of his beneficial ownership of the assets referred to in the grounding Affidavit as was his intent”.
5. Two procedural matters in relation to that motion, which will be referred to as “A.A.’s 2006 Application”, need to be adverted to. First, by order of the High Court (Abbott J.) made on 29th July, 2008, on the application of B.A., C.D., the then current wife of B.A., was joined as a notice party to A.A.’s 2006 Application. Secondly, C.D. was given short service by the High Court on 3rd December, 2008 to bring a motion returnable for 9th December, 2008 seeking that A.A.’s 2006 Application should be dismissed. Although not disclosed in the notice of motion, it is clear from para. 2.4 of the judgment of the High Court delivered by Irvine J. (the trial judge) on 10th June, 2009 (the 2009 Judgment) considered later that the application by C.D. for dismissal was on the basis that A.A.’s 2006 Application was misconceived. Later in the 2009 Judgment (at para. 11.2) it emerges that the point being made by C.D. was that the High Court did not have jurisdiction to grant any of the reliefs sought by A.A. where the procedure adopted was by way of a motion. Rather, C.D. argued, what was effectively an application to set aside what it was contended was a final order of the High Court could only be pursued in fresh plenary proceedings or by way of appeal. It was pointed out in the 2009 Judgment that C.D.’s argument “was thereafter even more belatedly adopted by [B.A.’s] legal team”.
6. In fact, 9th December, 2008 was the first day of the hearing of A.A.’s 2006 Application. The hearing before the trial judge in the High Court continued for twenty one days and led to the 2009 Judgment. A.A., B.A. and C.D. were represented by counsel at the hearing.
Decision of the High Court
7. The order of the High Court which reflected the outcome of the 2009 Judgment was made on 24th July, 2009 (the 2009 Main Order). In the 2009 Main Order, the reliefs sought at paragraphs 1 and 3 of the notice of motion were refused. However, an order was made granting the relief sought at paragraph 2 in the following terms:
“An order granting the relief sought at paragraph 2 in the said Notice setting aside that part of the Order of O’Higgins J. made on 21st December, 2001 being orders made ancillary to the decree of divorce, recited at paragraphs 1, 2, 3, 4, 5, 6 and 7 of the Order and substituting the following ancillary orders so that proper provision may be made for the parties and their dependents as of the 21st December, 2001.”
Notwithstanding that terminology, in reality, as counsel for A.A. submitted, the consent component of the 2001 Order was varied, rather than set aside. In any event, the principal difference between the consent component of the 2001 Order and the substituted ancillary orders set out in the 2009 Main Order related to paragraph 4 of the former, for which there was substituted an order providing for an additional tranche of lump sum, in addition to the two tranches payable under and at the times provided for in the 2001 Order, which additional tranche was to be payable with immediate effect. The only other element in the 2009 Main Order which flowed from the judgment delivered on 10th June, 2009 was that B.A. was ordered to pay A.A.’s costs of the proceedings on a solicitor and client basis. It was also expressed that no order was made in respect of C.D.’s costs.
8. Solely for the purpose of explaining why the trial judge made orders refusing the relief sought by A.A. under paragraphs 1 and 3 of A.A.’s 2006 Application, but granting relief under paragraph 2 thereof, I propose to point to the manner in which those decisions were rationalised in the 2009 Judgment, but emphasising that I have formed no view as to whether the reasoning and conclusions were correct, because it would be improper to do otherwise on this application. Having considered paragraph 3 and the statutory provisions invoked in that paragraph, the trial judge concluded (at paras. 12.23 to 12.32 of the judgment), that there was no jurisdiction to grant the reliefs sought in that paragraph to A.A. The trial judge then went on to deal with the relief sought at paragraphs 1 and 2 of A.A.’s notice of motion. The approach adopted by the trial judge in relation to those reliefs is explained in paragraph 12.34 of the judgment, in which she stated:
“[A.A.] advised the Court that the only difference between the relief sought at paras. 1 and 2 of the notice of motion was that the relief sought at para. 1 sought to set aside the entire order of the Court made on 21st December, 2001, including the decree of divorce with para. 2 seeking the same relief with the exception of an order setting aside the divorce. On reading the notice of motion, however, the decree of divorce itself was not, as is suggested by the relief sought, contained in para. 1 of the aforementioned order. Paragraph 1 deals with one of the financial orders under s. 14 of the Act of 1996. The decree of divorce was referred to in the body of the court order. Accordingly, the Court will, for the purposes of this judgment, deal with the application simply on the basis that the relief sought at para. 1 of the notice of motion seeks to set aside the entire order of the Court of 21st December, 2001 whilst the relief at para. 2 excludes a request that the decree of divorce be set aside.”
The trial judge (at para. 12.37) went on to outline a submission made on behalf of B.A. that it was not possible for the Court to set aside any of the ancillary orders without setting aside the decree of divorce, so that the relief set forth at para. 2 of A.A.’s notice of motion was not available. In the succeeding paragraphs, the trial judge considered that submission and she rejected it, setting out (at para. 12.39 et seq.) her reasons for so doing. Having set out the matters which she had taken into account in concluding that the Court could set aside the ancillary orders whilst leaving the decree of divorce in situ (at para. 12.43), the trial judge set out her conclusion that the Court would not interfere with the decree of divorce granted on 21st December, 2001.
9. The 2009 Main Order, which primarily gave effect to the judgment delivered on 10th June, 2009, also set out the Court’s decision on the application by B.A. for a stay on the portion of the order relating to the costs of the proceedings and B.A.’s obligation to discharge the additional tranche of the lump sum. A limited stay was granted by the High Court upon terms set out in the order.
10. Two further orders were made by the trial judge on 24th July, 2009. One was made on foot of a motion brought by A.A. following delivery of the 2009 Judgment seeking Mareva type relief against B.A. and orders directing disclosure and discovery of documents by him. The order of the High Court on foot of that motion restrained B.A. from reducing his assets below the level of the lump sum awarded by the High Court (including the additional tranche) between the date of the order and the determination of his appeal to the Supreme Court. B.A. was also ordered to make certain disclosure to A.A. A.A. was awarded the costs of that motion. The other order was made on foot of a motion brought after the delivery of the 2009 Judgment by B.A. seeking liberty to file further affidavits and to adduce further evidence and that A.A.’s 2006 Application be re-opened. That motion was refused. B.A. was ordered to pay A.A.’s costs of that motion.
Appeal to the Supreme Court
11. All of the foregoing matters are referred to because they were all the subject of B.A.’s appeal to the Supreme Court. B.A.’s appeal to the Supreme Court (Record No. 373/09) was against the 2009 Judgment and the consequential order of 24th July, 2009, that it to say, the 2009 Main Order, including the terms of the stay application, and also against the further two orders dated 24th July, 2009. The grounds of appeal relied on by B.A., as set out in the notice of appeal dated 11th September, 2009, were very extensive, running to 158 grounds in all, of which 137 related to the 2009 Judgment and the 2009 Main Order. Those grounds, in general, challenged, inter alia, the failure of the High Court to find that the 2001 Order was final, and also the findings of the High Court in relation to fraud and other misconduct alleged on the part of B.A., the burden and standard of proof, and evidential matters.
12. A number of grounds (Grounds 18, 19, 20, 23, 24 and 45) related to findings of the High Court in relation to the decree of divorce. One of those grounds (Ground 19) asserted that the trial judge erred in finding that the Court had jurisdiction to set aside the ancillary financial orders made on 21st December, 2001 while leaving in place and not setting aside the decree of divorce made on the same date, even though the Court held that a court, in the context of divorce proceedings, cannot discharge the constitutional and statutory obligations to grant a decree of divorce unless there has been adequate disclosure of a range of matters, including the financial circumstances of the parties. That ground mirrors the tenor of the other grounds, all of which link B.A.’s contention that the High Court had no jurisdiction to leave the decree of divorce in place to the requirement of “proper provision” being made, and of disclosure of the financial circumstances of the parties, and to B.A.’s worsened “financial circumstances” and suchlike, thus pointing to B.A.’s concerns in relation to his property and his property rights.
13. Two other appeals were joined with B.A.’s appeal. One was by the notice party, C.D., who appealed against the 2009 Judgment and the 2009 Main Order (Record No. 328/09). The basis of C.D.’s appeal, as set out in her notice of appeal, was the failure or refusal of the trial judge to make any order on foot of her motion to dismiss A.A.’s 2006 Application, which was returnable on the first day of the trial, the trial judge’s conclusion that the procedure adopted by A.A. should not be considered fatal to her claim, the granting of relief to A.A. pursuant to A.A.’s 2006 Application, and the refusal of the trial judge to make an order in respect of C.D.’s costs. In addition, the 2009 Judgment and the 2009 Main Order were subject to an appeal by A.A. (Record No. 485/2009). A.A. issued a notice to vary the order of the High Court pursuant to Order 58, rule 10 of the Rules of Superior Courts 1986. The variation sought by A.A. was an increase in the additional tranche of the lump sum directed by the High Court to be paid by B.A. to A.A.
Decision of the Supreme Court
14. The three appeals were heard together by the Supreme Court (Hardiman J., McKechnie J. and Clarke J.) on 2nd, 3rd and 4th July, 2013. Judgment was delivered on 30th July, 2014 by Clarke J. (the Supreme Court Judgment). As the order of the Supreme Court consequent on that judgment has only been perfected since the hearing of B.A.’s application to this Court, it is appropriate to set out the outcome of the appeal by reference to the summary of conclusions set out in para. 11 of the judgment. Insofar as is relevant for present purposes, paragraph 11 contained the following findings and conclusions:
(a) Paragraph 11.1 reflected the finding set out at para. 5.14 of the Supreme Court Judgment to the effect that the jurisdictional issue raised by B.A. and C.D. could not succeed. In paragraph 11.1 it was stated:
“I am satisfied that the trial judge was correct to conclude that she had jurisdiction to entertain this application in the form of a motion brought in the original proceedings and that it was appropriate, in all the circumstances of this case, not least because procedures analogous to those which would apply in the plenary process had in fact been applied, to go ahead with the case in that form.”
(b) Paragraph 11.3 set out the conclusion in relation to the findings of the trial judge on the allegations of non-disclosure of assets made by B.A. on A.A.’s 2006 Application in the following terms:
“With the exception of the issue concerning the bond to which reference has been made, I am satisfied that each of the findings of the trial judge in respect of the other assets which are the subject of this appeal were correct both in terms of the obligation to disclose, the finding of non-disclosure, the deliberate nature of same and the materiality and value of the assets concerned.”
The exception referred to there will be explained later.
(c) Paragraph 11.4 reflected para. 10.4 of the Supreme Court Judgment and stated that the trial judge was correct to leave the decree of divorce in place and to make further provision in the manner in which she did, subject to the question of the bond. In paragraph 10.4, in which it was stated that the trial judge was correct to conclude that it was possible to make further provision for A.A. without interfering with the original decree of divorce, it was pointed out that the further provision was not further provision in the statutory sense, as it did not derive from changed circumstances or other circumstances contemplated in the legislation. The legal basis on which the further provision could be made by the Court was explained as follows in para. 10.5:
“The legal basis for the further provision ordered by the trial judge in this case is that it is designed to meet the constitutional obligation that the courts ensure that there be proper provision in the case of a divorce in circumstances where it has now been established that, by virtue of the deliberate concealment of resources, [A.A.] and the court was misled into believing that what was then provided amounted to such proper provision. In those circumstances, I am satisfied that the court has a jurisdiction, without interfering with the original decree of divorce, to simply make such additional provision as the Constitution requires to be made to ensure that the total provision is appropriate in the light of the provision that would have been likely to have been considered proper at the time of the original decree of divorce, had adequate disclosure been made.”
(d) Finally, in para. 11.5 it was stated that the order of the High Court should be affirmed, save that the bond issue should be referred back to the High Court.
15. Returning to the bond issue for the purposes of explaining it, Clarke J. calculated that the trial judge had factored into the additional tranche of lump sum awarded to A.A. in the 2009 Main Order an amount, hereafter referred to as the “specified sum”, in respect of non-disclosure of a certain bond. The concern of Clarke J. in relation to the inclusion of that sum in the additional tranche was addressed in para. 8.5 of the Supreme Court Judgment. The concern arose from the fact that, at the hearing before the Supreme Court, very different accounts had been given of the potential benefit of the bond in question to B.A. Clarke J. stated (at para. 8.5):
“Having carefully reviewed that evidence, I have come to the conclusion that it may well be that the parties, or more accurately their advisors, were speaking at cross purposes for there was insufficient evidence which would allow an assessment as to which account of the bond, and its potential benefit to [B.A.], should be preferred. In those circumstances, it seems to me that the only just course of action to adopt is to refer this single issue back to the High Court for the sole purposes of determining whether, as a matter of fact, the bond concerned had the potential to increase the resources available to [B.A.].”
The practical consequence of that decision was summarised at para. 11.5, where it was stated that the lump sum provision should be reduced by the specified sum pending referral back of the bond issue to the High Court. However, if the limited bond issue was resolved in favour of A.A., then the reduction should be reversed and “a further provision of [the specified sum] made”.
16. The order of the Supreme Court dated 30th July, 2014 (the Supreme Court Order), which was perfected on 31st July, 2015, reflects the summary contained in para. 11 of the judgment, in that the appeal is dismissed and the order of the High Court is affirmed subject to the deduction of the specified sum from the total lump sum award, subject to that reduction being reversed following the decision of the High Court on the bond issue . The Supreme Court Order states that the issue of costs stands adjourned to a date to be decided by the Court.
Remittal to the High Court
17. The matter was back before the trial judge in the High Court in October 2014, having been remitted by the Supreme Court. Following a hearing on 17th October, 2014 the High Court made an order, which is dated 28th October, 2014, in which it found that the bond in issue “had the potential and did increase the resources available to [B.A.]”. I interpret that as meaning that the deduction of the specified sum from the total lump sum payable to A.A. is to be reversed. It has not been suggested to this Court that the finding of the trial judge on the bond issue or the consequential order of the High Court made on 28th October, 2014 has been appealed against. It is recited in the perfected order of 28th October, 2014 that the matter was heard on 17th October, 2014 in the presence of counsel for A.A., counsel for B.A., counsel for the Official Assignee and the solicitor for C.D. Other issues which were dealt with in the order of 28th October, 2014 are not material to this judgment.
18. As the presence of the Official Assignee in Court on 17th October, 2014 suggests, B.A. had been adjudicated a bankrupt in this jurisdiction prior to that date. It is now necessary to outline some of the procedural aspects of the bankruptcy of B.A.
Bankruptcy of B.A.
19. The sequence of events in relation to the U.S. Bankruptcy and the bankruptcy in this jurisdiction was as follows:
(a) On 12th February, 2013 a creditor of B.A. filed a petition in the High Court seeking the adjudication of B.A. as bankrupt in this jurisdiction. At the time B.A. was resident in the United States of America. By order of the High Court (Dunne J.) made on 12th February, 2013 it was ordered, inter alia, that the petitioner was at liberty to serve the petition out of the jurisdiction on B.A.
(b) However, before the petition was determined, on the voluntary filing by B.A. for Chapter 7 bankruptcy in the U.S. Bankruptcy Court on 29th March, 2013, the U.S. Bankruptcy came into being. Richard M. Coan (the Chapter 7 Trustee) was appointed Trustee of the bankruptcy estate of B.A. and an automatic worldwide stay on further proceedings in relation to B.A.’s estate took effect.
(c) Subsequently, following an application to the U.S. Bankruptcy Court by the petitioner for bankruptcy in this jurisdiction, the U.S. Bankruptcy Court, by an order perfected on 12th June, 2013, ordered that the automatic stay be modified, inter alia, to permit parties and interests to continue with the “Irish bankruptcy proceedings” and to take all actions necessary in connection with or relating to the petitioner’s application to have the appellant adjudicated bankrupt in the “Irish bankruptcy proceedings”, with the proviso that nothing in the order should deprive the U.S. Bankruptcy Court of jurisdiction over B.A. or over the property of B.A.’s estate.
(d) By order of the High Court (Dunne J.) made on 29th July, 2013, B.A. was adjudicated a bankrupt.
(e) Subsequently, B.A. filed notice of intention to show cause against the validity of the adjudication of bankruptcy in the High Court. Following the hearing of that application, by order of the High Court (McGovern J.) dated 6th December, 2013, B.A.’s application to show cause was dismissed. B.A.’s subsequent appeal against that order of the High Court was dismissed by this Court in a judgment delivered on 15th May, 2015 (the Supreme Court Bankruptcy Judgment).
20. Looking at the foregoing sequence in the context of the matrimonial proceedings, the position is that, while B.A. was subject to the U.S. Bankruptcy at the time of the hearing of the appeal in the Supreme Court in July 2013, he had not been adjudicated a bankrupt in this jurisdiction. However, he had been adjudicated a bankrupt in this jurisdiction shortly after the hearing and, by the time the Supreme Court gave judgment on 30th July, 2014, he was bankrupt in this jurisdiction. In the interim, an application having been brought to the High Court by the Official Assignee, by order of the High Court (Abbott J.) made on 7th March, 2014, which was expressed to be made in the matrimonial proceedings bearing Record No. 1997/No. 58M, the Official Assignee was joined as a respondent. It would appear that the Official Assignee has not been joined as a respondent to the other conjoined matrimonial proceedings (Record No. 2001/No. 168M). However, nothing turns on that as, assuming it is an oversight, it can be easily rectified.
21. Against that background, the application of B.A. which has given rise to the issue before the Court will now be outlined.
B.A.’s 2015 Application
The motion
22. By notice of motion dated 10th March, 2015 entitled in the matter of the three appeals to the Supreme Court (Record Nos. 328, 373 and 485/09) and expressed to be between B.A., as applicant, and A.A., as respondent, which will be referred to as “B.A.’s 2015 Application”, B.A. sought relief in the following terms:
“An Order setting aside both the Supreme Court’s judgment of 30th July, 2014 and the judgment of the High Court (Irvine J.) dated 10th June, 2009, on grounds of objective bias, or apprehended bias, in violation of the unenumerated right to constitutional and natural justice protected by Article 40.3 of the Constitution.”
That application was grounded on an affidavit of B.A. sworn on 23rd January, 2015.
Issue directed to be tried
23. When B.A.’s 2015 Application came before the Chief Justice on 23rd April, 2015, having heard counsel for B.A., counsel for A.A., and counsel for the Official Assignee, it was ordered that a preliminary issue be tried as to whether B.A. has locus standi to maintain B.A.’s 2015 Application for an order setting aside the judgment of the Supreme Court dated 30th July, 2014 and the judgment of the High Court dated 10th June, 2009. Directions were also given as to filing legal submissions, the submissions on behalf of the Official Assignee to be filed first. Although C.D.’s appeal (Record No. 328/09) is referred to in the notice of motion dated 10th March, 2015, B.A. did not make C.D. a party to B.A.’s 2015 Application and she has not been before the Court on the hearing of the application.
24. In B.A.’s 2015 Application, interim relief, which relates to certain assets, is also sought. However, no determination can be made in relation to the interim relief until the issue in relation to locus standi has been resolved.
Additional evidence filed
25. Subsequent to the order of 23rd April, 2015, additional affidavit evidence was filed in this Court, which was presented as being of relevance to the issue to be determined.
26. The earliest in time was an affidavit was sworn on 7th May, 2015 by Clodagh MacNamara, a solicitor in O’Grady’s, Solicitors, the solicitors on record for the Official Assignee. In that affidavit Ms. MacNamara averred that she was in court when the matter was remitted to the High Court in October 2014. She averred that on 9th October, 2014 counsel for B.A. indicated that he was attending as a courtesy to the Court only and that it was for the Official Assignee to deal with the balance of the proceedings. The matter remitted to the High Court was the subject of submissions on 17th and 28th October, 2014 by counsel for A.A. and counsel for the Official Assignee. Counsel for B.A. “attended only as a watching brief”. It was further averred that at no stage during the course of the hearings in October 2014 was any issue raised in relation to the trial judge determining any matter and that it was conceded by counsel for B.A. that “it was a matter for the Official Assignee to deal with all issues in relation to the Estate of the Bankrupt”.
27. Next, on 21st July, 2015, just two days before the locus standi issue was listed for hearing in this Court, an affidavit by James Berman sworn on 6th July, 2015 was filed on behalf of B.A. Mr. Berman is a partner in the law firm Zeisler & Zeisler, P.C., which represents B.A. in the U.S. Bankruptcy proceedings in the U.S. Bankruptcy Court. In that affidavit Mr. Berman made the following averments:
(a) In paragraph 4 he averred as follows:
“The date of [B.A.’s] U.S. bankruptcy filing and the creation of his U.S. bankruptcy estate, the 29th March, 2013, pre-dates [B.A.’s] adjudication as a bankrupt in Ireland on 29th of July, 2013. Accordingly, with certain exceptions not applicable here, all of [B.A.’s] assets, including his defenses in his family law proceedings, as of March 29, 2013 vested in his U.S. bankruptcy estate; and thereafter, as a matter of U.S. law and logic, said assets could not vest in another person or bankruptcy estate.”
(Emphasis in original).
(b) Mr. Berman averred in paragraph 5 that A.A. “filed a proof of claim in [B.A.’s] U.S. bankruptcy case” on 23rd September, 2013 and “filed amended proof of claim” on 26th September, 2013, and that from the details thereof it is clear that the claim relates to the additional tranche of lump sum awarded to A.A. by the High Court and the costs of the proceedings both in the High Court and in the Supreme Court.
(c) In paragraph 6 Mr. Berman averred as follows:
“In his U.S. bankruptcy case, [B.A.] has waived his discharge in bankruptcy. . . . This effect of this waiver is to terminate the bankruptcy automatic stay as against [B.A.], personally, as opposed to his U.S. bankruptcy estate, . . .; which permits creditors including [A.A.], to collect their debts from [B.A.’s] post-bankruptcy income and assets.”
Later, Mr. Berman averred:
“As an individual, [B.A.] has a separate existence from his bankruptcy estate. As stated above, following the waiver of his discharge, his pre-bankruptcy creditors may pursue him and seek to collect from his post-bankruptcy income.”
(d) In paragraph 9 Mr. Berman averred that the Chapter 7 Trustee, whom he described as “the representative of the U.S. bankruptcy estate, which, as set forth above, not only contains [B.A.’s] pre-bankruptcy property, but also his pre-bankruptcy defenses”, had authorised [B.A.] to pursue his right to seek to open the Irish Supreme Court judgment”. Mr. Berman exhibited a letter dated 5th June, 2013 from the Chapter 7 Trustee to B.A.’s then solicitors prior to the hearing of the appeal to the Supreme Court against the 2009 Judgment and the 2009 Main Order. In the letter, the Chapter 7 Trustee stated:
“Pursuant to your request, I am writing to confirm that I have no objection to your representation of [B.A.], or the representation of [B.A.] by any other lawyer, in relation to any matters that have come before the Irish Supreme Court or that may come before the High Court relating to [B.A.’s] family law dispute with his former wife.”
That letter, which records that it was sent by e-mail only, was dated just short of a month before the commencement of the hearing of B.A.’s appeal in this Court.
(e) Finally, in paragraph 10 Mr. Berman averred that the U.S. automatic stay applies to all “entities” and that the Official Assignee is an “entity”, which is defined as to include a “person, estate, trust, [and] government unit”. Mr. Berman averred that, by asserting he has [B.A.’s] litigation rights, the Official Assignee is attempting to “exercise control over property of the estate” and violating the automatic stay.
28. A further affidavit was sworn by Ms. MacNamara on 22nd July, 2015, in which she exhibited a letter from the Chapter 7 Trustee to O’Grady’s, Solicitors. That letter was dated 22nd July, 2015. In the letter, the Chapter 7 Trustee stated that the letter of 5th June, 2013 was sent by him to B.A.’s then solicitors in this jurisdiction at a time when B.A. had been adjudicated in the United States. He continued:
“At that time he had not been adjudicated in Ireland. I had no objection to him appealing the High Court decision in the matrimonial proceedings as a successful appeal might well have had the effect of making assets available for creditors. In circumstances where the creditors were not being required to bear the costs of the appeal, I saw no objection to permitting the bankrupt to proceed with the appeal. However, I was focusing solely on U.S. law and I had no intention of usurping the powers of an O.A., should an Irish bankruptcy commence. Nor did I take into account any aspect of Irish law, of which I had no knowledge.”
The Chapter 7 Trustee then stated as follows:
“The letter of 5th June, 2015, although written in general terms, was never intended to be applicable to such as the present application, which was wholly unforeseen at the time of writing of that letter.”
It is to be noted that the Chapter 7 Trustee neither set out his understanding of “the present application” nor indicated in plain terms his position in relation to it.
29. Understandably, the solicitors for the Official Assignee were less than pleased when they first received the affidavit of Mr. Berman by e-mail at 14.32 on the 21st July, 2015. In a letter of that day to B.A.’s solicitors, they indicated that they objected to the filing of the affidavit and that they reserved the right to seek leave to file a reply, if the affidavit was to be admitted. When the matter was before this Court on 23rd July, 2015, at the outset counsel for the Official Assignee recognised that the Court might consider it appropriate that Mr. Berman’s affidavit be responded to and he indicated that the Official Assignee was reserving his entitlement to seek an adjournment, if that was necessary. Having heard the submissions of counsel for the parties before the Court, the Official Assignee, A.A. and B.A., the Court enquired of counsel for the Official Assignee whether the Official Assignee wished to file an affidavit. Having taken instructions, counsel stated that the Official Assignee did not wish to file any further affidavit evidence. Furthermore, at the hearing of the locus standi issue on 23rd July, 2015 B.A. did not seek an opportunity to put any further evidence before the Court, for example, evidence, in the light of the contents of the letter of 22nd July, 2015, of the current position of the Chapter 7 Trustee in relation to B.A.’s 2015 Application to set aside the judgments of the High Court and the Supreme Court.
30. Accordingly, the position is that, in the context of a matter of private international law raised by B.A., the Court has before it an affidavit as to foreign law, that is to say, the law of the United States of America governing the U.S. Bankruptcy and the powers and functions of the Chapter 7 Trustee, from an attorney who represents one of the proponents on the issue before the Court, while having no other expert evidence on any relevant provisions of the law of the United States of America on behalf of any of the other parties who were before the Court, that is to say, the Official Assignee and A.A. That is a most unsatisfactory state of affairs. Even more unsatisfactory is the fact that this Court is not aware whether the Chapter 7 Trustee was given notice by B.A.’s solicitors of the filing on 10th March, 2015 of B.A.’s 2015 Application or of the procedural developments in relation to that application prior to the locus standi issue coming on for hearing on 23rd July, 2015, including the date fixed for the hearing of the locus standi issue, but it is assumed he was not. This is particularly disconcerting given the conflict which has emerged between the Official Assignee and B.A. as to the legal position in relation to B.A.’s assets, as the outline of the respective positions of the parties, which must now be embarked on, will disclose.
Respective position of the parties in outline
Official Assignee’s submissions
31. In essence, the Official Assignee is the moving party on the locus standi issue. The kernel of the Official Assignee’s contention that B.A. does not have locus standi to seek to set aside the 2009 Judgment and the Supreme Court Judgment is that A.A.’s 2006 Application in the matrimonial proceedings related solely to B.A.’s estate, that is to say, to his property, and not to his person, so that he does not have a personal claim arising out of the decisions of the High Court or the Supreme Court. B.A.’s estate has been vested in the Official Assignee since 29th July, 2013, it is submitted. In that connection, the Official Assignee relies on the definition of “property” in s. 3 of the Bankruptcy Act 1988 (the Act of 1988), which provides that property includes “things in action”. He also relies on s. 44 of the Act of 1988 and, in particular, subs. (1), which provides that, where a person is adjudicated bankrupt, subject to the provisions of the Act of 1988, all property belonging to that person from the date of adjudication vests in the Official Assignee for the benefit of the creditors of the bankrupt. Further, by virtue of subs. (3) of s. 44 it is provided that the property to which subs. (1) applies includes, inter alia, -
“all powers vested in the bankrupt which he might legally exercise in relation to any property immediately before the date of adjudication.”
The Official Assignee also relies on s. 61 of the Act of 1988, which, by virtue of subs. (3), empowers the Official Assignee, inter alia, -
“(d) to institute, continue or defend any proceedings relating to the property.”
In short, the position of the Official Assignee is that it is his function to determine what steps should be taken in relation to the property of the bankrupt, including assets which are the subject of the judgments and orders of the High Court and the Supreme Court on A.A.’s 2006 Application in the matrimonial proceedings. His decision is that he should not to prosecute any second substantive appeal which might arise from the outcome of B.A.’s 2015 Application.
32. In support of his contention that it is for him, to the exclusion of B.A., to decide whether B.A.’s 2015 Application to set aside the 2009 Judgment and the Supreme Court Judgment or any proceedings, such as a further appeal which might result from its outcome, should be prosecuted, the Official Assignee relies on the decision of the Court of Appeal of the United Kingdom in Heath v. Tang [1993] 1 W.L.R. 1421 (Heath), which was applied in this jurisdiction by the High Court (Kelly J.) in Quinn v. IBRC [2012] IEHC 261 (Quinn). The Official Assignee also places particular emphasis on a decision of the High Court of New Zealand in De Alwis v. Kum Civ. (2002) 404 001944 (De Alwis).
33. In his original written submissions filed on 7th May, 2015, the Official Assignee makes it clear that the purpose of those submissions is solely to deal with the question of the locus standi of B.A. to bring B.A.’s 2015 Application. That undoubtedly is the correct approach. Whether B.A.’s 2015 Application, as regards the substantive claims embodied in it, might, or might not, be successful, whether in relation to the 2009 Judgment or the Supreme Court Judgment, if pursued, in my view, is not material to the locus standi issue. In fact, the Official Assignee strayed beyond the avowed purpose of his submissions in a number of respects. For instance, the Official Assignee made submissions as to the likely outcome of the application to set aside the 2009 Judgment and the implications if it was not set aside, even if the Supreme Court Judgment was set aside. Moreover, in the Official Assignee’s submissions a critical analysis is conducted as to the legal basis on which B.A. seeks to set aside the 2009 Judgment and the Supreme Court Judgment. In my view, it is not appropriate for this Court to consider either of those matters. Similarly, the implications, if any, of the failure of B.A. to raise the issues which he now raises at the hearing before the trial judge in the High Court in October 2014 go to the substantive issues on his application rather than to the locus standi issue. While in this vein, apart from the observation made in the penultimate paragraph of this judgment as to the proper approach for a bankrupt to adopt where an issue is likely to arise as to whether the initiation or maintenance of legal proceedings in relation to a bankrupt or his estate is governed by s. 61(3)(d) of the Act of 1988, it is also pertinent to question, although neither the Official Assignee nor A.A. raised the point, whether there is a procedural issue in B.A. initiating a motion in the Supreme Court to set aside the 2009 Judgment of the High Court, as distinct from setting aside the order of the Supreme Court, rather than commencing the substance of B.A.’s 2015 Application as regards the 2009 Judgment and the 2009 Main Order in the High Court. However, as the question was not raised, it is not necessary for this Court to express any view on the point.
B.A.’s submissions
34. In responding to the submissions of the Official Assignee, counsel for B.A. did not take issue with the reasoning underlying the decisions in Heath or Quinn. Rather B.A.’s position is that neither of those decisions was concerned with or addressed a number of fundamental features of B.A.’s application.
35. The first distinguishing feature relied on by B.A. is characterised as the international cross-border dimension, which arises from the fact that B.A. is subject to two concurrent bankruptcies, the U.S. Bankruptcy, which was first in time, and the bankruptcy in this jurisdiction. B.A. asserts that the Official Assignee is incorrect in submitting that B.A.’s estate vested in the Official Assignee on 29th July, 2013, the date of the adjudication of B.A. as a bankrupt in this jurisdiction. It is asserted that the decision in In Re Anderson [1911] 1 KB 897 (Anderson) supports B.A.’s position that B.A.’s estate vested in the Chapter 7 Trustee, the U.S. Bankruptcy being first in time. The Court was also referred to Sheldon on Cross-Border Insolvency (4th Ed, 2015) at paras. 9.28 - 9.29. A number of propositions are advanced by B.A. flowing from that feature. It is contended that there is no basis for the Official Assignee to contend that B.A. does not have the right to bring B.A.’s 2015 Application. Rather, whether B.A. has a right to bring that application is a matter between B.A. and the Chapter 7 Trustee, B.A.’s position being that the letter of 5th June, 2013 from the Chapter 7 Trustee entitles him to bring the application. However, in my view, the letter of 22nd July, 2015 from the Chapter 7 Trustee disarms B.A.’s reliance on the letter of 5th June, 2013. The alternative proposition advanced on behalf of B.A. is that, even if the Official Assignee is entitled to intervene, on the facts as disclosed in Mr. Berman’s affidavit and, in particular, having regard to B.A.’s waiver of his discharge in the U.S. Bankruptcy, it is not the case that B.A. has no interest in prosecuting B.A.’s 2015 Application. That is because judgments against him, including the judgment in favour of A.A., who has submitted to the jurisdiction of the U.S. Bankruptcy Court, in the matrimonial proceedings, can be enforced against him personally in the United States in relation to his post-bankruptcy assets, so that he has a personal interest in prosecuting that application. The reasoning in Heath and in Quinn does not apply, it is submitted. Underlying that alternative proposition of B.A. is the assertion that the Official Assignee is ignoring the existence of the concurrent U.S. Bankruptcy, which was first in time, and its implications, which it is submitted he is not entitled to do.
36. The second feature which it is contended distinguishes the circumstances in this case from the circumstances in either Heath or Quinn is that the central complaint here is that B.A. was denied his fundamental right to constitutional justice and a fair trial in proceedings which were heard prior to his adjudication in bankruptcy, which, as regards the hearing of the appeal in the Supreme Court, I presume means prior to his adjudication in this jurisdiction. B.A.’s claim arising from that complaint, it is suggested, is a personal claim because it is B.A.’s personal rights which have been infringed, not those of the Official Assignee. It is suggested that, as a matter of principle, an individual’s constitutional rights are inalienable and not capable of assignment. The commentary in Milman on Personal Insolvency Law Regulation and Policy (Ashgate, 2005), at p. 59 is cited. In the context of discussing personal rights, in a chapter entitled “The Bankrupt’s Estate”, Milman states that the acid test seems to be whether the right is assignable; if so, it is capable of being brought within the boundaries of the estate. However, the authorities discussed by Milman leading to that conclusion involved assessment of whether the relevant personal right had economic value, so as to vest in the trustee in bankruptcy. One authority related to an expectation to renew a sea fishing licence; another to the continuation of a tenancy under a statutory provision. Neither the commentary in Milman nor either of those examples, in my view, has any relevance to the circumstances here. Nor do they support B.A.’s position when the real nature of his application and the only redress it could afford him, if successful, is analysed.
37. A further distinguishing feature identified on behalf of B.A. is that B.A.’s application arises out of matrimonial proceedings in which A.A. sought to set aside the 2001 Order, which order is characterised as a “consent order”, which “provided for a decree of divorce and a financial settlement”. That characterisation, in my view, is not correct. The consent element of the 2001 Order did not cover the decree of divorce; the decree of divorce was an independent determination of the High Court (O’Higgins J.), on the basis, as was recited in the order, that the Court was satisfied that the requirements of s. 5(1) of the Family Law (Divorce) Act 1996 had been complied with. In the judgments which B.A. seeks to set aside, there was a consideration as to whether the marital status of A.A. and B.A. could or should be interfered with, as outlined at paras. 8 and 14 above. In my view, it is not the case, as suggested on behalf of B.A., that the judgments sought to be set aside by B.A. “only indirectly concerned the estate and then not until after the consent order was set aside” (emphasis in original). Having said that, it will be necessary to consider and make a determination on whether the fact that the setting aside of the decree of divorce arose as an issue on A.A.’s 2006 Application has a bearing on the nature of B.A.’s claim to set aside the judgments of both Courts on that application and brings it into the “personal” category.
The Official Assignee’s reply
38. On that last argument advanced on behalf of B.A., while acknowledging that the nature of the application brought by A.A. may be more a matter for A.A., rather than for the Official Assignee, the response of the Official Assignee is that it is clear beyond argument that the specific application of A.A. related solely to B.A.’s assets. In addition to taking issue with that last argument, counsel for the Official Assignee also takes issue with the other propositions advanced on behalf of B.A. In particular, the reliance on behalf of B.A. on the decision in Anderson as authority for the proposition that B.A.’s property and estate is vested in the Chapter 7 Trustee, rather than in the Official Assignee, is questioned. In any event, it is submitted that, if there is a jurisdictional dispute as to how the concurrent bankruptcies should proceed, this would have to be resolved between the Chapter 7 Trustee and the Official Assignee. That is undoubtedly the case. However, the very unsatisfactory state of affairs which confronts this Court is that the only information before this Court as to the current position of the Chapter 7 Trustee in relation to B.A.’s 2015 Application is his letter of 22nd July, 2015 to the solicitors for the Official Assignee, which is of limited assistance to the Court, when faced with what, in reality, could evolve into a contest between B.A. and the Chapter 7 Trustee.
A.A.’s submissions
39. As the respondent to B.A.’s 2015 Application, indeed the only respondent named in the notice of motion filed on 10th March, 2015, A.A. was also a party to the locus standi issue. No question was raised by B.A. or the Official Assignee as to the entitlement of A.A. to argue that B.A. does not have locus standi, although counsel for B.A. acknowledged that A.A. may have an interest arising from being put to costs. This is adverted to because there is reference in Milman (op cit.) (at p. 55) to the decision of the House of Lords in Mulkerrins v. PricewatershouseCoopers [2003] 4 All ER 1. As explained by Milman, that case concerned a right of action to sue a firm of insolvency practitioners for failure to process an individual voluntary arrangement proposal, with the result that the claimant was unnecessarily adjudged bankrupt. The claimant’s cause of action was found not to vest in the trustee because the complaint did not crystallise until the bankruptcy commenced. Milman states that, notwithstanding “this curious reasoning”, the House of Lords ruled that it was improper for the insolvency practitioners (who had not been parties to the original ruling) to seek to re-litigate the point. As is clear from the opinion of Lord Walker, on an application by the claimant in the County Court, of which PwC was not on notice, it was ordered that the trustee in bankruptcy had no interest in the claimant’s right of action against PwC. Lord Walker stated (at para. 41) that, whether that order was right or wrong, it “clearly and decisively determined the issue between the only two possible contenders for the right of action against PwC”. It was held that the practical effect of the order, which bound the trustee in bankruptcy, was that it was not open to challenge by PwC. While the concern which that decision raises in the present context is that, as things stand, the only real contenders before the Court on the locus standi issue, which is exclusively the product of B.A. being a bankrupt, are the Official Assignee and B.A., in the light of the comments at the end of paragraph 38 as to the unsatisfactory state of affairs with which this Court is confronted, there is also a concern that the Chapter 7 Trustee might claim in the future that, if he had been joined by B.A. in the proceedings before this Court, he would have had an opportunity to be heard by this Court. However, it is on B.A. that the onus lies to obviate those concerns. In this connection, the observation in the final paragraph of this judgment is pertinent.
40. Broadly speaking, A.A. adopted the same position on the locus standi issue as the Official Assignee, namely, that B.A. has no locus standi. As regards the concurrent U.S. Bankruptcy, it is submitted on behalf of A.A. that there is not a contest before this Court on B.A.’s 2015 Application between competing jurisdictions. The point is made that the Chapter 7 Trustee has not asked the courts of this jurisdiction for assistance in relation to this matter. The suggestion is that what is happening here is that B.A. is trying to bypass the clear legal provisions of this jurisdiction. Once again, it is appropriate to reiterate that I consider that there is no satisfactory evidence before this Court as to the current attitude of the Chapter 7 Trustee to the substance of B.A.’s 2015 Application.
41. The foregoing is merely an outline of the submissions made by the respective parties. Before attempting to narrow down the issues which the Court has to determine, I consider that it would be useful to consider the authorities and academic commentaries cited by the parties, so as to identify the relevant legal principles. In so doing, it is convenient to consider first the authorities which do not have what counsel for B.A. referred to as an international cross-border dimension and then those which do, by being concerned with concurrent bankruptcies in two jurisdictions.
Relevant legal principles per authorities/academic commentary
relied on by the parties
Authorities which have no international cross-border dimension
42. As is pointed out in Milman (op cit.) (at p. 53), one of the most vexed issues in bankruptcy law concerns the fate of causes of action vested in the bankrupt prior to the date of his bankruptcy. Milman states that a prior cause of action, which is a thing in action within the meaning of the statutory provision in force in England and Wales and which corresponds to the definition of property in s. 3 of the Act of 1988, “will in general be viewed as an asset properly belonging to the estate”, citing Heath. However, Milman goes on to say that certain personal claims (such as defamation actions or claims in respect of personal injury) do not fall within the inclusive category in the definition of “property” and therefore remain the property of the bankrupt. Milman then cites in a footnote (fn. 48) a number of authorities in support of that general proposition, pointing in most of the cases to the nature of the claim, for example, damages for slander and wrongful dismissal. In the same footnote, Milman also states that “a claim for matrimonial relief by a bankrupt spouse would also not pass to the trustee” in bankruptcy, citing, by analogy, D (J) v. D (S) [1973] 1 All E.R. 349, which was a decision of the family division of the High Court of England and Wales. In that decision it was held that a husband’s application under a statutory provision for variation of a post-nuptial settlement in respect of property abated on his death. I think it is reasonable to surmise that the reference to a “claim by a bankrupt spouse” in that footnote reflects the analysis in Heath, outlined below, which distinguishes prosecution of his claims by a bankrupt, on the one hand, and defence of claims against a bankrupt by him, on the other hand.
43. In Heath, Hoffman L.J., as he then was, in considering the effect of bankruptcy on a cause of action, first considered the matter at a general level, stating (at p. 1422):
“By section 306 of the Insolvency Act 1986 the bankrupt's estate vests in his trustee when appointed and by section 285(3), no creditor has after the making of a bankruptcy order any remedy against the property or person of the bankrupt in respect of any debt provable in the bankruptcy. The effect is that the bankrupt ceases to have an interest in either his assets or his liabilities except in so far as there may be a surplus to be returned to him upon his discharge. What effect does this have upon legal proceedings to which he is a party? We shall consider the position first when the bankrupt is plaintiff and secondly when he is defendant.”
44. By way of explanation, as was pointed out by Kelly J. in Quinn, s. 306 and s. 285(3) do not differ materially from the provisions of s. 44 and s. 136 of the Act of 1988. While not specifically invoked by any of the parties on this application, it is appropriate to record that s. 136(1) provides as follows:
“On the making of an order of adjudication, a creditor to whom the bankrupt is indebted for any debt provable in bankruptcy shall not have any remedy against the property or person of the bankrupt in respect of the debt apart from his rights under this Act, and he shall not commence any proceedings in respect of such debt unless with the leave of the Court and on such terms as the Court may impose.”
Sub-section (2) of s. 136 provides that the section shall not affect the power of a secured creditor to realise or otherwise deal with his security. Accordingly, in general, the effect of s. 136(1) is that the only remedy available to an unsecured creditor is to prove in the bankruptcy for his debt.
45. In Heath, Hoffman L.J. went on to consider the position when the bankrupt is a plaintiff or claimant, stating (at p. 1423):
“The property which vests in the trustee includes ‘things in action’ . . . Despite the breadth of this definition, there are certain causes of action personal to the bankrupt which do not vest in his trustee. These 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’ . . . Actions for defamation and assault are obvious examples. The bankruptcy does not affect his ability to litigate such claims. But all other causes of action which were vested in the bankrupt at the commencement of the bankruptcy, whether for liquidated sums or unliquidated damages, vest in his trustee. The bankrupt cannot commence any proceedings based upon such a cause of action and if the proceedings have already been commenced, he ceases to have sufficient interest to continue them.”
46. As to the position where the bankrupt is a defendant, Hoffman L.J. stated (at p. 1424):
“In 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 . . . 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) 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 the judgment is adverse, to appeal.”
47. However, Hoffman L.J. went on to state that it appears clearly from the decision of the House of Lords in Rochfort v. Battersby (1849) 2 H.L. Cas 388, that a bankrupt would not be entitled to appeal against an order which was enforceable only against his estate. Hoffman L.J. set out the factual basis and the outcome of that case as follows (at p. 1425):
“The bankrupt was entitled to estates in Ireland subject to an annuity in favour of his mother. He had mortgaged the estates 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.’
In this particular case, the bankruptcy had occurred before the foreclosure proceedings were commenced and the House of Lords said that the bankrupt should never have been joined as a party in the first place. But the reasoning would equally have precluded him from appealing if bankruptcy had supervened after the Irish proceedings had been concluded.”
48. Both in relation to circumstances where the bankrupt is plaintiff and where he is defendant, Hoffman L.J. pointed to a statutory provision in force in England and Wales which the bankrupt may invoke where he is aggrieved because of the refusal of the trustee in bankruptcy to prosecute a claim or where the trustee will not appeal a decision against him. The analogous provision in this jurisdiction is s. 61(7) of the Act of 1988 which provides:
“The exercise by the Official Assignee of the powers conferred by this section shall be subject to the control of the Court, and any creditor or other person who in the opinion of the Court has an interest may apply to the Court in relation to the exercise or proposed exercise of those powers.”
While expressing no view on the application of that provision to a person in B.A.’s position, it is to be noted that, on B.A.’s 2015 Application, he is not seeking the directions of the Court; his position is that he is entitled to bring that application irrespective of the view of the Official Assignee and without seeking the leave of the Court. In that respect, the observation in the penultimate paragraph of this judgment is pertinent.
49. The decision of the Court of Appeal in Heath was considered by the High Court of New Zealand in De Alwis in a judgment delivered by Courtney J. on 24th March, 2012, which, in turn, was considered by the High Court (Kelly J.) in Quinn. In De Alwis, the Court was considering, inter alia, a claim by the second defendant, Mr. Chean, to set aside a judgment entered against him in the proceedings in 2007 following what is referred to as “a formal proof hearing”. The basis of Mr. Chean’s application to set aside, in general, was that the plaintiffs had misled the Court at the formal proof hearing. At the relevant times, Mr. Chean had been a director of the first defendant, Luvit Foods International Limited. The plaintiffs alleged that he induced them to invest in that company by making misrepresentations about the company’s performance, which were misleading and deceptive under a statutory provision, and that he was in breach of another statutory provision. The week before the hearing Mr. Chean declared himself a bankrupt. The solicitor acting for him and for the company obtained leave to withdraw. In considering whether Mr. Chean had standing to apply to set aside the judgment, Courtney J. considered a number of arguments advanced by counsel for Mr. Chean. As an alternative to his argument that Mr. Chean’s situation was distinguishable from Heath on the basis that the judgment against him post-dated the adjudication, which argument was rejected by Courtney J., counsel submitted that the judgment against Mr. Chean contained findings of a personal nature such that the right to set aside the judgment remained vested in him. Further, counsel submitted that the findings that Mr. Chean made misleading statements were “of a quasi-criminal nature”. He submitted that the findings had affected Mr. Chean’s personal rights and reputation. Courtney J. found that none of those propositions was valid. In a passage quoted by Kelly J. in Quinn, Courtney J. stated (at para. 24):
“Self-evidently, nearly all claims that result in a judgment enforceable against the estate will involve allegations of wrongdoing by the defendant. It would be a most surprising result if the principle articulated in Heath v Tang were undermined merely by the fact that the proceedings in which the judgment debt was obtained included allegations of wrongdoing against the defendant. I would add that, even where the allegations of wrongdoing could otherwise be regarded as defamation, that fact alone would not change the position in this case where the complaint is about findings of the Court, given that statements made in the course of legal proceedings are privileged.”
Courtney J. also stated that, although a judgment obtained by fraud is liable to be set aside, that does not alter the fact that the right to impugn a judgment debt on that basis still lies with the Official Assignee. In short, Courtney J. concluded that counsel for Mr. Chean was effectively seeking to “separate the right to set aside a judgment from the judgment itself and to elevate such a right to a personal right of action in itself”. He emphasised that the judgment debt was “a liability to be enforced only against Mr. Chean’s estate” and, as such, fell to be dealt with only by the Official Assignee.
50. The issue before the High Court in Quinn, arose from the fact that the first named defendant, Irish Bank Resolution Corporation Limited (IBRC), formerly Anglo Irish Bank Corporation, had been granted leave in October 2011 to issue and serve a third party notice on, inter alia, Sean Quinn (Mr. Quinn) claiming against him an indemnity against a certain aspect of the claims of the plaintiffs in the proceedings, the plaintiffs being members of Mr. Quinn’s family, on the grounds that any loss and damage as was allegedly sustained by the plaintiffs, all of which was denied, was caused wholly, or alternatively was contributed to, by reason of specified alleged wrongdoing on the part of Mr. Quinn. A statement of claim subsequently delivered against Mr. Quinn, in addition to claiming an indemnity, sought damages for the alleged wrongdoing. Mr. Quinn delivered a full defence to the statement of claim in December 2011. In early 2012 Mr. Quinn was adjudicated a bankrupt in this jurisdiction, following which the Official Assignee informed the High Court that it was not the intention of the Official Assignee to defend the claim against Mr. Quinn in the third party proceedings. Subsequently, in February 2012 the first named defendant (IBRC) brought a motion before the High Court seeking directions concerning the hearing of the third party proceedings. In the course of that motion, Mr. Quinn sought to be permitted to defend the third party proceedings. In those circumstances, Kelly J. identified the following issue for determination by the High Court:
“Does . . . Mr. Quinn . . . , who is a bankrupt, have an entitlement to defend these third party proceedings brought against him in circumstances where the Official Assignee in Bankruptcy . . . has declined to defend them?”
51. Having considered the judgment of Hoffman L.J. in Heath and, in particular, the passages considered above, Kelly J. pointed out that one of Mr. Quinn’s contentions was that an alleged personal right to defend himself in the third party proceedings did not vest in the Official Assignee. Mr. Quinn had pointed to passages of the third party statement of claim on which he relied to demonstrate “the serious allegations of dishonesty and conspiracy made against him”, which he denied. Mr. Quinn, in turn, had made certain allegations against the first named defendant (IBRC). Kelly J. summarised Mr. Quinn’s argument on this point as follows (at para. 56):
“It is suggested by Mr. Quinn that because of the nature of these allegations, the case can be regarded as one of those ‘personal’ types of cases which are not affected by bankruptcy.”
Kelly J. then considered a number of authorities cited on behalf of Mr. Quinn and concluded (at para. 62) that they did not appear to advance Mr. Quinn’s assertion that the claims for indemnity and damages made against him in the third party proceedings were, because of the allegations of misconduct, to be regarded as conferring on him a personal right to defend, which did not vest in the Official Assignee. The decision of the New Zealand High Court in De Alwis appeared to Kelly J. to be much more in point. Having referred to the specific arguments made by counsel for Mr. Chean as to the right to set aside the judgment being personal to Mr. Chean, Kelly J. quoted the passage from the judgment which has been quoted above, stating (at para. 65) that those observations appeared to him to be much more pertinent to the line of argument which Mr. Quinn advanced before him and that they were against the proposition asserted by Mr. Quinn. Kelly J. continued (at para. 66):
“In my view, merely because the allegations against Mr. Quinn in the third party proceedings involve allegations of wrongdoing, does not remove the defence of such a claim from the purview of the Assignee. Accordingly, I am of opinion that this claim for damages against the estate of the bankrupt is not one of those personal claims which do not vest in the Assignee. The defence of such a claim is a matter for the Assignee. This position is not altered because the claim includes allegations of wrongdoing against Mr. Quinn. Insofar as this argument is concerned, therefore, I reject the entitlement of Mr. Quinn to represent himself further in this litigation.”
Authorities in which an international cross-border dimension is present
52. I turn now to the other line of authority and academic commentary which it is necessary to consider, because it is submitted on behalf of B.A. that the Court must have regard to the implications of the concurrent foreign bankruptcy, the U.S. Bankruptcy.
53. As has been recorded earlier, counsel for B.A. cited the commentary in Sheldon (op cit.) at paras. 9.28 and 9.29. Obviously, the author there is dealing with the law of England and Wales, as he makes absolutely clear in the following statement under the heading “Concurrent Bankruptcies” (at para. 9.28):
“In the case of concurrent bankruptcies, the issue may arise as to whose title is to prevail where there are assets in England being claimed by both trustees. The basic approach would appear to be that the first in time will prevail. If bankruptcy proceedings have been commenced in England and a bankruptcy order made, no subsequent foreign adjudication will divest the English trustee of the title to the property in England [citing Re: O’Reardon (1873) 9 Ch. App. 74], although the English court will in such circumstances recognise the authority of the foreign trustee to deal with and distribute those assets within the jurisdiction of the foreign court. However, where the foreign adjudication precedes the English bankruptcy, movable property in England will already have vested in the foreign trustee and it cannot thereafter vest in the English trustee. Title must, however, be distinguished from jurisdiction. The fact that there is a prior foreign adjudication in bankruptcy (entitled to recognition in England) does not deprive the English court of jurisdiction to make a bankruptcy order. Equally the existence of a prior foreign adjudication cannot require the English court to stay its own proceedings.”
The principles set out in the last two sentences in that passage have, in fact, been recognised by this Court in the Supreme Court Bankruptcy Judgment on the appeal by B.A. against the decision of the High Court (McGovern J.) dismissing his application to show cause and to set aside his adjudication in bankruptcy. However, it was made clear in that judgment that how the concurrent bankruptcies could proceed would be a matter for the U.S. Bankruptcy Court and the High Court and for the Chapter 7 Trustee, who had not been before the High Court on the hearing of the show cause application and was not before this Court on the appeal, and the Official Assignee.
54. The authority primarily relied on by counsel for B.A., Anderson, was a decision of the High Court, which, as is pointed out in Sheldon (op cit.), “did not, on its facts, involve contemporaneous proceedings”. The facts were that in 1898 Anderson, whose domicile was English and who was entitled to a reversionary interest in personalty in England, was adjudicated bankrupt in New Zealand on a creditor’s petition. He obtained his discharge in New Zealand in December 1900. However, in 1904 he was adjudicated a bankrupt in England on a creditor’s petition and the official receiver became the trustee in bankruptcy. In January 1910 he applied for his discharge in the English bankruptcy, which was granted subject to a years’ suspension. The reversionary interest, which by an oversight was not disclosed in the New Zealand bankruptcy, was discovered by the trustee in bankruptcy in England in 1909 and he at once gave notice of his title to the trustees of the fund and arranged to sell it for £140. The Official Assignee in New Zealand claimed the £140 on the ground that the creditors in New Zealand were still unpaid, and applied for a declaration that he was entitled as against the trustee in bankruptcy in England to whatever interest the bankrupt was entitled in the property in 1898. It was held that the Official Assignee in New Zealand was entitled as against the trustee in bankruptcy in England to the reversionary interest.
55. The first sentence of the judgment of Phillimore J., in which he stated that what he was concerned with was “a contest between the Official Assignee of the bankrupt under an earlier bankruptcy in New Zealand and the trustee in bankruptcy under a bankruptcy at a later date in England”, identifies what I consider to be a very significant difference between this case and Anderson. This Court is not concerned here with a contest between the Official Assignee and the Chapter 7 Trustee in the U.S. Bankruptcy, because B.A. did not seek to make the Chapter 7 Trustee a party to B.A.’s 2015 Application.
56. On my reading of the judgment of Phillimore J., his approach was to identify where the title to the reversionary interest lay. First, he stated (at page 902) that, upon principle and authority, the adjudication in New Zealand, being a valid adjudication according to the law of New Zealand passed the right to movable property of the bankrupt in any country to his official assignee in bankruptcy in New Zealand. Furthermore, if the New Zealand bankruptcy passed as against the debtor all his movable property wherever situate, it passed it equally against all persons claiming under later titles from him, such as an executor, an encumbrancer, an assignee for value, or even an official trustee or assignee at bankruptcy. He then stated:
“Therefore this equitable reversion with which I have to deal had ceased to be the bankrupt’s, and was no longer part of his assets when the second bankruptcy supervened. Therefore it did not pass to the trustee in the second bankruptcy.”
57. Counsel for the Official Assignee reminded this Court of the extent to which this Court had considered the decision of the Court of Appeal in In Re Artola Hermanos (1890) 24 QBD 640 (Artola Hermanos) in the Supreme Court Bankruptcy Judgment on B.A.’s appeal to this Court against the dismissal by the High Court of his application to show cause. The factual circumstances in Artola Hermanos were that a firm, having its head office in Paris, had a branch establishment in England. The firm was declared bankrupt in Paris under the law of France, and a syndic was appointed to administer the estate. Subsequently, a bankruptcy petition was presented against the partners in England and an order was made appointing an interim receiver. The syndic applied to the English court to discharge that order and to stay all further proceedings under the petition. There was no evidence as to the domicile of the members of the firm, but two of them resided in England, where the firm had large assets. The Court of Appeal held that the jurisdiction of the Court being undoubted, the receiving order was rightly made. Further, the fact that a prior bankruptcy had been commenced in a foreign county, not shown to be the country of domicile of the debtors, was no ground for staying the proceedings in England. The purpose of analysing the decision of the Court of Appeal in Artola Hermanos in detail on B.A.’s appeal was explained in the Supreme Court Bankruptcy Judgment as being “because it illustrates the distinction . . . between the jurisdiction to create a concurrent bankruptcy and the effect and consequences of so doing”. It was against that background that it was stated in that judgment that how the concurrent bankruptcies would proceed would be a matter for the U.S. Bankruptcy Court and the High Court and for the Chapter 7 Trustee and the Official Assignee.
58. In his judgment in Anderson, Phillimore J. did not overlook the decision of the Court of Appeal in Artola Hermanos. He referred to it immediately after the last passage from the judgment quoted above, stating (at p. 903):
“I would like, before I leave this question, to point out that in In Re Artola Hermanos, and cases of that kind, the Court deals, perhaps not quite logically but very sensibly and practically, with cases of concurrent or contemporaneous bankruptcies without much regard as to which bankruptcy was by a few days the earlier of the two. Where both bankruptcies are running, the estate has to be got in. And, at any rate, for the purpose of colligenda bona, it may be quite proper to have two bankruptcies running, one in this country and another in some foreign country. In those cases the Court by upholding the title of the trustee in the English bankruptcy does not mean, as Lord Coleridge clearly pointed out, to decide the ultimate right to the assets. It merely gives a title ad colligenda bona.”
59. Having commented, as outlined earlier, that Anderson did not, on its facts, involve contemporaneous proceedings, it is stated in Sheldon (op cit.) that such proceedings did arise on at least three prior occasions before the old Court of Bankruptcy and it is suggested that perhaps the best illustration is Re Hughes (1858) 31 LTOS 207 (Hughes), the facts of which Sheldon outlines at para. 9.29. In Hughes, which is specifically relied upon by counsel for B.A., the bankrupt had carried on business as a shoemaker in London and in Londonderry. An adjudication was made on the debtor’s petition in Ireland and, three days later, a creditor’s petition was presented in England, pursuant to which an adjudication was subsequently made. A dispute arose concerning the proceeds of property in England, whether it should go to the official assignee in England, who was not yet appointed, or the official assignee in Ireland. Mr. Commissioner Holroyd stated:
“The only question is as to the assets. By law all of the property of the bankrupt wherever situate, passes to the courts which first acquire title to it. I do not think I ought to interfere in the matter. So far as I can understand it, the money must be paid over to the assignee in Ireland; and if the party complaining have any objection to make, he must oppose the bankrupt in the Court of Bankruptcy there.”
60. The commentary in Sheldon outlined above and the decision in Hughes have been considered because these matters were put before this Court by counsel for B.A. in support of B.A.’s contention that the submission of the Official Assignee that B.A.’s estate vested in the Official Assignee on 29th July, 2013, the date of his adjudication in this jurisdiction, is incorrect and that B.A.’s estate had by then vested in Chapter 7 Trustee. In the absence of the Chapter 7 Trustee, it would not be appropriate for this Court to express any view on B.A.’s contention. However, it is perhaps worth noting that, in delivering the judgment of the Privy Council in Cambridge Gas Transport Corporation v. Official Committee of Unsecured Creditors of Navigator Holders Plc [2007] 1 AC 508, a decision which was considered in the Supreme Court Bankruptcy Judgment, Lord Hoffman, in commenting on the undeveloped state of the common law as regards unifying principles applicable to both personal and corporate insolvency, stated (at para. 19):
“For example, the rule that English movables vest automatically in a foreign trustee or assignee has so far been limited to cases in which he was appointed by the court of the country in which the bankrupt was domiciled (in the English sense of that term), as in Solomons v Ross, or in which he submitted to the jurisdiction: Re Davidson's Settlement Trusts (1873) LR 15 Eq 383. It may be that the criteria for recognition should be wider, but that question does not arise in this case. Submission to the jurisdiction is enough. In the case of immovable property belonging to a foreign bankrupt, there is no automatic vesting but the English court has a discretion to assist the foreign trustee by enabling him to obtain title to or otherwise deal with the property.”
It is reasonable to predict that whether the principles outlined in that passage, which is quoted in Sanfey and Holohan on Bankruptcy Law and Practice (2nd Ed. at para. 19 - 13) (in relation to the question “what the position would be vis-à-vis non-EU bankruptcy proceedings”) apply in this jurisdiction, which has not been decided yet, will be the subject of consideration in the High Court in the not too distant future. In the circumstances, at this juncture, this Court must exercise caution.
61. Having said that, of course, B.A. did submit to the jurisdiction of the U.S. Bankruptcy Court by filing for Chapter 7 Bankruptcy on 29th March, 2013. That being the case, it is difficult to see how it would be appropriate for this Court to accept as correct the submission on behalf of the Official Assignee that all of B.A.’s assets, which would obviously cover movables as well as immovables, have been vested in the Official Assignee since 29th July, 2013, in the absence of the Court hearing the views of the Chapter 7 Trustee on that point.
Discussion of and conclusions on the locus standi issue
62. The legal and factual foundation on which the Court is expected to determine whether B.A. has locus standi to prosecute B.A.’s 2015 Application is riven with imponderables and hypotheses. In particular, for the reasons outlined earlier, it is neither appropriate nor possible to determine where, and to what extent, the property and estate of B.A., movable and immovable, is now vested, whether in the Official Assignee or the Chapter 7 Trustee, in the absence of the Chapter 7 Trustee before the Court. Notwithstanding that, I am satisfied that the Official Assignee has, under Irish law, an ad colligenda bona function, that is to say, a function to collect and preserve the assets of B.A., which, in my view, gives him sufficient standing to question the standing of B.A. to prosecute B.A.’s 2015 Application in this jurisdiction.
63. The fundamental question which must be considered on the locus standi issue is whether it is possible for the Court to determine that, irrespective of in which bankruptcy representative the estate of B.A. is vested, whether it is in the Official Assignee or, alternatively, in the Chapter 7 Trustee, B.A., as he contends, has retained a right which is personal, as distinct from proprietarial, in nature, which has not been vested in the Official Assignee or the Chapter 7 Trustee, as the case may be, and which gives him standing and entitles him to prosecute B.A.’s 2015 Application. In order to answer that question it is necessary to consider first the status of B.A., as the moving party in B.A.’s 2015 Application. In other words, does he have the status of a claimant or does he have the status of a defendant? The answer to that question necessitates a consideration of the nature of B.A.’s role in the process of A.A.’s 2006 Application in the High Court and in the Supreme Court.
64. B.A.’s role in the High Court on A.A.’s 2006 Application was to defend against A.A.’s claims, which, in essence, were claims that additional provision be made for her from B.A.’s assets. In the appeal to the Supreme Court he was seeking to set aside the judgment of the High Court, which was favourable to A.A. and was unfavourable to him in awarding additional provision, but, in reality, he was doing so in defence of A.A.’s claim. By analogy to the observations of Sedley L.J. in Grady v. HM Prison Service [2003] EWCA Civ 527 (at para. 20) to the effect that the appeal in that case, brought as of right, “was a continuation of the claim once it had failed at first instance”, B.A.’s appeal was a continuation of his defence once it had failed in the High Court. Having been unsuccessful in the Supreme Court, B.A.’s objective in initiating and attempting to prosecute B.A.’s 2015 Application is to set aside both the 2009 Judgment of the High Court and the Supreme Court Judgment, which, in the event of B.A. being successful, would mean that he would have to re-defend A.A.’s 2006 Application, assuming that A.A. decided to re-litigate it, which is a reasonable assumption. On that analysis, it seems to me that B.A.’s only current status in the matrimonial proceedings is as defendant to A.A.’s claim for additional provision.
65. If one envisages B.A. being in the hypothetical situation in which he finds himself re-defending the re-litigation of A.A.’s claim on A.A.’s 2006 Application, the outcome of that process, insofar as it would result in an increase or a diminution of the provision to be made for A.A. would, under Irish law, affect the property and estate of A.A., in whichever bankruptcy representative it would be vested at that time. To that extent, it would not affect B.A. personally under Irish law. The question which remains, on the application of Irish law, is whether in the hypothetical situation of re-defending the re-litigation of A.A.’s claim under the A.A.’s 2006 Application, B.A. would have some personal interest, as distinct from a property interest. It seems to me that the only basis on which one can answer that hypothetical question is by reference to B.A.’s conduct of the defence of A.A.’s claim in the past. The grounds on which B.A. appealed the decision of the High Court are particularly informative in that regard.
66. As outlined earlier, B.A. did, on the appeal, challenge the decision of the High Court to leave the decree of divorce in place while substituting for the ancillary provisions in the consent component of the 2001 Order ancillary provisions more beneficial to A.A. He did not do so, however, on the basis that, in order to protect a personal right unconnected to a property right, he was entitled to have the decree of divorce set aside, for example, so that the legal status of his marriage to A.A. would be reinstated for a reason unconnected with the making of proper provision for one or other or both of the former spouses. From reading the grounds of appeal it is clear that he did so solely on the basis of the property and financial implications of not setting the decree of divorce aside, in consequence of which a situation would not be created whereby the divorce proceedings would have to be started ab initio, thus creating an opportunity for B.A. to eliminate the property and financial implications which he regards as being adverse to him. On that analysis, and taking an overview of what has happened to date, in my view, B.A. has not demonstrated that he would have a personal interest, as distinct from a property interest, by being put in a situation, by reason of obtaining the relief he seeks on B.A.’s 2015 Application as set out at para. 22 above, where A.A. would have to re-litigate A.A.’s 2006 Application and B.A. would have an opportunity to re-defend it.
67. In arriving at that conclusion, the locus standi issue has been narrowed down to the real core of the substantive issue raised on B.A.’s 2015 Application, namely, what the outcome of the only relief he seeks will be, if he succeeds. It is true that the submission made by B.A. that his constitutional right to a fair trial has been infringed, which he contends is a personal right which remains vested in him, has not been analysed. That is because, in the words of Courtney J. in De Alwis, B.A. is effectively seeking to “separate the right to set aside a judgment from the judgment itself and to elevate such a right to a personal right of action itself”. The judgment which B.A. seeks to set aside gave rise to a liability enforceable only against B.A.’s estate. So, even if B.A. were successful on the argument that he had not been afforded a fair trial, the only outcome which would afford redress to B.A. for the infringement of his constitutional right would be the creation of a situation which would result in A.A. having to re-litigate and B.A. having an opportunity to re-defend A.A.’s 2006 Application. It must be emphasised that the complaint which forms the basis of B.A.’s 2015 Application is not focused against A.A. and, indeed, no wrongdoing is alleged against A.A. in that regard. The reality from every perspective, legal and practical, is that the only outcome which could be available to B.A., if he was successful, would be what he seeks, the setting aside of the 2009 Judgment and the setting aside of the Supreme Court Judgment, with the probability of re-litigation by A.A. of A.A.’s 2006 Application. He would not have any other remedy against A.A. or against any other person. That being the case, the question as to whether B.A. has standing to initiate and prosecute B.A.’s 2015 Application, having regard to his status as a bankrupt in two jurisdictions, when assessed in the context of the only potential outcome of that application, if successful, must be that he does not have standing, because he has not demonstrated that in the re-litigation and re-defence of A.A.’s 2006 Application, to adopt the words of Hoffman L.J. in Heath, the relief sought would “not directly concern his estate” so as to entitle him to defend.
68. Recalling the rejection of the argument by counsel for B.A. set out in para. 37 above that the judgments sought to be set aside by B.A. only “indirectly” concerned the estate, it must be emphasised that the fact that the setting aside of the decree of divorce arose as an issue in the High Court and in the Supreme Court on A.A.’s 2006 Application and that both Courts considered that it was unnecessary to set the decree aside, does not support B.A.’s argument that his asserted entitlement to set aside the 2009 Judgment and the Supreme Court Judgment falls within the personal category. On the basis of the analysis in the preceding paragraphs, I am satisfied that the defence by B.A. of the claims against him in A.A.’s 2006 Application was wholly property oriented. Neither the fact that A.A.’s 2006 Application, which is at the heart of B.A.’s 2015 Application, is founded in matrimonial proceedings, nor the fact that B.A. contends that his constitutional right to a fair trial has been infringed, supports the argument that B.A. has a personal interest in continuing to prosecute B.A.’s 2015 Application under Irish law. That is so, even if it is the case that, as a matter of Irish law, the Official Assignee has no greater title than an ad colligenda bona function in relation to B.A.’s movable assets.
69. As to the B.A.’s submission that he has a personal interest in having the 2009 Judgment and the Supreme Court Judgment set aside having regard to the application of United States law to him, based on his waiver of discharge, because of a number of factors which have already been alluded to, this Court is not in a position to express a view on B.A.’s contention that he has such a personal interest. The most significant factor is that the principal contender with B.A. as to the conduct of the U.S. Bankruptcy, in accordance with the law of the United States, is the Chapter 7 Trustee, who is not before this Court. Indeed, B.A. has not sought to join the Chapter 7 Trustee as a notice party in the matrimonial proceedings or in B.A.’s 2015 Application. Moreover, it would appear that B.A. did not give the Chapter 7 Trustee notice of the initiation of B.A.’s 2015 Application or of the direction that the locus standi issue be tried by this Court or of the date of the hearing of such issue. Such notice as the Chapter 7 Trustee has had of those matters appears to have come from the solicitors for the Official Assignee. Secondly, the only evidence before this Court as to the current attitude of the Chapter 7 Trustee is his letter of 22nd July, 2015 to the Official Assignee’s solicitors, which, as has been frequently noted above, is not satisfactory evidence as to his current attitude, save to set out his challenge to B.A.’s reliance on his letter of 5th June, 2013. Thirdly, as has also been noted earlier, the only evidence before the Court as to the relevant law of the United States is an affidavit from Mr. Berman, the attorney on record for B.A. in the U.S. Bankruptcy proceeding. B.A. cannot expect this Court to adjudicate on an issue involving the application of the law of a foreign jurisdiction without the benefit of independent expert evidence on the foreign law (lack of independent evidence being pointed to in Dicey Morris and Collins on The Conflicts of Law (15th Ed.) at para. 9.014 as a factor which may severely weaken the credibility of the evidence a technically competent witness gives) and, more importantly, in the absence of his principal potential protagonist on the issue. Accordingly, insofar as B.A. relies on what has been termed the international cross-border dimension involving an assessment of the application of the law of bankruptcy in the United States to him, he has not rendered it possible for this Court to adjudicate on that aspect of his claim.
70. While the procurement by the solicitors for the Official Assignee of the letter of 22nd July, 2015 from the Chapter 7 Trustee was of some limited assistance to the Court, it is important to emphasise that in the present context the onus of proving that B.A. either does have or does not have locus standi by reason of the application of U.S. law to B.A. in the circumstances prevailing in the U.S. Bankruptcy is not borne by the Official Assignee. It is on B.A. that the burden rests to establish that he has locus standi to bring B.A.’s 2015 Application. Therefore, any deficiencies in proving the facts which it is necessary to prove to establish that he has locus standi to bring and continue that application on the basis of the law of a foreign jurisdiction, which is a question of fact, are fatal to his being allowed to pursue it.
Summary of conclusions and order of the Court.
71. For the reasons outlined at paras. 64 to 68 above, I am satisfied that B.A. has not demonstrated that, as a matter of Irish law, he has locus standi to maintain B.A.’s 2015 Application. Moreover, it is not possible for this Court to adjudicate on B.A.’s submission that he has a personal interest in pursuing B.A.’s 2015 Application by the operation of the applicable law of the United States to his U.S. Bankruptcy, because of the deficiencies in the presentation of his claim to this Court outlined at paras. 69 and 70 above.
72. Accordingly, I consider that there should be an order dismissing B.A.’s 2015 Application.
Pertinent observations
73. Despite the unsatisfactory procedural manner in which B.A.’s 2015 Application has come before it, this Court has taken a practical approach and has addressed whether B.A. has locus standi to bring that application by way of preliminary issue. However, it should be noted that, where a bankrupt considers that he or she is entitled, as a matter of law, to institute, continue, whether by way of appeal or otherwise, or defend legal proceedings, having regard to the power conferred on the Official Assignee by s. 61(3)(d) of the Act of 1988, he or she should at the outset ascertain the view of the Official Assignee as to whether he or she is entitled so to do. If a dispute arises between the bankrupt and the Official Assignee as to the bankrupt’s right to prosecute proceedings, the resolution of that dispute is a matter, in the first instance, for the High Court.
74. Finally, it is pertinent to emphasise that the courts of this jurisdiction cannot ignore the fact that B.A. has been adjudicated a bankrupt in the U.S. Bankruptcy. Insofar as issues in relation to the application of the law of the United States regulating the U.S. Bankruptcy and the actions of the Chapter 7 Trustee properly arise in this jurisdiction, the courts of this jurisdiction will require assistance from the Chapter 7 Trustee and, where appropriate, from the U.S. Bankruptcy Court. Obversely, I would expect that, if the application of Irish law were to arise in the conduct of the concurrent bankruptcies in the U.S. Bankruptcy Court, the Chapter 7 Trustee and, where appropriate, the U.S. Bankruptcy Court, would seek and be given the assistance of the Official Assignee and, where appropriate, of the High Court.
Judgment of Mr Justice Charleton delivered on Monday the 9th day of November 2015
1. This judgment concurs with that of Laffoy J. Only a few observations are apposite as an addition to her reasoning in that judgment. The facts as therein stated are adopted.
Arguments advanced on the appeal
2. This preliminary issue is one of law. The Official Assignee asserts that the fact “that the trial judge or the Supreme Court made findings adverse to the bankrupt, or which reflected on his personal conduct does not of itself give the applicant any basis for making any claim [or] cause [that] claim to become a personal claim.” The Official Assignee is of the view that “there is no basis that is even stateable for overturning the decision of Irvine J in the High Court” and, further, that even were the decision of the Supreme Court on appeal to “be impugned, the launching of a second substantive appeal would be a matter for the Official Assignee.” Countering this BA, as bankrupt, argues, firstly, that the Official Assignee has no entitlement or standing to seek to prevent or impede any decisions in litigation he might make since the entire of his assets, wheresoever situated, had previously been vested in the United States of America trustee in bankruptcy. Thus, it is contended by BA that the Official Assignee has no interest in any proprietary right of BA since he does not control BA’s estate in bankruptcy; the claim being that BA’s estate never vested in that Irish official and nor could it due to the prior claims of the US official. Were this argument to be taken to its logical extreme, the entire of BA’s bankruptcy estate, being vested in the US trustee, has never, as to any part of it, come under the authority of the Official Assignee. Thus, BA claims, it is irrelevant to, and outside of the jurisdiction of, the Official Assignee as to whether any property of BA is diminished or added to in consequence of any success that BA may have on the course he proposes to take or as a result of any further order being made as to costs against him. Secondly, BA contends that even if the Official Assignee has any interest in any property of his in Ireland or elsewhere that he, BA, retains a personal right to vindicate wrongs done to him. As asserted on this appeal, the wrong consists, it is claimed, of an entitlement to overturn a finding integral to the judgement of Irvine J of 10th June, 2009, that he concealed assets in making discovery of relevant documents to AA in their initial matrimonial proceedings. This amounts to a finding, BA asserts, that his financial conduct and behaviour during the litigation was discreditable. He thus should have had the right, he claims, to participate in those family proceedings through the calling and examination of witnesses and by offering submissions to the court. On behalf of BA it is further asserted that once he raises any issue as to the alleged deprivation of fair procedures in a court case, this is personal to him and thus he retains the right to litigate it to conclusion notwithstanding any intervening bankruptcy. The vindication of all such rights, it is contended, is personal to BA and, as with other wrongs done to a bankrupt that specifically injure his person or the standing of his character, remain to be litigated by him personally and outside the direction or control of the Official Assignee.
3. The authorities make it clear that the position of the Official Assignee is correct and the counter arguments of BA are bound to fail.
Effect of adjudication in bankruptcy
4. The case argued on this appeal by BA is undermined by authority on the most fundamental level. Section 44 of the Bankruptcy Act 1988 provides:
(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 52(1) of the Property Services (Regulation) Act 2011], 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.
5. Section 61(2) of the Act of 1988 declares that the functions of the Official Assignee are “to get in and realise the property, to ascertain the debts and liabilities and to distribute the assets in accordance with the provisions of this Act.” In that regard subsection 3 gives to the Official Assignee the following powers:
(a) to sell the property by public auction or private contract, with power to transfer the whole thereof to any person or to sell the same in lots and for the purpose of selling land to carry out such sale by […] lease, sub-lease or otherwise and to sell […] any reversion expectant upon the determination of any such lease,
(b) to make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim present or future, certain or contingent, ascertained or sounding only in damages whereby the bankrupt or arranging debtor may be rendered liable,
(c) to compromise all debts and liabilities capable of resulting in debts and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the bankrupt or arranging debtor and any debtor and all questions in any way relating to or affecting the assets or the proceedings on such terms as may be agreed and take any security for the discharge of any debt, liability or claim, and give a complete discharge in respect thereof,
(d) to institute, continue or defend any proceedings relating to the property,
(e) to refer any dispute concerning the property to arbitration under the terms of section 11 of the Arbitration Act, 1954,
(f) to mortgage or pledge any property to raise any money requisite,
(g) to take out in his official name without being required to give security, letters of administration to any estate on the administration of which the bankrupt or arranging debtor would benefit,
(h) to agree a sum for costs where the Court so directs or where he considers that the amount which would be allowed on taxation would not exceed [€12,000],
(i) to agree the charges of accountants, auctioneers, brokers and other persons,
(j) to ascertain and certify to the Court the amount due in respect of a mortgage debt and the due priority thereof with power to the Court to vary such certificate,
(k) to draw out of the account referred to in section 84 (1) any sum not exceeding [€130] by way of indemnity in respect of costs incurred by him.
6. Causes of action sounding in damages that may benefit the estate of a bankrupt or may diminish it are under the control of the Official Assignee. A cause of action subsisting on adjudication in bankruptcy will thereby be stayed or dismissed unless the trustee in bankruptcy, here the Official Assignee, is willing to be substituted as the moving or responding party. Displacing a bankrupt from control over his former assets and liabilities places him in a position where the net benefit of his estate is made available for distribution to creditors. That estate is not to be increased through legal actions to enforce debt, even those which may be characterised as straightforward, save in circumstances where the Official Assignee regards it as appropriate that an action be taken. Nor is the estate of the bankrupt to be diminished by any creditor save in the lawful course of the gathering up and proper distribution of the property of the bankrupt. All of this is under the control of the Official Assignee. This is provided for in section 136 of the Act of 1988 thus:
7. This may be stated to be the principle of the separation of the estate of the bankrupt from his personal control. Its origin goes back as far as the first bankruptcy code. In modern legislation, as part of the status of bankruptcy, section 137 of the Act of 1988 provides for further protective powers which, in this instance, are vested in the Official Assignee:
(1) The Official Assignee may—
(a) where any proceedings against the bankrupt are pending in the High Court or on appeal in the Supreme Court, apply to the court in which the proceedings are pending for a stay of proceedings therein, and
(b) where any other proceedings are pending against the bankrupt, apply to the High Court to restrain further proceedings therein,
and the court to which the application is made may grant the application on such terms and for such period as it thinks fit.
(2) Where any proceedings against a bankrupt are stayed or restrained in pursuance of subsection (1), the following provisions shall have effect:
(a) the creditor shall not be liable for any costs incurred by the bankrupt or the Official Assignee in such proceedings;
(b) if the proceedings have been instituted against the bankrupt jointly with any other person, the proceedings against that other person shall not thereby be affected.
Redress for decisions in Bankruptcy
8. The Official Assignee is an officer of the High Court. The pursuit of his functions is pursuant to orders made by the High Court. Discharge from bankruptcy is ultimately a matter for that court. As a high administrative official, the Official Assignee is not left without recourse to the High Court in the discharge of his duties. Section 61(6) provides that he may “in cases of doubt or difficulty seek the directions of the Court in connection with the affairs of any bankrupt or arranging debtor.” Section 61(8) provides that the “powers and functions conferred on the Official Assignee by this section may be exercised and performed” by him where there is an “adjudication founded on a petition of a debtor” or otherwise where there is an adjudication, or where the time for showing cause has expired in the case of an adjudication “founded on a petition by a creditor” or “in the case of a vesting arrangement, on approval of the proposal by the Court.” It may be noted that several other provisions in the Act refer to the rights of family members and to those, necessarily contending, positions of the bankrupt and arranging debtor or to persons dying insolvent. This tends to be specific. The individual statutory sections rarely employ words of a more general kind. Section 61(7) contrasts with this in terms of affirming the powers of the High Court as the ultimate supervisor of the role of the Official Assignee:
The exercise by the Official Assignee of the powers conferred by this section shall be subject to the control of the Court, and any creditor or other person who in the opinion of the Court has an interest may apply to the Court in relation to the exercise or proposed exercise of those powers.
9. Under the Bankruptcy (Ireland) Amendment Act 1872, section 4, the then division of the High Court dealing in bankruptcy, the Court of Bankruptcy and Insolvency in Ireland, had “original jurisdiction, superintendence and control” over all matters in bankruptcy. In Ellis v Silber (1872-73) LR 8 Ch App 83, Lord Selborne declared the authority of the bankruptcy court thus:
That which is done in bankruptcy is the administration in bankruptcy. The debtor and the creditors, as the parties to the administration in bankruptcy, are subject to that jurisdiction. The trustees or the assignees, as the persons entrusted with that administration, are subject to that jurisdiction. The assets which come to their hands and the mode of administering them, are subject to that jurisdiction.
10. It was not proposed in the Bankruptcy Law Committee Report (Prl. 2714) under the chairmanship of Mr Justice Frederick Gardner Budd to diminish the general power of interested parties to apply to the High Court for decisions as to issues arising in the course of bankruptcy. Looking back to the 18th and early 19th centuries, a time when the trustee in bankruptcy might have been chosen by the main creditor of an insolvent person, a situation perhaps akin to the appointment of a liquidator on insolvency of a company in our time, it could be that conflicts of interest or personality issues might suggest to the trustee that a good cause of action should not be taken even though it would probably inure to the clear benefit of the estate in bankruptcy. It has always been the case that where the bankrupt is aggrieved by the refusal of a trustee in bankruptcy to prosecute a claim, he may make an application to the High Court. This can have the effect in clear cases of reversing that decision. Thereby such order as is necessary to meet the justice of the case may also be made. From the case law, it is a jurisdiction sparingly exercised. That principle is preserved in England in section 303(1) of the Insolvency Act 1986. This provision is mirrored by section 61(7) of the Act of 1988, quoted above. In Heath v Tang [1993] 1 WLR 1421 at page 1423, the historical observation by Hoffman LJ illustrates the difficulties of that time:
The rule that the bankrupt could not sue on a cause of action vested in his trustee was enforced with such rigour that he could not even bring proceedings claiming that the intended defendant and the trustee were colluding to stifle a claim due to the estate and which, if recovered, would produce a surplus. But in any case in which he was aggrieved by the trustee’s refusal to prosecute a claim he could apply to the judge having jurisdiction in bankruptcy to direct the trustee to bring an action, or to allow the bankrupt to conduct the proceedings in the name of the trustee.
11. In order to avoid any doubt, it should be noted that this appeal is the effective discharge of the entitlement of the bankrupt BA to access the courts under section 61(7) of the Act of 1988 to resolve an issue of controversy in the bankruptcy. BA has taken the view on this appeal that he should be entitled to attempt to upset through his own personal action the financial provisions made in favour of his ex-wife, AA, in the matrimonial proceedings. This decision by the Supreme Court is the answer to that question on which BA has sought a ruling as to the “exercise or proposed exercise of those powers” vested in the Official Assignee whereby that official of the High Court has declined to pursue the case which BA claims he should take. While the Official Assignee has refused, fundamentally BA challenges the power of the Official Assignee to control his estate and to thereby decide which cases to bring or decline to pursue.
Control over the estate in bankruptcy
12. The fundamental principle in regard to the control of a bankrupt’s estate is stated in Kisby on Bankruptcy (Dublin, 1876) at page 128. The decision of Laffoy J on this appeal is thus clearly based on sound authority. Control of the property of a bankrupt vests in the trustee in bankruptcy, now the Official Assignee. In the context of the then procedure of certification of conformity after final examination, the principle set forth by that authoritative text is of general application:
It was held in Motion v Moojen L.R. 14 Eq. 202, that an uncertified bankrupt cannot, as plaintiff, sustain a bill in equity to undo fraudulent treatment where the Court of Bankruptcy is competent to deal with the case. The proper course for a defendant to adopt in the event of an uncertified bankrupt filing such a bill, is to demur. The doctrine is an old one that a bankrupt who has not obtained his certificate cannot sue in the Court of Chancery, even though he should allege fraud and collusion in those who have charge of his property. See Heath v. Chadwick, 2 Phill. 649; Rochfort v. Battersby, 2 H.L. 407. The Court of Chancery will interfere, even at the bankrupt’s instance, if the bankrupt is not able, to relieve him against fraud… The disability of a bankrupt to sue is not a personal disability; but relates only to his property.
13. In Rochfort v Battersby 9 ER 1139; (1849) 2 HL Cas 388 a bankrupt had previously held an entitlement to estates in Ireland that were subject to an annuity in favour of his mother. These estates had been mortgaged to a creditor who later sought foreclosure. The issue in the action was whether the mortgage over the estate took priority over the annuity in favour of the bankrupt’s mother. The Lord Chancellor of Ireland decided the case in favour of the mother and the bankrupt appealed to the House of Lords in England. The key question was that which arises on this preliminary issue. The headnote to the case records it as a principle of law that an “insolvent debtor has not such an interest in property assigned under the Insolvent Debtors’ Acts, as to entitle him to enter into any litigation respecting it.” Lord Cottenham LC stated the rule in a passage which is worth recalling in this context. The relevant portion of the judgment appears at page 1147 of the English Reports thus:
The case of Collins v. Shirley (1 Russell and Myl. 638) [1830] brings the case, not more in principle, but more in point of fact, within the circumstances of the present case; and, as it seems to me, they are identically the same. There, a bill of foreclosure had been filed against the insolvent and his assignees, upon which the assignees disclaimed, and offered to release. The assignees claimed no benefit in the mortgage; the title of the mortgagee had been prior to their own, and they therefore abstained from litigating the point. The discussion arose upon a question of costs. The assignees withdrew from the contest, and it remained only between the insolvent and the mortgagee. “The Master of the Rolls held that the assignees were not entitled to their costs, but that Shirley had been made a party improperly, and ought therefore to have his costs.” That was identically the same as here. The assignees represented the property, and were therefore properly made defendants. But as to the insolvent, the Master of the Rolls, Sir John Leach, said, that he was improperly made a defendant; the consequence was, that the Court gave him his costs. Now all these cases refer to the state of the matter as it stands on this appeal, and shew that the insolvent under the Insolvent Debtors’ Act, is not considered by the Court as having any such interest in the property as entitles him to enter into any litigation respecting it. It cannot be stronger than this. We find a bill filed by the insolvent, alleging, upon the face of it, that there is a surplus, which practically is made use of by him to shew that he had an interest; but although the law would give him back again that surplus, if it should ultimately arise, the Court says, “ Although you have alleged that fact, a demurrer might be taken to that allegation on the ground that that fact does not, under the statute, give you such an interest as entitles you to sue upon it.” A demurrer is therefore held to be good to a bill filed by an insolvent, although lie alleges a probable surplus, and although he alleges combination and conspiracy to rob him, as between the assignees and the creditors. There cannot be a stronger proof therefore that the Courts have always considered these acts of Parliament as divesting the insolvent of all title and interest in the property, which would authorize and justify him in entering into any litigation respecting it. This objection ought to have been taken in the Court below, and the bill ought to have been dismissed as against the insolvent; but the Court did not adopt that course, but made a decree apparently as if the party had not been an insolvent at all, decreeing a foreclosure against him, which might ultimately lead to a redemption by him.
14. In Wylie’s Judicature Acts (Dublin, 1906), another admired text that assists the elucidation of fundamental law, the principle is reaffirmed:
That where a sole plaintiff becomes bankrupt he cannot continue the suit; that any steps taken by him subsequently will be discharged upon the defendant’s application; that the assignee is must obtain an order to continue the proceedings in their own names, or in the names of the bankrupt, giving security of course, if from the state of the action that course be more convenient, as where the action had been set down for trial.
15. The rule elucidated by Laffoy J in her judgment on this appeal is therefore of long-standing. It also is one which has been consistently applied. Should a bankrupt consider that the assignee in bankruptcy has made an incorrect decision, the remedy is to apply to the court supervising the estate. According to Smith v Moffat (1865) LR 1 Eq 397, that should be the court before which the order was made. The case, however, does not comment on concurrent bankruptcies in differing jurisdictions, only on the availability of a remedy. In Heath v Tang the effect of these decisions was summarised at 1425 by Hoffman LJ as demonstrating that, as a matter of principle, a bankrupt cannot appeal from a judgment against him which is enforceable only against the estate vested in the trustee in bankruptcy.
16. Later in the judgement, Hoffman LJ comments on the necessity to consider modern legislation in the context of the prevailing conditions at the time of its passage. That decision affirms the continuation of the principle of divesting assets from the bankrupt. This is a result which the status of bankruptcy carries. At page 1427 he comments:
Nevertheless, the principal 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 claims.
17. In the Bankruptcy Law Committee Report at paragraph 1.13.1, the purposes of bankruptcy are analysed. The authors of the report state:
The main objects of bankruptcy legislation are
(1) to secure equality of distribution and to prevent any one creditor obtaining an unfair advantage over the others,
(2) to protect bankrupts from indicative creditors by freeing them from the balance of the debts where they are unable to pay them in full, and to help rehabilitate them,
(3) to protect creditors not alone from debtors who prior to bankruptcy prefer one or more creditors to others but from the actions of fraudulent bankrupts,
(4) to punish fraudulent debtors.
18. Essential to the attainment of these purposes is that control over the estate in bankruptcy is transferred from the bankrupt to the Official Assignee. Thereafter, under the authority of the High Court, and subject to the entitlement of interested parties to refer issues to that court, the function of the Official Assignee is to collect in the property of the bankrupt and to manage the estate in bankruptcy. Central to that role is the function vested in the Official Assignee to make decisions as to what litigation should be continued, commenced or compromised for the benefit of the estate in bankruptcy. That principle has been previously applied by this Court in Siroko v Murphy [1955] IR 77. That was an appeal where the issue was whether a bankrupt could continue an action against the supplier of linseed oil where the alleged result of using it was that the plaintiff’s employee in his furniture workshop had contracted dermatitis, thereby opening a claim in compensation. Maguire CJ, after a consideration of the authorities, stated at page 80:
It is plain upon all the authorities, and, I may add, all the textbook writers, that when the plaintiff became a bankrupt this action, not being for a mere personal wrong, was by act of law assigned to the Assignee in Bankruptcy. The plaintiff thereupon became incapable of conducting it.
Personal wrong
19. The next matter to be considered is if there is any exception to this principle which is applicable to the circumstances of this bankrupt. Here, BA seeks to assert that the decision in the family proceedings resulted in the condemnation of his character and the rejection of his evidence and is therefore a personal wrong against him. The authority of the Official Assignee over actions in which the bankrupt was interested or seeks to interest himself extends to all cases which affect the estate in bankruptcy. It is not an exception to the principle that some aspect of litigation which the bankrupt wishes to appeal, or otherwise continue, relates to the personal honesty of the bankrupt. In De Alwis v Luvit Foods International [2010] NZHC 418 (24 March 2010) a bankrupt sought to set aside a judgement entered in 2007 on the basis that there had been deception by the plaintiff. It was asserted by the bankrupt that as the judgement against him was founded on adverse findings of a personal nature that the right to set aside the judgement subsisted in him personally and not in the trustee in bankruptcy. Courtney J rejected the proposition that a bankrupt had a right to challenge a judgement debt because it was ostensibly based on fraud. The judge further rejected the proposition that any adverse finding of fact gave rise to any right of appeal in terms of human rights entitlements under the New Zealand Bill Of Rights Act 1990.
20. To the principle of control by the trustee in bankruptcy over all of the estate, and hence all the litigation of the bankrupt, there is a limited exception. This exception is expressly related to injury to the physical person and reputation of the bankrupt. In The Law of Insolvency (4th edition, 2009) by Professor Ian Fletcher, that distinction is drawn at paragraph 7-008 thus:
Furthermore, a distinction is made between proceedings which are designed to enforce a legal obligation owed by the debtor and those which are of a punitive character and brought on account of his personal misconduct. In the latter type of case - for instance proceedings for contempt of court for committal of defaulting trustee - the court of bankruptcy will not intervene.
21. On the positive side of the scale, in terms of what actions may be instituted or continued by a bankrupt notwithstanding the bankruptcy, a limited exception to the principle of disenabling any further action by the bankrupt survives, allowing the bankrupt to take proceedings in his own name. These exceptions are personal injury actions, as where the bankrupt was injured in a road traffic, or workplace, accident either before or after the bankruptcy or where the bankrupt has been attacked physically, as in assault or false imprisonment. In addition, it seems, a bankrupt may defend his character if he has been defamed. A bankrupt may also be personally liable for contempts against court proceedings and may be arrested and charged in the usual way if he is accused of having committed criminal offences. Counsel on behalf of BA referred in argument to the possibility of taking a race discrimination case. This, it has been recognised in England and Wales, can be an exception because the injury is to the person of the bankrupt as opposed to the trading nature of his estate. Alternatively, the claim may be a hybrid of both; see Khan v Trident Safeguards Ltd [2004] EWCA Civ 624; [2004] ICR 1591. The case of Ord v Upton [2000] Ch 352; [2000] 1 All ER 193 differentiated between a medical negligence claim against a doctor claiming damages for pain and suffering and a claim on the same ground for loss of earnings. Such a hybrid claim was under the control of the trustee in bankruptcy and not under the control of the injured party, it was held. Aldous LJ put the matter thus at page 361:
In modern parlance [the bankrupt] Mr Ord's claim is a single cause of action. However I cannot accept [counsel for the bankrupt’s] submission that the cause of action is personal. It is a claim for damages for injury to his body and mind and also his capacity to earn and can therefore be considered as a "hybrid" claim, in part personal and in part relating to property. I have come to the conclusion that such an action vested in the trustee. It would only have remained with Mr Ord if it fell within an exception established by the authorities to be excluded from the definition of property now found in section 436 of the Act of 1986. To do so it must relate only to a cause of action personal to the bankrupt. All causes of action which seek to recover property vest in the trustee whether or not they contain other heads of damage to which the bankrupt is entitled. The authorities … lead to that conclusion.
22. After a review of the precedents, the most germane of which are analysed in the judgment of Laffoy J herein or in the previous judgment of this Court in Siroko v Murphy, the judge then turned to what the duties were of the trustee in bankruptcy in circumstances where the trustee would pursue the action in loss of earnings for the benefit of the estate in bankruptcy and also recover damages for pain and suffering on behalf of the injured plaintiff. The conclusions of the Court of Appeal of England and Wales on this issue point to the overarching control of litigation which the trustee in bankruptcy is obliged to exercise over the estate of the bankrupt. At page 371 Aldous LJ stated:
The authorities are only consistent with the conclusion that the trustee is entitled to the damages for past and future loss of earnings and is not entitled to the damages for pain and suffering. As there is a single cause of action, it vested in the trustee. There is in my view nothing in that conclusion which imposes practical difficulties with which the law cannot deal. The trustee as constructive trustee would have to account to the bankrupt for the property which he obtained inadvertently or by arrangement in an action which vested in him for the benefit of the creditors. The idea that the cause of action should vest in the bankrupt would not be acceptable and compulsory joinder of both could lead to difficulties when the claim for loss of earnings was small compared with the potential costs of the litigation. In such a case the trustee, if the cause of action vested in him, would have to consider carefully his duty to the bankrupt and would probably, if requested, assign the cause of action to him.
23. Whatever the examples, the exception is one of principle: it relates solely to injuries against or offences to the physical person of the bankrupt or to attacks on his character which sound in damages in his favour or to personal actions as to his conduct which may result in committal or imprisonment for contempt of court or other criminal imprisonment or punishment. All of these exceptions are entirely unrelated to the size of the estate and its economic balance as to assets and debts on bankruptcy. While the exceptions to the rule of control over actions by the Official Assignee stated in section 61(2)(d) of the Act of 1988 are defined in case law, these exceptions are also entirely logical and consistent with the purposes and aims of the legislation. Thus, what can increase the amount of the estate in bankruptcy through litigation which results in the increase or decrease in what is available to creditors is entirely within the competence of the trustee in bankruptcy: what may cause personal consequences for the bankrupt in litigation related to his misconduct and what may compensate him for injuries and assault or defamation is within the remit of the bankrupt. These exceptions are not as to the economy of the estate in bankruptcy but are of matters personally to his benefit or detriment.
Right to be heard
24. BA also asserts the right to be heard. This is curious, given the circumstances. He has been heard. At the family proceedings in both 2001 and 2009, BA was fully represented. The letters from the trustee in bankruptcy in the United States of America clearly assumes this as a fact. More importantly, the order of the High Court of 21st December, 2001, recites the dates of the hearing and the attendance of “counsel for the applicant [BA] and counsel for the respondent [AA]”. The order also references the production of affidavits, pleadings and documents and recites that the court had “heard the oral evidence of the witnesses whose names are set forth” in an attached schedule of witnesses.
25. It may be the case that a witness to proceedings who is not represented as a party to litigation may be disbelieved or may be disregarded. Sometimes, it can happen as well that the comments of a trial judge disparage a witness as to their character or truthfulness. The task of courts, however, is to seek out the truth in the competing claims of the parties to litigation and as between those who are called, or who are compelled, by court process to attend and testify. It is an inevitable and inescapable part of the work of judges that they may be required to believe or to disbelieve a witness whose testimony is essential to arriving at a correct decision. A witness in a seriously contested case will, no doubt, have any allegation or counter fact that may undermine his or her testimony put by counsel for the opposing party. This constitutes some opportunity to speak to what the judge may eventually have to decide.
26. In this case, however, the argument advanced as to fair procedures becomes entirely theoretical. In the arrangement of his financial affairs, BA entered into a marriage with AA and, in the ordinary course of human life, that marriage failed. Family courts faced with matrimonial breakdown recognise that the parties are before it because they could not agree on mutually acceptable solutions to difficult problems such as child care and the division of financial resources. Such family issues as were before the High Court were there in the context of the exercise of the fullness of procedures that are characteristic of a plenary hearing. This point therefore fails.
Constitutional rights
27. BA, in common with every citizen, has under the Constitution a right to litigate. That right, however, is not absolute. It may be subject to the circumstances in which it is sought to assert access to the courts. Here, economic difficulties have put BA in the position where his assets are insufficient to meet his liabilities and where the personal insolvency provisions in Irish law were invoked by his creditors. This has had the result that his entitlements to litigate are curtailed. Litigation can take different forms and it may also be restricted in accordance with constitutional norms. In ordinary circumstances, a citizen may choose to commence actions which may be genuine in character but which may carry little prospect of success. A person in business may choose not to answer a valid claim against him or her on the basis of a realistic appraisal of where the facts of the matter stand but, instead, proceed to defend an action in the hope that it might go away, the plaintiff may run out of funds, or that lies may supply a defence. Deceit, mischief and delay are familiars of litigation. The courts have procedures for striking out cases which have no prospect of success and also enable businesses or people who have liquidated claims to access summary judgment procedures. Both are subject to strict conditions. These procedures curtail some of the more negative aspects of litigation. The necessity to discharge litigation efficiently may channel or curtail other rights to a substantial degree. Ultimately, a case may involve a judge trying to strip away irrelevant or misleading aspects of a problem in order to get to the truth of a claim.
28. A person whose estate is in bankruptcy is not devoid of rights. Decisions as to the gathering in of the estate and the necessary pursuit of, or defence of, litigation remain. Control is through the necessary process of bankruptcy of the estate transferred from a bankrupt to the Official Assignee. This is by reason of the personal insolvency that has necessitated the adjudication in the first place. The Official Assignee is entitled to make decisions in pursuit of the preservation or augmentation of the estate in bankruptcy. Those decisions will be made by a public official who is responsible and whose interest is focused on the rights of creditors and on fairness to the bankrupt. Sensible decisions in aid of the early resolution of the gathering in phase of bankruptcy which exclude speculative litigation can only inure to the benefit of the creditors and to the ultimate good of the bankrupt. The sooner and the more efficiently the process of insolvency is conducted, the better chance the bankrupt has that the system will enable discharge. As commented on earlier in this judgment, it has always been the case under our bankruptcy legislation that the process is under the ultimate authority of the High Court. Consequently, the right to litigate continues to subsist through the decisions that are made by the Official Assignee. The bankrupt is not without a remedy should an unjustifiable decision be made. Where there is a real disagreement, whereby real economic sense may be seen in either defending an action against the estate in bankruptcy or in pursuing litigation that realistically and probably will yield a benefit to that estate, either the bankrupt or the Official Assignee may access the High Court under section 61(7) of the Act of 1988. This simple procedure enables the High Court to overrule or confirm the Official Assignee. In cases of genuine doubt, the ultimate power of the courts over the bankruptcy process enables the decision to be either affirmed or, instead, substituted with an appropriate direction. This appeal is an example of that process.
29. In so far as it has emerged on the oral argument of this appeal that, in some way, the right to a good name of BA was undermined by the judgment of Irvine J and the affirmation of that judgment by this Court on appeal, it must also be born in mind that family proceedings are conducted in anonymity. Such effects as there might be in relation to BA’s character are confined to the parties to the litigation. Further, it is asserted on behalf of BA that there is some kind of personal entitlement once any issue of fair procedures is raised to access the courts despite the opposition of the Official Assignee and to proceed to try an issue that concerns the estate. That cannot be correct. In virtually any case which goes to plenary hearing multiple questions as to fair procedures or the admission or exclusion of evidence might conceivably be raised. Where there is a genuine issue which has had a real effect on the outcome of a case, the rights of a potential litigant are not lost. Instead, it is for the Official Assignee to assess whether a substantial point has been raised which will have the probable effect of increasing the estate in bankruptcy. If such a prospect is genuine, and fact based, it is for the Official Assignee to consider pursuing it. In the event of disagreement, an application can be made to the High Court, as it was made in this case. In so far as it is contended that rights under Article 6(1) of the European Convention on Human Rights will be infringed through some form of denial to “a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”, those rights remain to be exercised through the sensible filter of the Official Assignee and subject to the direction of the High Court.
30. It is to be noted that in Luordo v. Italy [2003] ECHR 372 a bankrupt in Italy was subject to quite similar disabilities as is BA in this jurisdiction. The decision of the European Court of Human Rights in this regard is of interest. The applicant claimed that the loss of “capacity to take legal proceedings was highly damaging” to him and also asserted a conflict of interest. The answer of the Italian government claimed that such restrictions were necessary in the protection of third party rights, namely creditors. At paragraph 85, the Court noted that Article 6(1) guaranteed the right to institute proceedings in disputes over civil rights and obligations but that this right might be restricted. It was “subject to limitations permitted by implication, in particular where the conditions of admissibility of an appeal are concerned, since by its very nature it calls for regulation by the State, which enjoys a certain margin of appreciation in this regard”; citing Ashingdane v. United Kingdom, judgment of 28th May, 1985. The issue must be whether those limitations “restrict or reduce a person’s access in such a way, or to such an extent, that the very essence of the right is impaired”. Such restrictions, according to the court, should “pursue a legitimate aim” and there should also be “a reasonable relationship of proportionality between the means employed and the aim to be achieved”; citing Levages Prestations Services v. France, judgment of 23rd October, 1996. In that case while the purpose of the restriction was justified, the consequence of unlimited restriction over 14 years was considered disproportionate on the particular facts.
31. Fundamentally, in this case, it should be born in mind that the assertion of wrong sought to be litigated by BA has been subject to independent analysis by the Official Assignee. There is no merit in the point raised and nothing has been urged on this appeal which would cloth it in either substance or with any realistic prospect of success.
Interest of the Official Assignee
32. How the estate is divided up and whether the United States of America has priority is not a matter that is now before this Court. The reality to be faced here is that under the Act of 1988, BA has been declared bankrupt in this jurisdiction. The High Court is entitled only to act on the basis of the legislation conferring authority on the courts of this jurisdiction. As activity in the bankruptcy list has increased since the economic crash of 2008, it has become apparent that citizens of Ireland who are financially pressed have, on occasion, considered the possibility of bringing themselves under the ostensible authority of insolvency regimes in other jurisdictions. This is not the place to comment on any such trend beyond the reiteration of the primacy of the duty of our courts to uphold the laws of Ireland. There is no principle contained in the Act of 1988 whereby it may be said that our courts may simply cede jurisdiction to foreign authority. As to what level of cooperation may be achieved between the United States trustee in bankruptcy and the Official Assignee in Ireland is, in the first instance, a matter for those officials. Ultimately, it is subject to an appropriate ruling by the High Court in the event of any dispute of substance. Their first task is to gather in under their control the estate of the bankrupt. The claim by BA that the Official Assignee has no interest in the estate of this bankrupt because of the prior adjudication in bankruptcy under a foreign legal system has not been demonstrated. Recently, in the appeal entitled In the Matter of Sean Dunne, (a Bankrupt) [2015] IESC 42, the claim was made that the Official Assignee in Ireland had no jurisdiction to deal with the assets of the bankrupt where there had been a prior foreign bankruptcy order. Laffoy J at paragraph 63 commented that:
… there have been a number of recent decisions of the High Court in this jurisdiction which recognise that at common law an inherent jurisdiction exists, deriving from the underlying principle of universality of insolvency proceedings, by virtue of which the courts in this jurisdiction can give recognition to insolvency proceedings in a foreign jurisdiction and act in aid of the court in that jurisdiction: In Re Drumm (a bankrupt) [2010] IEHC 546; Fairfield Sentry Limited (in liquidation) & Anor. v. Citco Bank Nederland and Ors. [2012] 1 IEHC 81; and In Re Mount Capital Fund Limited (in liquidation) & Ors. [2012] 2 I.R. 486. However, if the High Court had jurisdiction to adjudge the Appellant a bankrupt on the petition of the Petitioner, and assuming the Petitioner established compliance with the criteria necessary to give it entitlement to such an order, there is absolutely no basis in law on which the High Court could abstain from exercising its jurisdiction on the ground that, instead of exercising its entitlement, the Petitioner should have attempted to persuade the Chapter 7 Trustee to pursue the order in aid route.
33. On the ultimate issue asserted, that the Official Assignee had no authority to gather in the estate, because the High Court could not make any adjudication in bankruptcy due to the prior foreign bankruptcy, the decision of this Court appears at paragraph 64 of Laffoy J’s judgment:
Emphasising once again that on the Appellant’s application to the High Court to show cause following the making of the adjudication order on the Petitioner’s petition, apart from compliance with the requirements of the Act of 1988 and, in particular, s. 11(1) of that Act and the procedural requirements in relation to service of the petition, the issue for the High Court was, and the issue for this Court on the appeal is, whether under Irish law the High Court has jurisdiction to adjudge a debtor a bankrupt, notwithstanding that he or she has already been adjudged a bankrupt by the court of a foreign jurisdiction, for the reasons set out above I am satisfied that the High Court has such jurisdiction. Accordingly, on the jurisdiction point, I am satisfied that the High Court had jurisdiction, having regard to the circumstances of this case, to entertain and determine in favour of the Petitioner the petition, provided the statutory and procedural requirements were complied with by the Petitioner. That conclusion is not informed in any way by the fact that it was the Appellant who, after the Petitioner had presented its petition to the High Court, voluntarily initiated the Chapter 7 bankruptcy proceedings in the US Bankruptcy Court. Nor is it informed by the conduct of the Chapter 7 proceedings. It is determined solely by what I consider to be the correct application of Irish law.
34. Reading the older cases cited earlier in this judgment and referencing the textbooks of another age calls to mind that controversies that then arose due to the choice by creditors of trustees in bankruptcy who might favour their view. A reading of the report by Mr Justice Budd, twice referenced earlier, may elucidate that many of the reforms of the past were necessitated by scandal and that these, in turn, arose due to the manipulation of the bankruptcy system. In this jurisdiction, we have an official trustee tasked with the independent and fair discharge of the collection and distribution of all of the estate of the bankrupt. He fulfils that task in exemplary fashion. His authority, exercised under that of the High Court, is not to be automatically ceded merely because a foreign power has been persuaded to take up a jurisdiction where it may be that virtually all of the relevant assets in realty lie outside the boundaries of that court system. Were such an alienation of authority possible, the clear risk would be that some systems might be more favourable to debtors than others or even that there might be a system enabling the return of assets to a bankrupt notwithstanding that the estate in bankruptcy is insufficient to meet liabilities. Such possibilities would caution against unthinkingly adopting such a principle. Even so, whether such a principle is positive to such a proposition or not, a matter not for decision today, the duty under the Act of 1988 remains clear: once a person is adjudicated bankrupt in Ireland, the provisions of the legislation are to be followed.
35. It is also correct to record agreement with Laffoy J on the issue of proof. Since BA apparently asserts that the Official Assignee has no standing to bring any application in bankruptcy, the lack of proof as to the effect of the US bankruptcy as a matter of foreign law is also fatal to the argument advanced on his behalf.
Result
36. In the family proceedings BA, as a bankrupt, has claimed to be entitled to challenge orders made by the High Court by appeal to this Court. The grounds upon which any such challenge is proposed to be mounted has been assessed by the Official Assignee in Bankruptcy as unstatable. That decision was challenged by notice of motion before this Court. Solely at issue on this appeal has been the legal standing of BA, as a person who is now a bankrupt, to pursue issues that impact on the value of his estate in bankruptcy. Essentially, in a bankruptcy administration, he seeks to displace the Official Assignee. That cannot happen.
37. It has always been part of the bankruptcy code that upon adjudication in bankruptcy all decisions affecting the estate of the bankrupt transfer from the bankrupt to the trustee in bankruptcy. This long-standing principle is enshrined in section 44(1) of the Bankruptcy Act 1988. Under section 61 of the Act of 1988, decisions as to existing or prospective litigation cease to be those of the bankrupt but, instead, are to be made by the Official Assignee. To this general principle there are limited exceptions whereby a bankrupt may personally pursue damages claims for defamation or for injuries to or assaults on his person and may be personally imprisoned for crimes, for example contempt of court or fraud. This judgment offers no comment as to the source of funding of any such litigation. Central to the case made by BA is that a High Court judgment in family proceedings concluded that some property had been concealed by him at the time of an earlier proceeding between himself and his wife, AA, which concealment was contrary to orders of discovery. The result of that judgment, affirmed on appeal by this Court, was that BA, not then in bankruptcy, had a higher financial liability to his ex-wife AA. That liability came out of his general economic resources. On adjudication in bankruptcy, which came later, it is for the Official Assignee to decide if there is any real and probable prospect of seeking to overturn that High Court judgment and the judgment of this Court on appeal affirming it. By reason of the bankruptcy, the Official Assignee has control over the estate in bankruptcy of BA and has the authority to decide if any such litigation should or should not be pursued. In this instance, the prospect of any benefit to the estate in bankruptcy is characterised by the Official Assignee as unstatable. Nothing on this appeal has demonstrated even the possibility of a contrary view.
38. The preliminary issue should therefore be resolved in favour of the Official Assignee.
