[2018] IEHC 367
THE HIGH COURT
[2014 No. 7820 P.]
CHRISTOPHER LEHANE
AS OFFICIAL ASSIGNEE AND BANKRUPTCY IN THE ESTATE OF
SEAN DUNNE
PLAINTIFF
AND
GAYLE DUNNE
DEFENDANT
JUDGMENT of Mr. Justice Brian McGovern delivered on the 22nd day of June, 2018
1. The defendant has brought a motion seeking an order striking out and/or dismissing the plaintiff’s claim in these proceedings pursuant to the inherent jurisdiction of the court on the grounds offorum non conveniensand abuse of process. The application is grounded on an affidavit of Gayle Killilea who is the defendant and referred to in documents before the court variously as Gayle Dunne and Gayle Killilea. The proceedings have been brought by the official assignee against the defendant seeking declarations that certain transfers of shares in Mavior from Sean Dunne (a bankrupt) to the defendant or companies controlled by her are void and have no effect by virtue of the provisions of s. 59 of the Bankruptcy Act 1988 and/or by reason of the provisions of s. 10 of the Irish Statute of Fraudulent Conveyance, 1636 (10 Chas 1 SCSS.2, C. 3). The assets which are the subject matter of the proceedings include the following:-
(i) the Mavior director’s loans;
(ii) the shares in Mavior transferred to the defendant or companies controlled by the defendant on 28th October, 2008;
(iii) the Lagoon Beach Hotel, Cape Town, South Africa; and
(iv) any assets transferred to the defendant by the bankrupt pursuant to an agreement dated 15th February, 2008.
2. The motion was originally heard in the High Court by Costello J. For the purpose of the hearing, Mr. Timothy Miltenberger – a US lawyer, acting on behalf of Mr. Richard Cohen who had been appointed bankruptcy trustee in the Chapter 7 US proceedings involving Mr. Sean Dunne (the bankrupt) – swore a number of affidavits purporting to deal with issues of US law and how they were affected by the fact that there was a Chapter 7 bankruptcy and an Irish bankruptcy in respect of the bankrupt. Another US bankruptcy lawyer, Mr. Alec P. Ostrow, swore an affidavit on behalf of the defendant. There was some disagreement among the two lawyers on the position of US law as it affected the issues in this case.
3. Costello J., in a judgment delivered on 19th February, 2016, rejected the defendant’s request that she should be allowed to cross examine Mr. Miltenberger on his affidavits. She went on to consider the substantive issue raised in this motion and on 27th July, 2016, delivered judgment rejecting the defendant’s argument onforum non conveniensand abuse of process.
4. The defendant appealed both these decisions to the Court of Appeal and in a judgment delivered on 30th January, 2018, the court allowed the defendant’s appeal on the cross examination issue and on that basis vacated the order made on the substantive issue on the motion. The court remitted the matter back to the High Court on the basis that there were a number of issues of US law which would have to be determined before a decision could be made on the motion.
5. In the judgment of the Court of Appeal, Hogan J. pointed out that an issue of foreign law is always a question of fact for an Irish court to be proved by evidence:-
“…normally given in the first instance in affidavit form by a suitably qualified lawyer from the jurisdiction in question. Where there is a dispute as to what the law is or where the foreign law is doubtful or even obscure on the point in question, the Irish court must ultimately adjudicate on that question and form a view as to what the foreign law provides, any uncertainties on this question notwithstanding. But it is clear that it does so qua finder of fact.” (para. 17)
6. The Court of Appeal identified two significant legal issues that will have to be decided by the court in determining the issues that arise on this motion. I can do no better than quote from para. 8 of the judgment of Hogan J. where he sets out the two issues:-“First, what is the effect of US bankruptcy law so far as the Irish proceedings is concerned and, specifically, if the effect of US law is to vest the entire bankruptcy estate in the Chapter 7 Trustee and, then assuming that such an order would be recognized by our courts, does the Official Assignee have any continuing standing to prosecute these present proceedings? Second, even if the Official Assignee has such a standing, does the determination of the Irish proceedings create a res judicata or collateral estoppel such as would bind the Chapter 7 Trustee from re-litigating the matter in the US courts?”
7. The court observed that the Chapter 7 trustee had also commenced proceedings known as Adversary Complaint 15 – 5020 solely against the defendant in respect of the Mavior shares and debt and that according to Mr. Miltenberger, those proceedings have been voluntary dismissed in view of the proceedings taken by the official assignee in this jurisdiction. The defendant’s legal expert, Mr. Ostrow, maintains that this dismissal is on a without prejudice basis so that by reference to the Federal Rules of Civil Procedure, the trustee “can commence a new adversary procedure asserting the same claim”.
8. Following the remittal of the matter back to the High Court, the court has now held a hearing on what is the US law on the two issues referred to at para. 6 above.
9. It has been agreed by counsel that the court should deliver its judgment on the question of US law before going on to consider the substance of the motion as one will have an affect on the other.
10. These proceedings arise out the fact that there are Chapter 7 bankruptcy proceedings in the US involving the defendant’s husband, Mr. Sean Dunne, and he has also been adjudicated bankrupt in this jurisdiction. An application by the bankrupt to set aside the adjudication in this jurisdiction failed in the High Court and the matter was appealed to the Supreme Court which dismissed the appeal. In the course of the judgment of the Supreme Court, Laffoy J. set out some of the problems that might arise in circumstances where there are co-existing Chapter 7 and Irish bankruptcy proceedings and these difficulties are revisited in the judgment of the Court of Appeal in this case. Therefore, it is not necessary for me to rehearse those matters.
11. The two US lawyers are not in agreement on the two issues of US law that have been identified by the Court of Appeal and although it seems clear from the evidence before the court that the US bankruptcy judge intended the official assignee to prosecute these proceedings in Ireland, there remains some uncertainty as to the extent to which the Chapter 7 trustee will agree to be bound by the decision of the Irish courts. An issue also arises as to the extent to which creditors of the bankrupt might be bound in one jurisdiction rather than the other.
12. It may not be sufficient for this Court to merely discern the intention of the US bankruptcy judge with regard to the procedural steps to be taken in this jurisdiction. As pointed out by Laffoy J. in the judgment of the Supreme Court inRe Dunne[2015] IESC 42, the issues that arise are:-
“…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 [the bankrupt], 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 [the bankrupt], which, in my view, gives him sufficient standing to question the standing of [the bankrupt] to prosecute [the bankrupt’s] 2015 application in this jurisdiction.” (para. 62)
13. Notwithstanding the intention of the bankruptcy judge that the official assignee would prosecute these proceedings, the court must consider the effect of the US bankruptcy law and how it affects the Irish proceedings (including thelocus standiof the official assignee to maintain these proceedings) and also any possible issues ofres judicataand collateral estoppel such as would bind the Chapter 7 trustee. In doing so, the court must avoid the temptation to engage in judicial activism.
14. Mr. Miltenberger in his first affidavit in these proceedings sets out the history of Sean Dunne’s Chapter 7 bankruptcy and describes how on 17th May, 2013 Ulster Bank Limited sought relief from the automatic stay which arose as a result of the filing of the Chapter 7 bankruptcy petition. On 31st May, 2013 the trustee filed a statement in support of the bank’s motion for relief from stay. The United States bankruptcy court found the trustee’s support for the bank’s motion for relief a compelling reason for granting the motion for relief from stay. In making his ruling the bankruptcy judge (Judge Shiff) agreed with the trustees’ submission that the “Irish bankruptcy proceedings will be beneficial to the creditors of the bankruptcy estate and necessary for a complete and just administration of the assets of the bankruptcy estate …”. Judge Shiff noted that the trustee supported the modification of the automatic stay to permit an Irish Court to appoint a State representative, namely the official assignee, to negotiate an ad hoc protocol between the US and Irish Courts.
15. The trustee was advised by the official assignee that these proceedings were being commenced. The trustee commenced two adversary proceedings against the defendant in the United States. These are proceedings in a civil action commenced in the United States bankruptcy court. In one of the proceedings (“adversary proceeding 15-5020”) the trustee seeks to avoid the transfer of the Mavior debt and Mavior shares to Mrs. Killilea-Dunne. These proceedings have been voluntarily dismissed. Mr. Miltenberger has deposed to the fact that in his view the official assignee’s fraudulent conveyance actions do not violate the automatic stay. He states that the United States Court of Appeal for the Second Circuit has ruled that fraudulently transferred property is not property of the estate. (See InRe Colonial Realty & Co., 980 F. 2d 125, 131 (2d Cir. 1992). Thus the Mavior debt and the Mavior shares are not property of the estate and actions to recover these assets for the benefit of creditors do not violate the automatic stay. Although the Second CircuitIn Re Colonial Realtydid hold that fraudulent conveyance claims brought by creditors violate the portion of the automatic stay that prevents a party from pursuing claims against the debtor, Mr. Dunne has waived his discharge and the automatic stay prohibiting acts against the debtor has terminated.
16. In the course of his affidavit Mr. Miltenberger describes how the trustee and the original assignee through counsel have conferred as to how they would cooperate in pursuit of their claims against Mrs. Killilea-Dunne and others. Their discussions are focussed on preventing duplication by the two bankruptcy administrators and reducing the potential for inconsistent judgments and the avoidance of the potential for duplicate recovery.
17. He states that it is the intention of the trustee and the official assignee to seek recovery of the Irish Assets (and the South African assets) through litigation conducted in Ireland and to seek recovery of US assets through litigation conducted in the United States. He believed that most of the witnesses and documents related to the Irish assets are located in Ireland and most of the witnesses and documents related to the US assets are located in the United States. It was for this reason that the United States bankruptcy court granted relief from stay to permit Ulster Bank to pursue the bankruptcy adjudication of Mr. Dunne in this jurisdiction.
Questions of US Law
Question 1 – is the effect of US Bankruptcy Law to vest the entire bankruptcy estate in the Chapter 7 Trustee and does the Official Assignee have any standing to prosecute these proceedings
18. In his third supplemental affidavit sworn on 20 April 2018, Mr. Miltenberger states “it is a long standing principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States’”. SeeEEOC v. Arabian American Oil Co., 499 U.S. 244, 258 (1991) (quotingFoley Bros. v. Filardo,36 U.S. 281, 285 (1949)). The US Bankruptcy Code’s provisions defining property of the estate applies extra territorially.
19. Paragraph 541(a) of the Bankruptcy Code provides that commencement of a bankruptcy action creates a worldwide estate of all the legal or equitable interests, wherever located, held by the debtor at that time.
20. Under US law, the automatic stay imposed by 11 U.S.C. para. 362 applies extra territorially thus reflecting the principle of universality in bankruptcy law.
21. Mr. Miltenberger gave evidence on affidavit of the fact that fraudulently transferred property is not the property of the estate. InPickard v. Fairfield Greenwich Ltd, 762 F. 3d 199, 212 (2nd Cir. 2014) citingColonial Reality, 980 F. 2d at 131, the court stated:-
“Our case law is clear that assets targeted by a fraudulent conveyance action do not become property of the debtor's estate under the Bankruptcy Code until the Trustee obtains a favorable judgment.”
22. He then went on to consider whether property of the estate includes causes of action and referred the court to the case ofIn Re Tribune Co. Fraudulent ConveyanceLitig., 818 F. 3d 98, 116 (2d Cir. 2016) where the court described the law as follows:-“Whether, and to what degree, fraudulent conveyance claims become the property of a bankrupt estate was, at the time of Section 546(e)’s enactment, and now, anything but clear. The principal Supreme Court precedent held that such claims are the property of the debtor’s estate. Trimble v. Woodhead, 102 U.S. 647, 649, 26 L.Ed. 290 (1880). It is a very old decision but has not been expressly overruled. Subsequent court of appeals decisions are bountiful in contradictory statements regarding the property issue. Compare In re Cybergenics Corp., 226 F.3d 237, 241, 246 (3d Cir.2000) (stating that ‘fraudulent transfer claims have long belonged to a transferor’s creditors, whose efforts to collect their debts have essentially been thwarted as a consequence of the transferor’s actions’ but also noting that the debtor’s ‘‘assets’ and ‘property of the estate’ have different meanings, evidenced in part by the numerous provisions in the Bankruptcy Code that distinguish between property of the estate and property of the debtor, or refer to one but not the other’), and Picard v. Fairfield Greenwich Ltd., 762 F.3d 199, 212 (2d Cir.2014) (‘Our case law is clear that assets targeted by a fraudulent conveyance action do not become property of the debtor’s estate under the Bankruptcy Code until the Trustee obtains a favorable judgment.’), with Cumberland Oil Corp. v. Thropp, 791 F.2d 1037, 1042 (2d Cir.1986) (noting that causes of action alleging violation of fraudulent conveyance laws would be property of the estate), and Nat’l Tax Credit Partners v. Havlik, 20 F.3d 705, 708-09 (7th Cir.1994) (‘[T]he right to recoup a fraudulent conveyance, which outside of bankruptcy may be invoked by a creditor, is property of the estate that only a trustee or debtor in possession may pursue once a bankruptcy is underway.’).”
InRe Tribune Co. Fraudulent Conveyance Litig, 818 F. 3d at 116-17.
23. While he was under cross examination, Mr. Miltenberger referred to the fact thatTrimble v. Woodheadwas a case decided in 1880 before the United States Bankruptcy Code was enacted almost one hundred years later. He pointed out that the Second Circuit stated that the Supreme Court decision in that case was a very old decision but had not been expressly overruled. He stated that the current state of US law in the Court of Appeals is:-
“…now fractured through contradictory statements, which means our Court of Appeals are not applying Trimble v. Woodhead according to its express language. They are coming up with very different conclusions. It cites the Cybergenics case. The Cybergenics case has a quote that says something to the effect of, if the question is is (sic) whether or not the creditor’s fraudulent conveyance claims become property of the debtor upon bankruptcy filing, the answer is clearly no.” (Transcript 2, p. 25)
24. Mr. Miltenberger also referred to the fact that in theTribunecase, the court citedPickard v. FairfieldGreenwich Limited which repeats the language found in theColonial Realitycase which says that fraudulently conveyed property does not become property of the bankruptcy estate.
25. In his affidavit on US law, Mr. Alec Ostrow stated at para. 7:-
“…although property sought to be recovered by a US trustee in bankruptcy in a fraudulent transfer claim is generally not considered to be property of the US bankruptcy estate unless and until it is recovered, the fraudulent transfer claim itself is generally considered to be property of the US bankruptcy estate.”
26. In support of that proposition, he referred toSecurities Investor Protection Corporation v. Bernard L. Madoff Investments Securities,LLC, 460 B.R. 106, 114 (Bankr. S.D.N.Y. 2011). He stated that this is so because the US bankruptcy estate includes “any interest in property that the trustee recovers under section 550, of the Bankruptcy Code 11 U.S.C. § 541(a)(3)”. He goes on to state:-“Section 550 of the Bankruptcy Code, in turn, contains the trustee’s right to recover transfers that the trustee may avoid and set aside ‘under section 544, [or] 548’ of the Bankruptcy Code. 11 U.S.C. § 550(a). These two sections 11 U.S.C. §§ 544, 548, empower the trustee to avoid fraudulent transfers.”
In fact, if a creditor sues to set aside a fraudulent transfer making such a claim in competition with a trustee, the trustee can apply to the court for an injunction on the basis that the creditor’s claim violates the automatic stay under 11 U.S.C. § 362(a)(3) by exercising control over the bankruptcy estate.
27. Mr. Ostrow maintains that a fraudulent transfer claim is a general claim that may only be asserted by a trustee. SeeMarshall v. Pickard (In Re Bernard L. Madoff Investment Securities LLC), 7 40 F. 3d 81, 91 (2d Cir. 2014). But he says that whether the official assignee, who is technically not a creditor in the US bankruptcy case, has the power to bring such proceedings is a significant unresolved issue of law which involves the interface of US and Irish bankruptcy law.
28. In a footnote to his Brief for the United States Court of Appeal’s Second Circuit (p. 39), Mr. Ostrow stated:-
“In Tribune Co. Fraudulent Conveyance Litig., this Court declined to hold definitively that fraudulent conveyance actions are property of the bankruptcy estate, although it observed that the ‘use of ‘property’ as a short-hand way of suggesting exclusivity has merit’. 818F.3d at 117. Of course, an enforceable right to exclude others is a fundamental attribute of property. See E.G., Lorretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 [1982]; Kiaser Aetna v. United States 444 U.S. 164, 176 [1979]; Thomas W. Merrill, Property and Right to Exclude 77 Neb, L. Rev. 730, 730 [1998]. This court has affirmed an injunction enforcing a trustee’s exclusive right to bring and settle a fraudulent transfer action. Marshall v. Pickard (Re Bernard L. Madoff Inv. Sec. LLC), 740 F.3d 81, 95 (2d Cir. 2014). Therefore, at least for purposes of the automatic stay, the exclusive right to bring fraudulent transfer actions constitutes property of the estate.”
29. Mr. Ostrow said that he made that argument to Judge Shiff in November 2015, but he did not think he had that decision when he made the argument. He accepted that Judge Shiff was not impressed by his vesting argument on this point. While Mr. Ostrow did not concede that he lost the argument in the Court of Appeal, he did accept that Judge Meyer of the appellate court said that he could not disagree with the order of Judge Shiff lifting the automatic stay or that he abused his discretion in lifting it to enable the official assignee to bring these proceedings. It is clear that despite the arguments made by Mr. Ostrow to the effect that only the trustee could bring a fraudulent transfer action in this case, that did not commend itself to Judge Shiff who gave relief from the stay.
30. On the state of current US jurisprudence, there is an uncertainty as to whether or not a fraudulent claim can only be asserted by the Chapter 7 Trustee. In seeking to resolve the issue, some guidance can be found in the decision of Judge Shiff in the US bankruptcy court and from comments made by Judge Meyer of the appellate court. Judge Shiff’s bankruptcy court is a specialist court and he was aware that under United States law, once Mr. Dunne filed for bankruptcy all of his property, wherever located and by whomever held, became property of his bankruptcy estate. Nonetheless, it is clear from the decision of Judge Shiff granting relief from the automatic staynunc pro tuncthat he was, in effect, authorising the official assignee to take these proceedings in Ireland and that decision was affirmed by the District Court on appeal.
31. The court has had the benefit of the transcript of the hearing of the US Court of Appeal for the Second Circuit in which Mr. Ostrow said in answer to Judge 1:-
“…the only reason that the that (sic) as far as American law is concerned, that the official assignee has any right to pursue a fraudulent transfer action is that stay has been lifted. Because the fraudulent transfer actions belong exclusively to the trustee, unless and until the bankruptcy court lifts the stay and allows someone else to bring that.”
That is precisely what has happened in this case.
32. The argument that the only person entitled to bring a fraudulent transfer action is the Chapter 7 trustee is at variance with Mr. Ostrow’s response to the appellate judge having regard to the fact that Judge Shiff had lifted the stay to allow the official assignee bring these proceedings. It does not appear that the Second Circuit appeal court had a difficulty with what Judge Shiff decided although they dealt with the motion of Ms. Killilea on the basis of standing.
33. This Court has also had the benefit of reading a transcript of the oral argument and ruling of the United States District Court for the District of Connecticut which was the immediate appellate court reviewing the decision of Judge Shiff. The judge set out the nature of the appeal in the following terms:-
“This is, of course, an appeal from a bankruptcy court decision. That decision permitted the official assignee of the Irish Sean Dunne bankruptcy estate to pursue a lawsuit against the appellant or more law claims despite the fact of an automatic stay that was entered under 11 U.S.C. section 362.” (p. 55)
34. He went on to say:-“Now, it seems to me that there is no dispute here that Judge Shiff did identify the correct legal standards governing whether he should grant relief from the automatic stay for the official assignee to pursue litigation. The code itself, of course, requires a showing of ‘cause’ under 362(d). And Judge Shiff here, consistent with the Sonnax decision articulated the multiple factors there in terms of when it is appropriate that courts should be considering. And I am confident he did consider each of those factors to lift the automatic stay.
I don’t find that Judge Shiff made any error at all, much less a harmful or reversible one, in how he considered and applied the Sonnax factors and considered ultimately the ultimate issue, which is whether there was cause for lifting of the stay with respect to his ultimate determination…Judge Shiff, from his view of the facts, concluded that the trustee and the official assignee cooperatively were pursuing their actions, and that was in the best interest of the creditors and the estate. And he did further conclude that the appellants [Ms. Killilea/Dunne] primary aim was to delay expeditious resolution of the case.” (pp. 55 – 56)
35. Having considered the evidence of the two US lawyers and the US case law which was cited to the court, I conclude that a Chapter 7 trustee may bring a fraudulent transfer claim in Chapter 7 bankruptcy proceedings. I am also satisfied that Judge Shiff took the view that in the particular circumstances of this case, he should grant relief from the automatic stay so as to permit the official assignee bring these proceedings and the appellate court, namely the United States District Court for the District of Connecticut upheld Judge Shiff’s entitlement to make such an order. Principles of comity require this Court to follow those decisions unless it can be established that they are contrary to Irish public policy.
36. As Mr. Sean Dunne has been adjudicated a bankrupt in this jurisdiction, there is no reason why the official assignee cannot act and the Supreme Court has held that he has a function to collect and preserve the assets of the bankrupt. I am satisfied that as a matter of US law, the lifting of the automatic staynunc pro tuncallows the official assignee to maintain these proceedings for the benefit of the Chapter 7 bankruptcy. That law does not appear to be in conflict with Irish public policy.
37. Therefore, on the first question posed by the Court of Appeal, I am satisfied that the effect of US bankruptcy law is to vest the entire bankruptcy estate in the Chapter 7 trustee but that the official assignee does have a standing to prosecute these fraudulent transfer proceedings. In doing so, he is not in conflict with US law because Judge Shiff has granted relief from the automatic staynunc pro tuncspecifically for that purpose and on this point he has been upheld on appeal.
Question 2: If the official assignee has standing, does the determination of the Irish proceedings create a res judicata or collateral estoppel such as would bind the Chapter 7 trustee from relitigating the matter in the US Courts?
38. The evidence of Mr. Miltenberger is clearly to the effect that if the defendant succeeds in her defence in the Irish proceedings that the Chapter 7 trustee is unlikely to be able to maintain the same claim involving the Mavior debt in the US. It is worth quoting question 194 and the answer thereto as they appear in the transcript of the 9th May, 2018 before this court: -
“194 Q. If Gayle Killilea wins in Ireland, is it your sworn evidence that the Chapter 7 trustee cannot claim pursuant to constructive trust the Mavior debt?
A. I cannot say that he cannot, but what I can say is that he had a specific action against Mavior which he dismissed because he is not going to pursue Mavior, and we have tried to make that clear on a number of occasions, I will do that again this afternoon, that the trustee does not want to pursue the causes of action against Mavior, he wants the OA to do that, the only reason why we would find the trustee in America pursuing the Mavior claims is because the claims could not go forward on the merits in Ireland.”
39. At Q. 238 in the same transcript it was suggested that it would be a difficult case to run in the US if the defendant was successful in the Irish proceedings and Mr. Miltenberger responded “I think I would go beyond difficult. It would be extremely difficult.”
40. In answer to Q. 243 as to whether the Irish court needed to be concerned about the possibility of proceedings taking place in the US even if the defendant succeeds in Ireland he stated: -
“No, for the reasons I stated earlier. The trustee has dismissed his Mavior cause of action so the OA could bring that case. The OA is bringing that case, and whether we want to call it constructive trust, unjust enrichment, fraudulent transfer, the Irish courts should not be concerned about the trustee seeking to recover the Mavior claims. That is why we dismiss the case. All of that is predicated on our belief that the Irish courts will adjudicate that case on the merits, that there will ultimately be a substantive decision as to whether what was done was consistent with the law of violative of the law. That is all that the trustee is seeking to have happen is that some court somewhere reaches that substantive issue.”
41. Later Mr. Miltenberger stated that if the Irish proceedings are dismissed on the basis of the substantive issue then it is not the trustee’s intention to pursue the Mavior claims. But if they are dismissed on aforum non conveniensbasis or some other technical basis the trustee will keep his options open.
42. The evidence is that an oral agreement was reached between the Chapter 7 trustee and the Official Assignee that any recovery by the Official Assignee will not be distributed by him without the appropriate order of the US court. In an affidavit sworn by him on the 20th April, 2018 paras. 56-58 come under the heading “THE TRUSTEE WILL AGREE TO BE BOUND BY DECISIONS OF THIS COURT”. I think it is useful to set out the text of the three paragraphs concerned:
“56. To the same extent and degree that any defendant in Coan, trustee Killilea, et al Adversary Proceeding No. 15-5019 (“Coan v. Killilea”) agrees to bound in courts in the United States by decisions of the High Court, the trustee agrees to be bound in courts of the United States by the decisions of the High Court, but only with respect to the defendant or defendants who so agree.
57. The trustee’s agreement extends to bothres judicata, or claim preclusion and collateral estoppel, or issue preclusion.
58. The trustee believes that he will need permission from the United States Bankruptcy Court to enter into such agreements and believes that permission will be granted. The trustee agrees to seek such permission when, and if, he is notified that any defendant inCoan v. Killileaagrees to be bound by the determinations of the High Court.”
43. It is not entirely clear whether this agreement is dependent on the consent of any defendant inCoan, trustee v. Killilea, et al. That seems to be the thrust of para. 56 of the affidavit. But in his submissions to the court counsel for the Official Assignee stated unequivocally that the US court will recognise the judgment of the High Court in these proceedings. That positon seems to be consistent with the judgment of Judge Shiff in granting relief from the automatic stay for the purpose of allowing the Official Assignee to bring these proceedings. It is by no means clear that the defendant in these proceedings will agree to be bound by the decision of this Court although her consent may be irrelevant if this Court has jurisdiction over her. I can see no reason why it does not. But that is not to say the proceedings will continue in this jurisdiction as that will depend on the outcome of the defendant’s motion. What is clear from the submissions made on her behalf is that the defendant would prefer all proceedings to take place in the US.
44. Having considered all the evidence on this part of the motion, I am satisfied, on the balance of probability, that the US court will be bound by any decision of this Court in these proceedings either on the basis ofres judicataor collateral estoppel. I accept Mr. Miltenberger’s evidence that it would be extremely difficult for the Chapter 7 trustee to reactivate the Mavior fraudulent transfer claims in the US having regard that they have been dismissed or discontinued in the US for the purpose of allowing the US court to lift the automatic stay so as to enable the plaintiff in these proceedings to maintain the action against the defendant in Ireland. My decision on this point is specific to this case and the circumstances giving rise to the lifting of the automatic stay by Judge Shiff. While Mr. Ostrow expressed the view that the “dismissal” of the Mavior fraudulent transfer proceedings in the US was without prejudice and could be reactivated, it seems to me that this is highly unlikely. I prefer the evidence of Mr. Miltenberger on this point.
45. I would, therefore, answer question 2 in the affirmative namely that the determination of the Irish proceedings creates ares judicataor collateral estoppel as would bind the Chapter 7 trustee from re-litigating the matter in the US courts.
46. The balance of the motion concerning the issues offorum non conveniensand abuse of process remains to be determined by this Court and I will hear counsel on how the matter should proceed after they have had an opportunity of considering this judgment.
