In the matter of Sean Dunne (a Bankrupt) [2015] IESC 42 (15 May 2015)

Judgment

Title:

In the matter of Sean Dunne (a Bankrupt)

Neutral Citation:

[2015] IESC 42

Supreme Court Record Number:

535/2013

High Court Record Number:

Bankruptcy 2478 of 2013

Date of Delivery:

15/05/2015

Court:

Supreme Court

Composition of Court:

Denham C.J., Laffoy J., Charleton J.

Judgment by:

Laffoy J.

Status:

Approved


Judgments by	Link to Judgment	Result	Concurring
Laffoy J.	Link	Appeal dismissed	Denham C.J., Charleton J.

Outcome:

Dismiss

___________________________________________________________________________

THE SUPREME COURT

[Appeal No. 535/2013]

Denham C.J.

Laffoy J.

Charleton J.

IN THE MATTER OF SEAN DUNNE (A BANKRUPT)

Judgment of Ms. Justice Laffoy delivered on 15th day of May, 2015

Introduction
1. This appeal raises a fundamental question in relation to the operation of the law on bankruptcy, that is to say, personal insolvency as distinct from corporate insolvency, in this jurisdiction. Although it is disclosed in the Bankruptcy Law Committee Report, a report of a committee under the chairmanship of Budd J., which was established on 23rd August, 1962 and which reported in 1972, which will be referred to as “the Budd Report”, that legislation governing bankruptcy in Ireland has been on the statute books since as long ago as 1772, it is very surprising that there is no record of the principal issue addressed on this appeal having been raised and addressed before the courts in Ireland previously. Having said that, it is important to emphasise from the outset the sources of current law on bankruptcy in this jurisdiction. Apart from Council Regulation (E.C.) No. 1346/2000 which, in the case of personal insolvency is transposed in this jurisdiction by the European Communities (Personal Insolvency) Regulations 2002 (S.I. 334 of 2002), the combined effect of which is hereafter referred to as the “EU Regulation”, which has no application to the circumstances on this appeal, the main sources are:

(a) the Bankruptcy Act of 1988 as amended (the Act of 1988), which was, as originally enacted, largely based on the recommendations contained in the Budd Report; and

(b) the common law to the extent, insofar as is relevant, which will be considered later.

In particular, unlike the position which prevails in other states, for example, the United States of America and the United Kingdom, the UNCITRAL Model Law on Cross-Border Insolvency has no application in the State.

2. In broad terms, the issues on the appeal arise from the fact that Ulster Bank Ireland Limited (the Petitioner) on 12th February, 2013 presented a petition to the High Court to have Sean Dunne (the Appellant) adjudged bankrupt. Approximately six weeks later, on 29th March, 2013, the Appellant voluntarily filed for Chapter 7 Bankruptcy in the United States Bankruptcy Court, District of Connecticut (the US Bankruptcy Court). The parties to the appeal are the Appellant, as appellant, and the Petitioner, as respondent. The Official Assignee also participated in the appeal to assist the Court. One of the principal creditors of the Petitioner, the National Asset Loan Management Limited (NALM), also participated. Against that background, it is necessary to outline the procedural steps in the proceedings to date in some detail.

Procedural steps
3. The Petitioner’s petition, which was filed in the High Court on 12th February, 2013, disclosed that the Appellant is indebted to the Petitioner in the sum of €164,586,493.05 plus continuing interest and costs representing the total outstanding on foot of a judgment of the High Court against the Appellant dated 21st May, 2012, in respect of which debt the Petitioner did not, nor did any person on its behalf, hold any mortgage, charge or lien on the debtor’s estate or any part thereof as security for that debt, although it was disclosed that the Petitioner held security in respect of other indebtedness of the Appellant to it. The petition also disclosed that the Appellant had within three months before the presentation of the petition committed an act of bankruptcy, in that an execution order which was sent to the Sheriff of the City of Dublin for execution was returned marked “No Goods - Nulla Bona” and dated 5th December, 2012. The facts set out in the petition were verified by Niall Hurson (Mr. Hurson), a bank official employed by the Petitioner, by affidavit sworn on 12th February, 2013 and endorsed on the petition. By order of the High Court (Dunne J.) dated 12th February, 2013 it was ordered, inter alia, that the Petitioner be at liberty to serve the petition out of the jurisdiction on the Appellant.

4. On the voluntary filing by the Appellant for Chapter 7 Bankruptcy in the US Bankruptcy Court on 29th March, 2013, Richard M. Coan (the Chapter 7 Trustee) was appointed the trustee of the Bankruptcy Estate of the Appellant and an automatic worldwide stay on any further proceedings in relation to the Appellant’s estate took effect.

5. While the Petitioner’s petition was still pending in the High Court, the Petitioner on 28th May, 2013 filed an amended motion with the US Bankruptcy Court for entry of an order granting limited relief from the automatic stay to permit the Petitioner to take all actions necessary -

(i) to perfect service upon the Appellant, and

(ii) to obtain an order adjudicating the Appellant “bankrupt”

in the proceedings pending in the High Court.

In the motion it was asserted as follows:

“Because this Court has no jurisdiction over assets, creditors, or evidence located in Ireland or elsewhere (or at least no ability to meaningfully exercise any jurisdiction that arguably exists), a parallel bankruptcy case in Ireland (and likely elsewhere) is absolutely critical for the efficient administration of this case.”

It was further asserted as follows:

“It is worth noting that this Motion does not seek recognition of the Irish Bankruptcy Proceedings, or an order finding that the Irish Bankruptcy Proceedings is the foreign main proceeding or the ‘primary’ bankruptcy proceeding. The parties expect that a comprehensive cross-border protocol will be necessary in this case resolving the jurisdictional and legal interests and conflicts amongst the various locales wherein the [Appellant’s] assets and liabilities are located . . ..”

6. On 31st May, 2013 the Chapter 7 Trustee filed a statement in partial support of the Petitioner’s motion for relief from the worldwide stay. In the final paragraph of the statement (at para. 45) the Chapter 7 Trustee’s position was summarised as follows:

“The Trustee believes that an Irish estate representative is necessary. The Trustee has every reason to believe that he will be able to negotiate an

ad hoc

protocol with the Irish estate representative for approval by this Court and the Irish High Court that will allow for the efficient liquidation of the [d]ebtor’s assets and the fair distribution to creditors, wherever located.”

Accordingly, the Chapter 7 Trustee requested that the Court grant the Petitioner’s motion for relief from the stay “for the limited purpose of allowing the Irish Proceedings to advance to the appointment of an Irish estate representative and the negotiation of an ad hoc protocol for presentation to this Court and the Irish High Court”.

7. After the filing of the Appellant’s objection to the motion for relief from the automatic stay, the motion was heard in the US Bankruptcy Court by Judge Shiff on 4th June, 2013. The transcript of the hearing was before the High Court and is before this Court on the appeal. Judge Shiff granted the relief sought by the Petitioner on that day. The order was perfected on 12th June, 2013 and it ordered that the automatic stay was modified -

(a) to permit the Petitioner and/or its successors and assigns to take all actions necessary under Irish law to perfect service upon the Appellant in the “Irish Bankruptcy Proceeding”;

(b) to permit parties in interest to continue with the “Irish Bankruptcy Proceeding” 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 Proceeding”, with the proviso “that nothing in this Order shall deprive this Court of jurisdiction over the [Appellant] or over the property of the bankruptcy estate;

(c) to permit the parties in interest, in the event that the Appellant is adjudicated “bankrupt” in the “Irish Bankruptcy Proceeding”, “to attend and participate in any proceeding for the nominating and/or voting in respect of the appointment of a Trustee pursuant to s. 110 of the [Act of 1988], as amended, and to take all actions set forth under the laws of Ireland in connection therewith”.

The order specifically provided that -

“. . . except as explicitly set forth herein the Automatic Stay shall not be modified or waived, and no party-in-interest in this case shall, except by leave of this Court, take any affirmative action in the Irish Bankruptcy Proceeding that violates the terms of the Automatic Stay.”

8. On 14th June, 2013 the Appellant appealed the order of the US Bankruptcy Court and moved for a stay on the order pending the appeal. On 18th July, 2013 the request for a stay pending the appeal was denied by Judge Shiff. This Court was informed, for completeness, that on 11th March, 2014 a final order was entered denying the appeal.

9. Difficulties had been encountered by the Petitioner in serving the petition in the High Court proceedings on the Appellant, who at the time of the presentation of the petition was residing in Connecticut, pursuant to the order permitting service out of the jurisdiction. An order for substituted service was made by the High Court (Dunne J.) on 10th June, 2013 and it was perfected on 18th June, 2013, contemporaneously with the delivery of the order of Judge Shiff. The petition was listed for hearing in the High Court on Monday, 29th July, 2013. While there is a dispute as to whether the petition had been properly served on the Appellant, which will considered later, the petition was heard in the High Court on 29th July, 2013. The Petitioner was not represented at that hearing, although his U.S attorneys, Zeisler & Zeisler, were aware of the hearing on that day and had corresponded with the Petitioner’s solicitors on 26th July, 2013. That correspondence having been put before the High Court, an order was made by the High Court (Dunne J.) in which it was recorded that satisfactory proof had been given that the requirements of s. 11(1) of the Act of 1988 had been complied with and it was ordered that the Appellant be and was thereby adjudicated a bankrupt.

10. Having on 30th July, 2013 been granted an extension of time by the High Court, on 12th August, 2013, the solicitors on record for the Appellant filed in the High Court notice of the intention of the Appellant to show cause against the validity of the adjudication of bankruptcy made on 29th July, 2013 against him on the grounds that the order of adjudication against him is invalid and on the basis that the requirements set out in s. 11(1) of the Act 1988 had not been complied with. The grounds for those contentions, as particularised, may be subsumed under three headings.

11. First, it was contended that the Petitioner had failed to demonstrate that the High Court had jurisdiction to make the adjudication order and that it was not made in accordance with law having regard to the Appellant’s pre-existing bankruptcy in the United States of America, the validity of which had not been contested by the Petitioner. In support of the contention that there was lack of jurisdiction, it was asserted as follows: that the order was contrary to the principle that bankruptcy should take place by way of unitary proceedings; that the order purported to impose multiple bankruptcies upon the Appellant contrary to law, including private international law; that the order infringed upon and/or had the capacity to infringe upon the principle of the comity of nations; that the Petitioner’s petition was made in the knowledge that the order for relief against the worldwide stay pre-supposed the negotiation and presentation of an ad hoc bankruptcy protocol to the High Court in circumstances where no such protocol exists and where the High Court has no jurisdiction to consider or approve of such a protocol; and the adjudication of bankruptcy was unnecessary having regard to the possible availability of more appropriate alternative means with which to give effect to the bankruptcy process under way in the US Bankruptcy Court.

12. Secondly, it was asserted that the order had been obtained in breach of the Appellant’s procedural rights pursuant to Order 76 of the Rules of the Superior Courts 1986 (the Rules) and the Act of 1988, with specific reference to the Appellant’s entitlement to notice, including statutory notice.

13. Thirdly, the grounds on which it was contended that the requirements of s. 11(1) of the Act of 1988 had not been complied with were particularised as follows: that the Appellant was not domiciled in this jurisdiction and that he was domiciled in the United States of America; that the Appellant did not ordinarily reside and had not ordinarily resided in this jurisdiction for a period in excess of one year prior to the presentation of the petition; that the Appellant did not have a place of business in this jurisdiction and had not had for a period in excess of one year prior to the presentation of the petition; that the Appellant did not have a dwelling house in this jurisdiction and had not had for a period in excess of one year prior to the presentation of the petition; and that the Appellant had not carried on business in this jurisdiction, alone or as a member of a partnership, whether by means of an agent, manager or partner for a period in excess of one year prior to the presentation of the petition.

14. The motion to show cause was heard in the High Court by McGovern J. on affidavit evidence, primarily, although not exclusively, on affidavits of the Appellant and of Mr. Hurson on behalf of the Petitioner. Neither party sought to cross-examine any deponent of the other party.

15. The trial judge delivered judgment on 6th December, 2013. On that day the High Court ordered that the Appellant’s application to show cause be dismissed. It is against that order that the Appellant appeals to this Court.

Judgment of the High Court
16. In analysing the legal issues which he was required to address, the trial judge quoted s. 16 of the Act of 1988, being the provision under which the Appellant’s application to show cause had been brought. Sub-section (1) of that section provides that a person adjudicated a bankrupt may, within a specified time limit, “show cause to the Court against the validity of the adjudication”. Sub-section (2) provides that on such an application -

“. . . the Court shall, if . . . the bankrupt shows to its satisfaction that any of the requirements of section 11(1) have not been complied with, annul the adjudication and may, in any other case, dismiss the application or adjourn it . . .”

17. The trial judge stated (at para. 8) that, although the notice to show cause was ostensibly based on the Appellant’s assertion that the requirements of s. 11(1) of the Act of 1988 had not been complied with, the notice went beyond allegations of non-compliance with s. 11(1) and encompassed arguments based, for example, on inadequacy of service and infringement of the principle of universality. In those circumstances, the trial judge stated that it was appropriate to deal with the application on the basis of an application pursuant to s. 16 and also s. 85(5) of the Act of 1988. The trial judge then quoted s. 85(5) (which, since the commencement of amendments introduced by s. 157 of the Personal Insolvency Act 2012 on 3rd December, 2013 is s. 85C(1)). That provision, which in the interest of clarity will henceforth be referred to as s. 85C(1), stated and states:

“A person shall be entitled to an annulment of his adjudication -

(a) where he has shown cause pursuant to section 16 or

(b) in any other case where, in the opinion of the Court, he ought not to have been adjudicated bankrupt.”

Subject to the reservation which will be outlined at the end of this judgment in relation to procedural matters, I consider that the approach adopted by the trial judge in considering the issues before the High Court pursuant to s. 16 in combination with s. 85C(1) was the correct approach. As he stated (at para. 9) the burden of proof rested on the Appellant to show that the requirements of s. 11(1) had not been complied with or that there were other grounds under s. 85C(1) entitling him to an annulment of the adjudication.

18. The trial judge dealt with the issue as to the service of the petition on the Appellant first. He concluded (at para. 24) that, as submissions on the issue were made for the first time at the hearing of the motion to show cause and there was no new evidence on the issue of service, the Appellant could not argue that the evidence available on the hearing of the petition did not disclose proper service having been effected and that it was impermissible for the Appellant to seek to re-open the issue of service, because to do so would effectively amount to an appeal. He then stated:

“But even if I am incorrect in that statement of the law, the facts outlined above establish that proper service of the petition documents was effected in accordance with the order of Dunne J. made on 10th. June 2013 and the bankrupt had sufficient notice of the hearing on 29th. July 2013.”

19. Before considering how the trial judge addressed the issue as to whether there was compliance with the requirements of s. 11(1) of the Act of 1988, it is convenient to quote that sub-section in its amended form as at the date of the petition, although it has since been further amended. It provided:

“A creditor shall be entitled to present a petition for adjudication against a debtor if -

(a) the debt owing by the debtor to the petitioning creditor . . . amounts to €1,900 or more,

(b) the debt is a liquidated sum,

(c) the act of bankruptcy on which the petition is founded has occurred within three months before the presentation of the petition, and

(d) the debtor (whether a citizen or not) is domiciled in the State or, within three years before the date of the presentation of the petition, has ordinarily resided or had a dwelling-house or place of business in the State or has carried on business in the State personally or by means of an agent or manager, or is or within the said period has been a member of a partnership which has carried on business in the State by means of a partner, agent or manager.”

The period of three years referred to in para. (d) was substituted for the period of one year by s. 30(a) of the Civil Law (Miscellaneous Provisions) Act 2011 with effect from 2nd August, 2011. The trial judge correctly concluded that the requirements contained in s. 11(1)(d) are disjunctive, so that it would be sufficient for the Court to be satisfied that anyone of the criteria specified was met. However, there is consensus that he misconstrued that provision in regarding the expression “within three years” as relating to all of the criteria, including domicile. The proper construction of para. (d) of s. 11(1) is that the requirement is that the debtor is domiciled in the State at the date of the presentation of the petition.

20. On the domicile requirement, having considered the judgment of Arden L.J. in Barlow Clowes v. Henwood [2008] EWCA Civ 577 (Barlow Clowes), the trial judge stated (at para. 46) that he was not satisfied that the Appellant had discharged the onus upon him to show cause for the adjudication to be set aside on the basis of domicile. Having referred to an e-mail sent by the Appellant to an officer of the Petitioner on 8th November, 2010, in which the Appellant stated that his domicile “is Ireland”, the trial judge stated:

“The [Appellant] has not sought to resile from this statement or to clarify or explain its meaning. Indeed, it is impossible to envisage any alternate interpretation other than that the [Appellant], by his own admission, was domiciled in the State within the three years preceding the presentation of the Petition.”

The question he should have addressed is whether the Appellant was domiciled in the State on the date of presentation of the petition, that is to say, on 12th February, 2013.

21. In relation to the other requirements of para. (d) of s. 11(1), the trial judge found that the Appellant had failed to discharge the onus of proving that he had not ordinarily resided (para. 54), did not have a dwelling house (para. 60) or business (para. 71) in the State within the three years prior to 12th February, 2013.

22. The trial judge addressed the Appellant’s contention as to the lack of jurisdiction to make an adjudication order in paras. 72 to 88. He concluded that the Act of 1988 does not preclude a dual bankruptcy. Having outlined some of the provisions of the Chapter 7 Trustee’s statement in partial support of the Petitioner’s motion in the US Bankruptcy Court for a stay, he stated (at para. 84) that the courts in this jurisdiction must have regard to principles of comity and should be slow to ignore the express wishes of the Chapter 7 Trustee which were accepted by the US Bankruptcy Court in granting the stay which was sought. He stated (at para. 85) that, while the principle of unitary bankruptcy is one that should be followed, save in exceptional circumstances, he was of the view that, in the particular case before him, there were exceptional circumstances. These included that the Appellant had “contrived a situation” whereby the US Bankruptcy Court had become involved, when the Appellant knew that the Petitioner was taking steps to have him adjudicated a bankrupt in Ireland, that the US Bankruptcy Court had been persuaded to modify the stay, and that the Chapter 7 Trustee supported the Irish bankruptcy. The trial judge stated:

“In those circumstances, unless the 1988 Act precluded the Irish court from making an adjudication, I see no legal impediment to having a dual bankruptcy in this case, even if it departs from the general principle of universality.”

The trial judge also alluded to the fact that the assets of the Appellant had vested in the Chapter 7 Trustee (at para. 86) and continued:

“But in circumstances where the trustee supports the Irish bankruptcy co-existing with the Chapter 7 bankruptcy in the US and proposes that a protocol be set up to ensure the efficient administration of the [Appellant’s] estate, there is no good argument for setting aside the adjudication here.”

The trial judge (at para. 87) characterised “the administration of the [Appellant’s] estate” as being “largely a procedural matter” and he concluded that, on a practical level, there was likely to be little disagreement as to what law would apply to the issues in the bankruptcy. Finally, the trial judge referred to some evidence which pointed to a willingness on the part of the Appellant “to engage in forum shopping”.

Notice of appeal
23. In the notice of appeal filed by the Appellant on 20th December, 2013, he seeks an order setting aside the whole of the judgment and order of the High Court. The grounds upon which he relies relate to three aspects of the judgment of the High Court.

24. First, it is contended that the trial judge erred in law and in fact by approving the dual bankruptcy proposed by the Petitioner and by declining to exercise the discretion to annul the adjudication under s. 85C(1) of the Act of 1988. In elaborating on that ground, it is specifically contended that the trial judge erred in law and in fact in finding that there are no legal impediments to a dual bankruptcy in this jurisdiction, particularising matters which it is contended contradict that finding, by way of example, that the functions and powers of the High Court do not extend to negotiation, implementation, or approval of an “ad hoc protocol” or dual bankruptcy process. It is also asserted that -

(a) the trial judge failed to give proper weight or effect to the principle of universality of insolvency proceedings,

(b) erred in finding that the support of the Chapter 7 Trustee was a relevant factor to be taken into account, and

(c) failed to consider, or adequately consider, in exercise of his discretion, whether the making of “orders in aid” provided for in s. 142 of the Act of 1988 was an appropriate alternative to the adjudication of bankruptcy.

This aspect of the appeal will be referred to as the jurisdiction issue.

25. Another ground centres on the finding that the Appellant was domiciled in this jurisdiction for the purposes of the Act of 1988. The finding in relation to domicile is the only finding in relation to compliance with the criteria stipulated in s. 11(1)(d) of the Act of 1988 which has been challenged. Therefore, the findings of the trial judge in relation to residence in, having a dwelling house or place of business in, and carrying on business in the State, which are not challenged, stand.

26. Finally, the Appellant challenges the findings of the trial judge in relation to service of the petition on the Appellant and, in particular, as regards compliance with the requirements of Order 76, rule 25 of the Rules and the finding that the issue of service could not be revisited as part of “a show cause” application without fresh evidence.

Appellant’s submissions on the jurisdiction issue in outline
27. Reflecting the grounds of appeal as summarised above, counsel for the Appellant submitted that there is one principal issue on the appeal, which, in essence, is whether the High Court had jurisdiction to adjudicate the Appellant a bankrupt, given the pre-existing Chapter 7 bankruptcy under the jurisdiction of the US Bankruptcy Court, resulting in what counsel for the Appellant referred to as a “dual bankruptcy”. If the High Court did have jurisdiction to adjudicate the Appellant a bankrupt, the position of the Appellant is that the two further issues raised on the notice of appeal arise, namely:

(a) whether the Appellant was domiciled in this jurisdiction on the date of the presentation of the petition so as to entitle the Petitioner to present the petition for adjudication, which will be referred to as the domicile issue; and

(b) whether the petition was properly served in accordance with the requirements of law and of the Rules, which will be referred to as the service issue.

28. On the principal issue, the Appellant’s position is that dual bankruptcy is impermissible on two bases. First, it is contrary to the prevailing jurisprudence in the field of international insolvency and in particular the principle known as “modified universalism” or the “unitary principle”. The Appellant’s submissions as to the applicability of the principle of modified universalism as an impediment to the existence of bankruptcy proceedings in this jurisdiction parallel with the Chapter 7 proceedings in the US Bankruptcy Court is primarily based on recent decisions of the United Kingdom courts, commencing with the judgment of the Privy Council delivered by Lord Hoffman in Cambridge Gas Transportation Corporation v. Official Committee of Unsecured Capital Creditors of Navigator Holdings Plc [2007] 1 AC 508 (Cambridge Gas). Secondly, the Appellant submits that the Act of 1988 does not permit a dual bankruptcy. In this context, it is submitted that there is no lawful means by which the Official Assignee can negotiate the proposed ad hoc bankruptcy protocol and that the Court does not have jurisdiction, pursuant to the Act of 1988 or otherwise, to approve of a bankruptcy regime which either allows for the exclusion of certain provisions of the Act of 1988 or gives effect to provisions of the US Bankruptcy Code.

29. As regards the Appellant’s further ground of appeal based on the “orders in aid” mechanism provided for in s. 142 of the Act of 1988, it seems to me that it could be regarded as a hybrid argument in that it may be deployed in support of the contention that the Court does not have jurisdiction or, alternatively, that, if the Court has jurisdiction, the trial judge did not exercise such discretion as he had under that jurisdiction properly. Given the multiplicity of issues which have to be addressed on this appeal, I do not consider it necessary or appropriate to determine in any definitive manner the question as to whether the Court has a residual discretion to refuse to make an adjudication order where compliance with the requirements of s. 11(1) of the Act of 1988 has been established and the regulatory requirements have been complied with, or, if it has, the circumstances in which it may be exercised, although those issues are touched upon in subsequent paragraphs of this judgment (cf. paras. 30, 34 and 36).

The Petitioner’s submissions on the jurisdiction issue in outline
30. It is the Petitioner’s position that nothing in the Act of 1988, whether express or implied, requires that the High Court shall not adjudicate a debtor a bankrupt if, at the time of the presentation of the petition, he has been adjudicated a bankrupt in another jurisdiction. The Appellant, it is submitted, is asking the Court to re-write the legislation. As regards the Appellant’s reliance on modified universalism, it is the Petitioner’s position that, while common law courts have long recognised universality in insolvency as desirable, the aspiration as to universality does not operate to oust the jurisdiction of the courts in this jurisdiction to make an adjudication order where there is a pre-existing bankruptcy. However, counsel for the Petitioner recognise that the existence of a foreign bankruptcy is something which the Court might take into account in deciding whether or not to exercise its discretion to make an adjudication order, thus recognising a residual discretion in the Court of the type referred to in paragraph 29 above.

31. In relation to the recent English authorities relied on by the Appellant in support of the modified universalism argument, the Petitioner relies on the most recent decisions of the United Kingdom courts and, in particular, the decision of the U.K. Supreme Court in Rubin and Anor. v. Eurofinance SA and Ors. [2013] 1 AC 236 (Rubin) and also very recent judgments of the Privy Council delivered on 10th November, 2014 in Singularis Holdings Ltd. v. PricewaterhouseCoopers [2014] UKPC 36 (Singularis). The Petitioner also relies on the statement of the law contained in Dicey, Morris & Collins on The Conflict of Laws (2014, 15th Ed.) and, in particular, the principle summarised in what is called Rule 210. It is pointed out that the 15th edition post-dated most of the United Kingdom authorities on which the Appellant relies in support of his argument that the principle of modified universalism would be infringed, if this Court were to uphold the order of the High Court. Moreover, counsel for the Petitioner cite a range of authorities stretching over almost two centuries from 1814 to 1995 in which English courts have adjudicated a person a bankrupt in circumstances in which the person was already a bankrupt in another jurisdiction, that other jurisdiction sometimes being Ireland. Those authorities, it is submitted, are themselves consistent with the application of the principle of universality.

32. The Petitioner disputes the Appellant’s contention that there is no legal foundation for the proposed protocol arrangement between the Chapter 7 Trustee and the Official Assignee.

Jurisdiction to make an adjudication order where there is a pre-existing bankruptcy: discussion

Rule 210

33. While not oblivious to or ignoring the observations made in this Court by O’Donnell J. in Re Flightlease (Ireland) Limited (in voluntary liquidation) [2012] 1 IR 722, in relation to the rules set out in the previous edition (the 14th edition) of Dicey, Morris and Collins on The Conflicts of Law in the context of the application of so-called “Rule 36” under consideration in that case, nonetheless, I find so-called “Rule 210”, as formulated in the 15th edition, to be a useful starting point in addressing the jurisdiction issue. Rule 210 provides:

“Subject to the effect of the Insolvency Regulation, the jurisdiction of the English courts to adjudge bankrupt a debtor on the petition of a creditor, or on the petition of the debtor, is not excluded by the fact that the debtor has already been adjudged a bankrupt by the court of a foreign country.”

The reference to the Insolvency Regulation there is to legislation which corresponds to what is referred to in this judgment as the EU Regulation, which has no application to this jurisdiction issue. The authorities cited for Rule 210 include, inter alia, Ex parte Robinson (1883) 22 Ch. D 816, Re; Artola Hermanos (1890) 24 QBD 640 (Artola Hermanos) and Re Thulin [1995] 1 WLR 165, all of which have been relied on by counsel for the Petitioner.

34. In the commentary on Rule 210, the editors state (at para. 31 - 019) as follows:

“The fact that a debtor has been adjudicated a bankrupt in a foreign country does not deprive the English court of jurisdiction to adjudge him a bankrupt. Thus, English law does not recognise the principle of ‘unity of bankruptcy’, according to which all creditors must have recourse to the courts of the debtor’s domicile, or of his principal place of business, and no other court has jurisdiction to adjudicate him a bankrupt . . . but the fact that the debtor has been made a bankrupt abroad is a reason for the court in its discretion not to exercise jurisdiction, though little weight may be given to this factor if the foreign adjudication was obtained by the debtor on his own petition. If, as a result of the foreign adjudication or otherwise, there are no assets in England, that may be a strong reason for the court to refuse to exercise its jurisdiction, but it is by no means a conclusive reason, if, in a particular case, an English bankruptcy order might assist the creditor in reaching assets in a foreign country.”

It is important to emphasise that what Rule 210, including that commentary on it, is concerned with is whether the courts of England have jurisdiction to make an adjudication order in respect of a debtor who has already been adjudged bankrupt in a foreign country, which the Rule states they have.

35. The effect and consequences of an English bankruptcy in such circumstances are addressed in subsequent rules in Dicey, Morris and Collins. To take one of many examples, Rule 214(2), which deals with the jurisdiction of foreign courts, provides that, subject to the effect of the EU Regulation, -

“English courts will recognise that the courts of any foreign country have jurisdiction over a debtor if -

(a) he was domiciled in that country at the time of the presentation of the petition; or

(b) he submitted to the jurisdiction of its courts, whether by himself presenting the petition or by appearing in proceedings.”

In the succeeding commentary (at para. 31 - 064), the editors state that Rule 214(2) is an attempt to state the circumstances in which English courts will recognise that a foreign court outside the United Kingdom had jurisdiction to exercise bankruptcy jurisdiction, but that it must be regarded as somewhat speculative, because the question is a vexed and controversial one which the English courts have had few opportunities of considering. Later in the commentary (at para. 31 - 065) the editors state that Rule 214(2) is expressed in positive terms only, that is to say, it does not assert that the grounds therein enumerated are the only ones which give jurisdiction in bankruptcy to the courts of a foreign country outside the United Kingdom. However, they state that it is unlikely that mere presence of assets in a foreign country would be regarded as a sufficient ground of jurisdiction, citing Artola Hermanos, which is one of the authorities cited in support of Rule 210. Although it must be emphasised that what the Court is concerned with on this appeal is whether the High Court had jurisdiction to make an order adjudicating the Appellant a bankrupt, rather than the effect of such order, the foregoing exposition of rule 214(2) is intended to represent the broader picture in which the decision in Artola Hermanos is of relevance. Of course, on the facts here, the Appellant submitted to the jurisdiction of the foreign court, the US Bankruptcy Court, so that, if the application of rule 214(2) was in issue, it would be clearly complied with and no controversy would arise.

36. The decision in Artola Hermanos is useful in illustrating the distinction between the issue as to jurisdiction of a court to adjudge a debtor a bankrupt in circumstances where he has already been adjudicated a bankrupt in a foreign country and the effect and consequences of the creation of a concurrent bankruptcy. In that case, 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. However, the fact that a prior bankruptcy had been commenced in a foreign country, not shown to be the country of domicile of the debtors, was no ground for staying the proceedings in England. Fry L.J., in a passage in his judgment referred to by counsel for the Petitioner stated as follows at p. 647:

“The application made by the French syndic is of a double character. In the first place, he applies for the rescission of the receiving order. In the next place he asked for a stay of all further proceedings, and that the assets in the English bankruptcy may be handed over to the French syndic. Now, with regard to the receiving order, it appears to me plain that this Court has jurisdiction, because the sixth section of the Bankruptcy Act, 1883, refers to the domicile of the debtor or his ordinary residence or permanent place of business for a year before the presentation of the petition. It is not denied that the circumstance of residence in England is present in the case of two of the brothers. Is there then any ground on which it would be improper to exercise the jurisdiction of the Court in pronouncing a receiving order? I will not say that a receiving order would be

ex debito justitiae

; but I think that a receiving order ought to be pronounced where the conditions of the Act have been satisfied, unless there is some valid reason to the contrary.”

The Petitioner’s case is that following the reasoning in that passage, if the Petitioner has fulfilled the requirements of s. 11(1) of the Act of 1988, which it is contended it has, then, in the absence of a valid reason to the contrary, which it is contended does not exist, the proper course was to adjudicate the Appellant a bankrupt.

37. In his judgment in Artola Hermanos, Fry L.J. (at p. 648) then went on to consider the effect of the concurrent bankruptcies and how they should be dealt with. He considered three possibilities, the first being that each forum would administer the assets locally situated within its jurisdiction, which he acknowledged gave rise to “several inconveniences”. The second was that every other forum should yield to the forum of the domicile and that the forum of every foreign country (i.e. not of the domicile), should act only as an accessory and an aid of the forum of the domicile, which possibility did not apply, there being no evidence that the bankrupts were domiciled in France. He ruled out the third possibility, namely, that the forum of the country in which the debtor had assets and which first adjudicated him bankrupt, although not the forum of the domicile, should be entitled to claim the assets from the tribunals of the other countries in which he had assets. That possibility he suggested was an entirely unreasonable one.

38. Of the very considerable number of English authorities from the nineteenth century and the early twentieth century which have been put before this Court by counsel for the Petitioner, I have analysed the decision of the Court of Appeal in Artola Hermanos because it illustrates the distinction to which I have already alluded between the jurisdiction to create a concurrent bankruptcy and the effect and consequences of so doing. An important aspect of the decision in Artola Hermanos, however, was that Lord Coleridge C.J., in his judgment, with which Fry L.J. agreed, made it clear that the Court was not deciding what was to be done with the English assets when they were collected, nor according to what law, the law of France or of England, they were to be administered amongst the creditors. He stated (at p. 646) as follows:

“Without, therefore, determining or even suggesting what may be the governing law of the distribution of these assets, it is enough to say that, on the present application, which is to stay proceedings and prevent the assets from being collected, there is no ground brought forward to enable me to say that the English proceedings ought, at all events at this stage, to be in any manner interfered with.”

39. I consider that, if this Court determines that it is proper to dismiss the appeal, so that the order of the High Court dismissing the application to show cause stands, a similar approach must be adopted. In other words, this Court will merely be determining that the Appellant has not made a case for the annulment of the bankruptcy in this jurisdiction. How the concurrent bankruptcies proceed in those circumstances will be a matter for the US Bankruptcy Court and the High Court and for the Chapter 7 Trustee, who was not before the High Court on the hearing of the show cause and is not before this Court on the appeal, and the Official Assignee.

40. In the context of responding to the Appellant’s submission that the Act of 1988 does not confer any jurisdiction on the Official Assignee to enter into a protocol with the Chapter 7 Trustee or confer any jurisdiction on the High Court to approve of such a protocol, counsel for the Petitioner referred the Court to a passage from Goode on Principles of Corporate Insolvency Law (4th Ed., 2011) at para. 16 - 65, in which judicial co-operation in concurrent insolvent proceedings is considered and, in particular, the manner in which bankruptcy proceedings in the United Kingdom and concurrent Chapter 11 proceedings in the US Bankruptcy Court in the Southern District of New York in relation to the collapse of the Maxwell Group of companies were conducted in tandem, which will be considered later. However, at the risk of unnecessary repetition, it is not the Court’s function at this juncture to make any determination or, indeed, express any view on how, if it continues, the bankruptcy of the Appellant should be conducted.

Jurisdiction exercised by the Irish courts
41. The question which must now be considered is whether the law in this jurisdiction is similar to the law in the United Kingdom as reflected by Rule 210 in Dicey, Morris and Collins, so that the jurisdiction of the High Court to adjudge bankrupt a debtor on the petition of a creditor is not excluded by the fact that the debtor has already been adjudged a bankrupt by the court of a foreign country. Unfortunately, none of the authorities put before the Court are of any assistance on the point, although two involved an Irish dimension. Those two also involved another common dimension, in that each involved partners and joint adjudications.

42. The earliest in time of those authorities is Ex parte Cridland [1814] 3 V & B 415. In that case the petitioner and his brother were in partnership as merchants in England and Ireland, the petitioner residing in Dublin and his brother residing in Leicester. The petitioner was declared a bankrupt in Ireland first. A short time later both the petitioner and his brother were declared bankrupts in England. It was held by the Lord Chancellor, Lord Eldon, that the joint bankruptcy in England was not superseded on the ground of a previous separate bankruptcy proceeding in Ireland. In other words, it was held that the two bankruptcies should subsist together.

43. The later authority is in Re O’Reardon [1873] L.R. 9 Ch. 74. In that case Mr. O’Reardon, in England, and Mrs. Murphy, in Ireland, had carried on business in partnership. Mr. O’Reardon was adjudicated a bankrupt in England and Mrs. Murphy was adjudicated a bankrupt in Ireland. Then they were jointly adjudicated bankrupts in Ireland, the same persons being appointed assignees as were assignees under Mrs. Murphy’s bankruptcy. The issue for the London bankruptcy court was by whom, whether the English trustee or the Irish assignees, monies realised from the sale of business assets of the partnership should be distributed. Mellish L.J. considered the effect of joint adjudication after separate adjudications, the separate adjudications being in two different jurisdictions. He stated (at p. 77):

“There is great difficulty in determining what is the precise effect of a joint adjudication against several partners issued after a separate adjudication against one of them. . . . In

Ex parte Cridland

Lord Eldon refused to supersede a joint commission, on account of a previous separate commission in Ireland against one of the bankrupts, but he gives no positive opinion as to the effect or even as to the validity of the joint commission. . . . Now, in the present case, it seems impossible either to supersede or to impound the separate adjudication in England; and indeed we are not asked to do so. The separate creditors of O'Reardon are plainly entitled to have the proceedings against him continued in the ordinary way. Then if the adjudication against O'Reardon cannot be superseded or impounded, the consequence is that the Irish assignees, notwithstanding the joint adjudication, have no better title to the joint assets than the English trustee. Any action or suit to recover the joint assets, whether in England or Ireland, ought to be brought by them both. The case, indeed, seems to be the same as if there had been no joint adjudication in Ireland, but only a separate adjudication against Mrs. Murphy.

On the simple ground of convenience, there is certainly no more reason why the English joint assets should be sent to Ireland than why the Irish joint assets should be sent to England. The English adjudication was first, the greater number of the joint creditors live in England, and there are considerable assets ready for distribution in England.”

The Court of Appeal upheld the decision at first instance that the assets in England would not be handed over to the assignees in the joint bankruptcy.

44. Obviously, that passage is more concerned with the effect of a joint adjudication after separate adjudications, rather than with separate adjudications in different jurisdictions. However, what emerges is that no question arose as to the continued existence of two parallel bankruptcies in the two jurisdictions.

45. The decisions in Cridland and O’Reardon merely illustrate that after the Act of Union, and throughout the nineteenth century, the bankruptcy jurisdiction in Ireland and the bankruptcy jurisdiction in England were separate jurisdictions and under the English jurisdiction concurrent bankruptcies were permitted. Indeed, over two centuries later it is interesting to note the following observations of Lord Eldon in the Cridland case (at p. 417) in relation to the difficulties created by concurrent bankruptcy commissions across the Union:

“In the Case of two Commissions in England that the Lord Chancellor may for Convenience supersede either is settled by Practice: but he has no Concern with a Commission in Ireland; and the Lord Chancellor of Ireland would refuse an Application to quash this separate Commission on account of the joint Commission in this Country, unless he has the Means of administering the Affairs of the Bankrupt by a Commission under the Authority of his own Great Seal. He might supersede the first Commission, if he had a joint Commission under the Seal of Ireland, which would enable him to do Justice: but if the Irish Commission is the Right of the Subject, and duly issued, how could he supersede it on the Ground, that there is in some other Country a Jurisdiction, founded on a subsequent Proceeding, which he has no Means of enforcing against the Person of the Bankrupt, or any Part of his Property, that may happen to be in that Part of the Kingdom?

It seems to me therefore, that now, the Union of the three Parts of the Kingdom having taken place, though their separate Laws still exist, there is no satisfactory Mode of solving these Difficulties without some legislative Regulation upon the Subject.”

Nothing had changed by 1890, and, in particular, no legislative changes had occurred, so that, in his judgment in Artola Hermanos Fry L.J., before considering the possible solutions to the problem of concurrent bankruptcies already alluded to, stated (at p. 648):

“Lord Eldon, I think, on more than one occasion described these cases as being very distressing cases, and something of the distress which he felt has, I think, remained to successive judges who have had to deal with these concurrent bankruptcies.”

Budd Report
46. It would appear that any Irish judges who were subjected to the distress of having to deal with concurrent bankruptcies did not record their thoughts in judgments. In any event, no judgment of an Irish court, either before or after 1922, in relation to concurrent bankruptcies has been put before this Court. In the Budd Report the existence of a foreign dimension to a bankruptcy is considered in a number of respects. Most importantly for present purposes, it is considered in Chapter 53, which deals with auxiliary provisions or orders-in-aid. In para. 53.10.1 the different concepts which underlie the approach to international insolvency are adverted to as follows:

“In Private International Law two systems are generally recognised namely the unity and universality of bankruptcy and the territorial or multiple system of bankruptcy. The former provides that a bankruptcy in one State is effective in all other States where the bankrupt has property or creditors, the latter that various adjudications can be made in the States in which the requisites for adjudication exist. . . . Although in general both Ireland and England subscribe to the theory of territoriality the principle of unity and universality is not new to bankruptcy law in either country. Sections 267 and 268 of the [Irish Bankrupt and Insolvent Act 1857] provide for the vesting of bankrupts’ property, both real and personal whatever the same may be in the assignees. English bankruptcy law subscribes to the theory by including in the definition of property in section 167 of the [Bankruptcy Act 1914] the words ‘whether situate in England or not’.”

47. In making its recommendations in relation to the provision for reciprocal aid in the draft Bill included in the Budd Report, which became s. 142 of the Act of 1988, having referred to “Ireland’s entry into the European Economic Community and its likely effects on certain aspects of Irish bankruptcy law” in respect of which they had not made any definite recommendations, it was stated in para. 53.13.1 of the Report:

“Following entry to the Community we think that extension of the order-in-aid sections to countries outside the Community will be necessary but as an interim measure have provided in the draft Bill that the Court and its officers may act in aid of any Court having bankruptcy jurisdiction in Northern Ireland, England and Wales, Scotland, the Isle of Man and the Channel Islands. We provide also for the extension by Government Order of reciprocal facilities to other countries.”

48. Since 2nd July, 2002, s. 142(1) of the Act of 1988 has provided as follows:

“The Court and its officers may act in aid of any court in the Isle of Man or the Channel Islands, and its officers respectively, at the request of such court, in any bankruptcy matter before such court, and the Court and its officers so acting shall have the like jurisdiction and authority as in the case of a bankruptcy originating under an order of the Court.”

References to Northern Ireland, England, Wales and Scotland were deleted from s. 142(1) when the relevant provisions of the EU Regulation came into effect. Sub-section (2) of s. 142 provides that:

“The Government may by order apply subsection (1) in relation to any other jurisdiction where the Government are satisfied that reciprocal facilities to that effect will be afforded by that jurisdiction.”

It is common case that the Government has not made any order applying subs. (1) of s. 142 to the United States of America, or, indeed, to any foreign country.

49. Another foreign dimension in relation to Irish personal insolvencies which is addressed in the Budd Report is the law in relation to vesting of property in foreign countries, which is alluded to in the passage from paragraph 53.10.1 quoted earlier and is also dealt with in para. 9.1.3, where it is stated:

“Section 267 of the [Irish Bankrupt and Insolvent Act 1857] provides for the vesting of the property of a bankrupt in assignees ‘wheresoever the same may be’. In Common Law countries personal property is governed by the law of the domicile of the owner of the property. Real property, is, however, subject to the

lex loci rei

sitae

. We must bear this in mind so as to show that we at least wish that property in a foreign country belonging to a bankrupt adjudicated here vests in the Official Assignee . . .. The definition of the word ‘property’ in the draft Bill includes property whether situate in the State or elsewhere so that it will be apparent to any foreign court that under Irish law property vested in the Official Assignee includes property outside the State.”

50. The vesting of property in the Official Assignee is dealt with in s. 44 of the Act of 1988, subs. (1) of which provides:

“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.”

Counsel for the Appellant drew the Court’s attention to the fact that, unlike the position which prevails in a corporate insolvency where property does not vest in the liquidator, in the case of a bankruptcy the property of the bankrupt vests in the Official Assignee. Further, it was emphasised that the vesting takes place at the date of adjudication and there is no relation back to the date of the presentation of the petition. Undoubtedly, those factors may give rise to problems which have to be resolved where there are concurrent bankruptcies. However, such problems as may arise in relation to the Appellant’s assets are not for resolution on this application.

51. A more relevant point is the definition of “property” in the Act of 1988. The definition of “property” in s. 3 of the Act of 1988 as originally enacted provided as follows:

“‘property’ includes money, goods, things in action, land and every description of property, whether real or personal and

whether situate in the State or elsewhere

; also obligations, easements, and every description of estate, interest, and profit, present or future, vested or contingent, arising out of or incident to property as above defined.” (Emphasis added).

With effect from 2nd July, 2002, on the commencement of the EU Regulation, the definition was amended and now reads:

“‘Property’

(a) includes money, goods, things in action, land and every description of property, whether real or personal,

(b) includes obligations, easements and every description of estate, interest, and profit, present or future, vested or contingent, arising out of or incident to property,

(c) in relation to proceedings opened in the State under Article 3(1) of the Insolvency Regulation, includes property situated outside the State, and

(d) in relation to proceedings so opened under Article 3(2) of the Regulation, does not include property so situated.”

As regards insolvency proceedings to which the EU Regulation does not apply, it is noteworthy that the words “and whether situate in the State or elsewhere”, as included in the definition as originally enacted in 1988 on the recommendation of the Budd Report, were not preserved.

52. The question to which the amendment of the definition of property in s. 3 gives rise is whether the absence of the words “and whether situate in the State or elsewhere” in relation to proceedings which are not subject to the EU Regulation means that the Oireachtas intended that property situated outside the State would not vest in the Official Assignee in accordance with s. 44. When the definition of “property” is read in the context of s. 44(1), in my view, that conclusion is not open. The effect of s. 44 is to vest “all property belonging to” the person adjudicated a bankrupt without indicating any limitation by reference to the location of the property. It will be recalled that the rationale for including the words “whether situate in the State or elsewhere” in the definition of property in the draft Bill annexed to the Budd Report was so that it would be apparent to a foreign court that under Irish law property vested in the Official Assignee included property outside the State, not that the inclusion of those words was necessary to vest “all property belonging to” a bankrupt in the Official Assignee.

Modified universalism: recent authorities

53. Taking an overview of the provisions of the Act of 1988, in my view, the Act, as amended, cannot be interpreted as excluding the High Court from adjudicating a person a bankrupt solely by reason of the fact that he or she has been adjudicated a bankrupt by the court of a foreign country. However, having regard to the fact that so much emphasis was placed by counsel for the Appellant on the principle of modified universalism, it is appropriate to make some comments on the application of the principle. First, none of the recent authorities relied on by counsel for the Appellant concerned the jurisdiction of a court in the United Kingdom to adjudge a person a bankrupt who had already been adjudged bankrupt in a foreign country. In general, those authorities concerned the enforcement of insolvency judgments of foreign courts. The Cambridge Gas case concerned the jurisdiction of a court in the Isle of Man to give assistance to the Official Committee of Unsecured Creditors pursuant to an order made in proceedings in the United States under Chapter 11 of the United States Bankruptcy Code. As was subsequently noted by the United Kingdom Supreme Court in the Rubin case, this Court in Flightlease did not follow the decision of the Privy Council in Cambridge Gas. Secondly, none of the authorities relied on by counsel for the Appellant involved personal insolvency. Rather they involved corporate insolvencies. Thirdly, some of the authorities concerned the application of a statutory provision in force in England and Wales, s. 426 of the Insolvency Act 1986, a provision somewhat analogous to s. 142 of the Act of 1988, save that it provides that the power to assist extends to “a relevant country” and its application under consideration in one authority was to “a relevant country”, namely, Australia. Fourthly, some of the authorities involved consideration of the UNCITRAL Model Law.

54. At a more general level, there is a very helpful exposition of the development and effect of the principle of modified universalism in the judgments of the United Kingdom Supreme Court and, in particular, in the judgment of Lord Collins of Mapesbury on the appeal from the Court of Appeal in Rubin. Lord Collins did not disavow the dictae of Lord Hoffman in Cambridge Gas or in his speech in the House of Lords in In Re HIH Casualty and General Insurance Limited [2008] 1 WLR 852. In the latter, Lord Hoffman stated (at para. 30):

“The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the eighteenth century. That principle requires that English courts should, so far as is consistent with justice and UK public policy, co-operate with the courts in the country of the principal liquidation to ensure that all the company's assets are distributed to its creditors under a single system of distribution.”

In addition to quoting that passage, Lord Collins also quoted the following passage from the judgment of the Privy Council in Cambridge Gas (at para. 16):

“The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application. There should be a single bankruptcy in which all creditors are entitled and required to prove. No one should have an advantage because he happens to live in a jurisdiction where more of the assets or fewer of the creditors are situated.”

55. In Rubin the United Kingdom Supreme Court was considering two appeals in relation to the enforcement of judgments in foreign insolvencies. The core issue on the effect, if any, of the principle of modified universalism was articulated by Lord Collins as follows (at para. 106):

“Since the judgments are in personam the principles in the

Dicey

rule are applicable unless the court holds that there is, or should be, a separate rule for judgments in personam in insolvency proceedings, at any rate where those judgments are not designed to establish the existence of rights, but are central to the purpose of the insolvency proceedings or part of the mechanism of collective execution.”

The Dicey rule referred to in that passage was so-called Rule 36, which was in issue in Flightlease.

Lord Collins (at para. 115) characterised the question as one of policy: should there be a more liberal rule for avoidance judgments in the interests of the universality of bankruptcy and similar procedures and he answered the question in the negative. He stated (at paras. 128 and 129):

“This would not be an incremental development of existing principles, but a radical departure from substantially settled law. There is a reason for the limited scope of the

Dicey

rule and that is that there is no expectation of reciprocity on the part of foreign countries. Typically today the introduction of new rules for enforcement of judgments depends on a degree of reciprocity. The EC Insolvency Regulation and the Model Law were the product of lengthy negotiation and consultation.

A change in the settled law of the recognition and enforcement of judgments, and in particular the formulation of a rule for the identification of those courts which are to be regarded as courts of competent jurisdiction (such as the country where the insolvent entity has its centre of interests and the country with which the judgment debtor has a sufficient or substantial connection), has all the hallmarks of legislation, and is a matter for the legislature and not for judicial innovation. The law relating to the enforcement of foreign judgments and the law relating to international insolvency are not areas of law which have in recent times been left to be developed by judge-made law.”

56. As the United Kingdom Supreme Court noted in Rubin, in Flightlease this Court declined to follow Cambridge Gas. In his judgment in Flightlease, with which the other judges of this Court concurred, Finnegan J. stated (at para. 66):

“In the area of conflicts of law it is desirable to await development of a broad consensus before developing the common law and it has not been suggested that such a consensus exists among common law jurisdictions. It is in any event desirable that such a significant change in the common law should be by legislation as appears to be the case in the United Kingdom. It is suggested by commentators that the common law in the United Kingdom is developing so that it will approximate with Council Regulation (E.C.) No. 1346/2000. For such a change to occur in this jurisdiction it is desirable that it should occur by way of legislation rather than by judicial development having regard to the significant changes which would be wrought in the common law.”

57. Finally, both parties referred this Court to the following passage from the judgment of the Privy Council (delivered by Lord Sumption) in Singularis. Having referred to Cambridge Gas and the judgment of the United Kingdom Supreme Court in Rubin, it was stated (at para. 19):

“In the Board's opinion, the principle of modified universalism is part of the common law, but it is necessary to bear in mind, first, that it is subject to local law and local public policy and, secondly, that the court can only ever act within the limits of its own statutory and common law powers. What are those limits? In the absence of a relevant statutory power, they must depend on the common law, including any proper development of the common law. The question how far it is appropriate to develop the common law so as to recognise an equivalent power does not admit of a single, universal answer. It depends on the nature of the power that the court is being asked to exercise. On this appeal, the Board proposes to confine itself to the particular form of assistance which is sought in this case, namely an order for the production of information by an entity within the personal jurisdiction of the Bermuda court. The fate of that application depends on whether, there being no statutory power to order production, there is an inherent power at common law do so.”

By way of explanation, the applicants in Singularis were the liquidators of companies incorporated in the Cayman Islands, which were being wound up under the law of the Cayman Islands. They sought the assistance of the Bermuda court in obtaining information from the former auditors of the companies.

Deployment of principle of modified universalism by the Appellant

58. On this appeal, what the Appellant is endeavouring to achieve is to preclude the Petitioner from having the Appellant adjudicated a bankrupt in this jurisdiction. In determining whether the Appellant is entitled to do so, as was stated by the Privy Council in Singularis, this Court can only act within the limits of its own statutory and common law powers. As already stated, I am satisfied that nothing in the Act of 1988 precludes the High Court from making an order pursuant to s. 14(1) adjudicating the debtor a bankrupt, notwithstanding that he has been adjudicated a bankrupt in a foreign country, nor has any common law jurisdiction to that effect, which could be exercised in this jurisdiction, been pointed to. It remains to consider whether the jurisdiction of the High Court is in any way impeded by either the Appellant’s contention that there is no lawful means by which the Official Assignee can negotiate the proposed ad hoc bankruptcy protocol or, alternatively, on the ground that the objective of the Petitioner partly supported by the Chapter 7 Trustee could be achieved by seeking an order in aid.

Authority to enter into an ad hoc protocol

59. The Appellant’s argument that in bankruptcy proceedings in this jurisdiction there is no lawful means by which the Official Assignee could negotiate and obtain approval of what is referred to as a bespoke ad hoc protocol is premised on the proposition that the powers of the Official Assignee and the jurisdiction of the High Court in relation to personal insolvency derive entirely from the provisions of the Act of 1988. In this regard, counsel for the Appellant pointed to the following provisions of the Act of 1988:

(a) s. 60(1), which, in its current form which commenced on 3rd December, 2013, provides that the Official Assignee shall have such functions as are assigned to him by or under the Act of 1988 or any other enactment;

(b) s. 61(2), which provides 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 and it is emphasised that it is expressly provided that those functions are exercisable “in accordance with the provisions of this Act”;

(c) s. 61(3), which lists the powers the Official Assignee shall have in performance of his functions, including the power to make any compromise or arrangement with creditors and the power to compromise all debts and liabilities; and

(d) s. 81, which deals with preferential payments and sets out the debts which “shall be paid in priority to all other debts”, which it is contended is mandatory and cannot be adjusted to accommodate the Chapter 7 Trustee.

Further, citing the decisions of this Court in G. McG v. D.W. (No. 2) [2000] 4 I.R. 1 and Mavior v. Zerko Ltd. [2013] IESC 15, the position of the Appellant is that no reliance can be placed on any “inherent jurisdiction” of the Court.

60. Counsel for the Petitioner in response, cite the decision of the English High Court in Re P. MacFadyen & Co. [1908] 1 KB 675, which was a case in which there were dual bankruptcies, one in England and the other in Madras in India, in which the English court held that it had jurisdiction to sanction an agreement between the trustee and bankruptcy in England and the Official Assignee in Madras for pooling all the assets and distributing them rateably amongst the English and foreign creditors, notwithstanding that the Bankruptcy Act 1883 contained no express provision authorising such a scheme.

61. Counsel for the Petitioner also rely on the commentary in Goode (op. cit.) referred to earlier for the suggestion that protocols in relation to cross-border insolvencies appear to be quite standard. Having referred to co-operation between the English bankruptcy court and the US Bankruptcy Court in the insolvency of the Maxwell Group companies, which occurred over twenty years ago, Goode states (at para. 16 - 65):

“Thus began the practice by which protocols are agreed between office-holders in the different jurisdictions and approved by their respective courts. Common provisions in such protocols include: a statement confirming the sovereignty and independence of the two courts involved and recording that each of the two office-holders is subject only to the jurisdiction of its own court; a recognition by each court of the proceedings opened by the other and any stays granted; the status of the two office holders and the right to be heard as a foreign representative in the other proceedings; a direction to the office-holder in each court, while respecting the sovereignty and independence of the two courts, to co-operate with the other in connection with the management of the parallel insolvencies and to harmonise and co-ordinate their activities; and provision for similar co-operation between the two courts with a view to establishing methods of communication, with or without counsel, co-ordinating joint hearings via a telephone link; an identification of the various cross-border issues to be addressed (for example, re-organisation, treatment of claims, realisation of assets); a provision for mutual disclosure of relevant documents and for notice to all interested parties of any court motion; provision for the venue of applications for relief, which will depend on the nature of the relief sought and whether it relates to property within the jurisdiction of one of the courts; and a direction to the office-holders to submit to their respective courts’ re-organisation plans in substantially the same form.”

In reliance on that commentary, counsel for the Petitioner submits that the Court should reject the Appellant’s contention that there is no legal foundation for a protocol between the Chapter 7 Trustee and the Official Assignee if the Appellant’s appeal is dismissed on the basis that the contention has no legal foundation and that it is at odds both with judicial precedent and judicial practice.

62. While I do not accept that, if the order of the High Court adjudicating the Appellant a bankrupt was properly made, the administration of the estate of the bankrupt will be a largely procedural matter, as suggested by the trial judge, and I anticipate that, on the contrary, it is likely to give rise to very complex issues, including issues of a substantive nature, I consider that it is not necessary, and it would not be appropriate, for the Court to express any view at this juncture as to whether and how those matters might be resolved. In particular, it is to be borne in mind that the proponents on this appeal are the Appellant, the bankrupt debtor, and the Petitioner, who is only one creditor, albeit one of two creditors, the other being NALM whose support it has, which this Court was told are due 99% of the debts owed by the Appellant. Of particular significance is the fact that the Chapter 7 Trustee is not before this Court, although this Court is fully aware of the basis on which Judge Shiff modified the worldwide stay to enable the bankruptcy proceedings in this jurisdiction to be pursued by the Petitioner.

Order in aid as an alternative to dual bankruptcy

63. While s. 142 of the Act of 1988 is of no assistance to the Chapter 7 Trustee, 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.

Whether the Court has jurisdiction to make an adjudication order where there is a pre-existing bankruptcy in a foreign jurisdiction: conclusion
64. 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.

Domicile issue
65. It will be clear from the terms of para. (d) of s. 11(1) of the Act of 1988 as quoted earlier that, for the purposes of compliance with para. (d), as already noted, it is sufficient if the petitioning creditor establishes that the debtor meets either the requirement of domicile in the State at the date of the presentation of the petition or any of the other requirements stipulated, for example, having carried on business in the State within three years before the date of the presentation of the petition. That the Appellant has not appealed the findings of the trial judge in relation to the requirements other than the domicile requirement, was confirmed by counsel for the Appellant on the hearing of the appeal. Accordingly, in my view, counsel for the Petitioner was correct in submitting that the domicile point is moot and does not have to be decided on the appeal. Notwithstanding that, as both parties made comprehensive submissions on the domicile issue, I consider it appropriate to make the following observations.

66. The ascertainment of the domicile of the Appellant as at the date of the presentation of the petition, 12th February, 2013, is governed by Irish law as the lex fori (c.f. Re Adams Deceased [1967] I.R. 424). As happened in the High Court, counsel for the Appellant relies primarily on the judgment of Arden L.J. in Barlow Clowes as a statement of the relevant legal principles and counsel for the Petitioner broadly accepts those principles but places particular emphasis on certain principles. In her judgment, Arden L.J. outlined ten principles, which are derived from Dicey, Morris and Collins on Conflict of Laws (14th Ed., 2006). The principles on which counsel for the Petitioner lay emphasis are the following:

“(iv) An existing domicile is preserved to continue until it is proved a new domicile has been acquired.

(v) Every person receives at birth a domicile of origin . . .

(vi) Every independent person can acquire a domicile of choice by the combination of residence and an intention of permanent or indefinite residence, but not otherwise . . .”

In addressing the intention requirement embodied in the principle at (vi) in that quotation, Arden L.J. cited the leading case of Udny v. Udny (1869) LR 1 Sc & D 441, and she referred to and quoted from the speeches of Lord Hatherley L.C. and Lord Westbury. The approach adopted by the Law Lords in Udny v. Undy has been followed in this jurisdiction, for example, by the High Court in In re Sillar, Hurley v. Winbush [1956] I.R. 344, where Budd J. stated (at p. 349):

“A domicil of choice is acquired by residence

(factum

) coupled with an intention to reside permanently or indefinitely (

animus manendi

). Per Lord Westbury . . . : - ‘Domicil of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time.’ He adds later:—‘It is true that residence originally temporary, or intended for a limited period, may afterwards become general and unlimited, and in such a case so soon as the change of purpose, or

animus manendi

, can be inferred the fact of domicil is established.’”

67. The position of the Petitioner is that, in applying those principles to the issue which arises here, the onus of proof is on the Appellant to establish that at the relevant date his domicile was not within this jurisdiction, and, this jurisdiction having been his domicile of origin, the onus is on him to prove that he had acquired another domicile of choice by the relevant date, 12th February, 2013. The Appellant’s position is that he had acquired a domicile of choice in the United States of America on 12th February, 2013. Both parties recognise that there is a conflict of evidence on the issue of the Appellant’s domicile as at the date of the presentation of the petition and each party implicitly criticises the other for not seeking to cross-examine the others’ deponent or deponents on the issue of domicile. The issue of conflicts on affidavit evidence where the Court is determining a serious issue such as whether a debtor should be adjudicated a bankrupt and, accordingly, making a final determination on the substantive rights and obligations of the parties, was addressed by this Court recently in O’Donnell& Anor. v. Bank of Ireland [2015] IESC 14. Where there is a conflict, it is difficult to comprehend why, on such applications, neither party, neither the petitioner nor the debtor, seeks leave to cross-examine the other’s deponent or deponents with a view to assisting the Court in resolving a material conflict. A glaring example of such a conflict in this case is the conflicting evidence recorded by the trial judge at paragraph 31 of his judgment as to when the Appellant took up residence in Connecticut: whether it was in June 2010, as deposed to by the Appellant, or in January 2012, as deposed to by Mr. Hurson.

68. There is an aspect of the evidence adduced by the Appellant on the issue of domicile on the basis of which, if this Court was required to do so, I would find it impossible to reach a determination that the Appellant has proved that, as a matter of probability, he was not domiciled in the State on 12th February, 2013, on the basis that, as asserted by him, he had abandoned his domicile of origin and had acquired a domicile of choice in the United States of America. This arises from the Appellant’s affidavit sworn on 16th September, 2013, which specifically addressed the domicile issue in response to the averments in an affidavit sworn by Mr. Hurson on 28th August, 2013. The Appellant averred that his then current visa status in the United States of America was “that of an E2 - non-Immigrant visa holder”, his eligibility for the “investor visa” having arisen from the fact that his wife made an investment in “her US business Mountbrook USA LL.C, which is a development company”. He further averred that he had at all times understood that the E2 visa was indefinitely renewable and that it was possible that he could remain in the United States forever on that visa. However, he averred that, notwithstanding the fact that the E2 visa might be renewed indefinitely, it did not entitle him to “permanent residence” in the United States, as that term is understood in US immigration law. Since permanent residence was a necessary pre-requisite to obtaining US citizenship, he had “initiated the process to obtain a green card” and he had been advised that, if he obtained it, he would be eligible for United States citizenship after a further five years. The Appellant averred that, in order to achieve that, he had retained the services of a United States based immigration lawyer, Bruce Morrisson, a former member of the US House of Representatives, to assist him in obtaining a “green card” as a pre-cursor to obtaining United States citizenship.

69. The Appellant in that affidavit exhibited a letter dated 10th September, 2013 from Mr. Morrisson, which was addressed to the solicitors on record for the Appellant in these proceedings. In the letter Mr. Morrisson stated:

“[The Appellant] is currently present in the United States in E-2 ‘treaty investor’ status. While this is a ‘nonimmigrant’, rather than an ‘immigrant’ status, US immigration law imparts several distinctive characteristics to this category that support a conclusion that a person in this status can have the intent to reside indefinitely in the country and have no other domicile.”

Mr. Morrisson went on to explain that, while most “nonimmigrant categories” have a limit on the total number of years an alien can remain in that status, no limit exists for the E-2, which can be renewed (every five years in the case of Irish nationals) for as long as the investment in the US, which gave rise to the status, is maintained. He also stated that “an E-2 has no obligation to return to his country of nationality ever, just to depart the US when and if the E-2 can no longer be renewed”. Mr. Morrisson confirmed that he had instructions from the Appellant to prepare a petition and application for him to acquire lawful permanent residence (a “green card”) as quickly as that status could be obtained and he stated that processing of the application was expected to be concluded in approximately one year and approval was anticipated. He concluded:

“A lawful permanent resident must at all times intend to be domiciled in the United States, irrespective of his physical location. A permanent resident is eligible for US citizenship after five years in that status.”

70. Principle (vii) from Dicey, Morris and Collins (14th Ed.) quoted by Arden L.J. in Barlow Clowes states:

“Any circumstance that is evidence of a person’s residence, or his intention to reside permanently or indefinitely in a country, must be considered in determining whether he has acquired a domicile of choice . . .”

Arden L.J. amplifies that principle at paras. 16 to 19. Having stated that some commonly occurring facts call for special mention, she mentions the following factors which are pertinent to the issue of the Appellant’s domicile at the date of the presentation of the petition:

“The fact that residence is precarious or illegal is a circumstance that is relevant to the question of intention (but the fact that presence is illegal does not prevent residence) . . .

A person can acquire a domicile of choice without naturalisation . . .. On the other hand, citizenship is not decisive . . .”

71. Given the evidence put before the Court by the Appellant as to the legal status of his presence in the United States of America when the petition was presented, it is impossible to conclude that the Appellant has established that he had acquired a domicile of choice in that jurisdiction at that time by reference to the legal requirements as to the establishment of a domicile of choice in accordance with Irish law as outlined earlier. While the Appellant was physically and legally present in the United States of America, so that it may be assumed that as at 12th February, 2013 the factum of residence is established, his status in the United States of America at that time, on the basis of the evidence adduced by him, is relevant and it raises serious questions as to whether animus manendi could be or is established. On the evidence, it is not possible to conclude that it was open to the Appellant to form an intention to reside permanently or indefinitely in the United States of America prior to or on 12th February, 2013 which was capable of fulfilment at that time, nor is it possible to conclude that he had, in fact, formed such an intention given that, on his own evidence, he only took steps to acquire the right to remain permanently or indefinitely in the United States of America in reaction to Mr. Hurson’s affidavit sworn on 28th August, 2013 which disclosed his legal status.

72. Apart from that point, a large number of factual matters are relied on by the Petitioner in support of its contention that the Appellant has not discharged the onus of proving that he has acquired a domicile of choice in the United States of America. Some of those factual matters were also outlined by the trial judge in his judgment. Many of those matters demonstrate a continuing connection between the Appellant and this jurisdiction such as to lead to the conclusion that he has not established that he has abandoned his domicile of origin permanently and indefinitely.

Service issue
73. The requirements in relation to service of the Petitioner’s petition on the Appellant are governed by the Rules and the following provisions of the Rules are relevant:

(a) The petition in this case being a bankruptcy petition by a person other than the debtor, service thereof is regulated in accordance with Order 76, rule 25 of the Rules which (as amended by Rules of the Superior Courts (Bankruptcy) 2012 (S.I. 120/12)) provides:

“Every petition by a person other than the debtor shall be served, not less than seven days before the hearing of the petition, by delivering to the debtor personally a copy of such petition and by showing to the debtor at the time of such service the sealed original, or shall be served in such substituted manner as the court may direct. The petitioner shall file in the proper office an affidavit of service of the petition not later than two clear days before the hearing.”

(b) Application of time limitations is governed by Order 122 of the Rules. Rule 9, which has been invoked by the Appellant, insofar as it is relevant for present purposes, provides as follows:

“Service of summonses, pleadings, notices, orders, and other proceedings, shall be effected before the hour of five o'clock in the afternoon, except on Saturdays, when it shall be effected before the hour of one o'clock in the afternoon. Service effected after five o'clock in the afternoon on any weekday except Saturday shall, for the purpose of computing any period of time subsequent to such service, be deemed to have been effected on the following day. . . .”

“Non-compliance with these Rules shall not render any proceedings void unless the Court shall so direct, but such proceedings may be set aside either wholly or in part as irregular, or amended, or otherwise dealt with in such manner and upon such terms as the Court shall think fit.”

(d) Order 9, Rule 15, which deals with service, provides:

“In any case the court may, upon just grounds, declare the service actually effected sufficient.”

74. By way of general observation, it is interesting to note that over the last century, Order 122, rule 9 apparently has not absorbed much judicial time or energy. It is not mentioned at all in Delany and McGrath on Civil Procedure in the Superior Courts (3rd Ed.) and the short commentary in Ó Floinn on Practice and Procedure in the Superior Courts reflects the commentary on the corresponding provision of the Rules of the Supreme Court (Ireland) 1905 in Wylie on the Judicature Acts. One may surmise, accordingly, that, in general, common sense prevails in relation to the application of that rule, notwithstanding that a five day working week has been the norm for almost half a century.

75. In support of the Appellant’s contention that the adjudication order should be annulled because the petition was not served on the Appellant in accordance with the requirements of the Rules, the Court is referred to a number of authorities, the earliest being O’Maoileoin v. Official Assignee [1989] I.R. 647. There, Hamilton P., having reviewed earlier authorities, stated at follows (at p. 654):

“These cases clearly establish that the bankruptcy code, having regard to the consequences which flow from an adjudication of bankruptcy, is penal in nature and that the requirements of the statutes must be complied with strictly; that the debtor's summons to be served within the provisions of s. 21 of the Bankruptcy Ireland (Amendment) Act, 1872, must be served in the prescribed manner and the amount due in accordance with a judgment, when a judgment is relied upon, must be accurate and that a claim for an amount in excess of the amount due in accordance with such judgment would render the notice defective and a subsequent adjudication void.”

What was referred to as a “debtor’s summons” in the pre-1988 legislation is referred to as a “bankruptcy summons” in the Act of 1988, where s. 8 sets out the requirements in relation to obtaining a bankruptcy summons and its effect. The significance of a bankruptcy summons is that service of it may give rise to one of the cases in which a debtor commits an act of bankruptcy in accordance with s. 7(1) of the Act of 1988. That case, as set out in para. (g) of s. 7(1), is -

“if the creditor presenting a petition has served upon the debtor in the prescribed manner a bankruptcy summons, and he does not within fourteen days after service of the summons pay the sum referred to in the summons or secure or compound for it to the satisfaction of the creditor.”

The decision in O’Maoileoin was recently followed by the High Court (McGovern J.) in Minister for Communications v. M.W. [2010] 3 IR 1, in which a bankruptcy summons under the Act of 1988 was dismissed on the grounds that the summons was invalid.

76. There is a distinction, in my view, between the statutory requirements in relation to the form, content and service of a bankruptcy summons, service of which is designed to give rise to the existence of an act of bankruptcy, on the one hand, and the requirements of the Rules in relation to service of petitions, whether to wind up a company or to have a person adjudicated a bankrupt, on the other hand. That distinction is referred to in a passage from the judgment of Finlay Geoghegan J. in Society of Lloyds v. Loughran [2004] IEHC 1 on which the Appellant also relies. There the issue was whether a bankruptcy petition should be struck out on the grounds that the petitioner, a body corporate, had failed to comply with Order 76, rule 20(2), which requires the bankruptcy petition to be sealed with the seal of the body corporate and signed by two directors or one director and the secretary. Finlay Geoghegan J. stated:

“Whilst I note the distinction between the approach to a bankruptcy summons and petition made by Cave J. above, in general I accept that there ought to be compliance with the Rules of Court even on a petition but conclude that there is nothing on the authorities which appears to absolutely preclude the Court from exercising its discretion in a proper case under O. 124 of the Superior Court Rules where there is a failure to comply with the Rules on a petition.

For the purpose of exercising my discretion under O. 124 it is relevant that there is no prejudice asserted on behalf of the debtor by reason of the failure of Lloyds to seal and sign the petition in compliance with O. 76, r. 20.”

The Appellant laid emphasis on the fact that it was recorded in that passage that no prejudice had been asserted on behalf of the debtor.

77. As regards the factual circumstances of the service of the petition on the Appellant, I propose starting with the order for substituted service made by the High Court (Dunne J.) on 10th June, 2013, following numerous attempts to have the petition personally served on the Appellant in Connecticut. The order for substituted service made under Order 76, rule 25 of the Rules ordered service of the petition and other documents by hand delivery of true copies thereof to -

(a) an address, which was understood to be the Appellant’s then residence in Greenwich, Connecticut, and

(b) Ziesler & Zeisler at their address,

would be good and sufficient service of the petition on the Appellant. On the same day as the order for substituted service was made, but subsequent to the order for substituted service having been made, it was disclosed at the s. 341 creditors meeting in Connecticut held pursuant to the Chapter 7 jurisdiction of the US Bankruptcy Court that the Appellant had moved to a new address. After the order for substituted service was made, the petition was listed for hearing in the High Court on 1st July, 2013. However, because of the position which pertained in the US Bankruptcy Court in relation to the modification of the worldwide stay, it was not possible to proceed with the hearing of the petition on 1st July, 2013 and subsequently the petition was re-listed for hearing, first on 22nd July, 2013 and then on 29th July, 2013. The factors which prevented the listing on the 1st July, 2013 being availed of were that Judge Shiff’s order was not perfected until 12th June, 2013. That order was then stayed until 4pm on 14th June, 2013 to allow the Appellant to file an appeal against it. The Appellant did file an appeal and, as has been outlined earlier, sought a stay on the order pending the appeal. The decision and order of Judge Shiff denying the motion to stay pending the appeal was dated 18th July, 2013. The Petitioner was then free to serve the petition on the Appellant.

78. The Appellant having changed address, service at his old address in Greenwich pursuant to the order for substituted service could not, as counsel for the Appellant contend, have been effective. The Petitioner relies on service by delivery to the offices of Zeisler & Zeisler. Zeisler & Zeisler would have been aware that the petition had issued from the High Court on 12th February, 2013 and that it would be served when the procedural matters in the US Bankruptcy Court in relation to the modification of the worldwide stay were dealt with, which ultimately happened on 18th July, 2013. I propose to outline the service on the Petitioner at the offices of Zeisler & Zeisler in accordance with the order for substituted service by reference to what is stated in a letter dated 26th July, 2013 from Zeisler & Zeisler to the Petitioner’s solicitors.

79. On 18th July, 2013 a package addressed to the Appellant and marked “Strictly Private & Confidential To be Opened by Addressee Only” was delivered to the office of Zeisler & Zeisler. In that package, which included copies of the petition and other documents, there was notification by reference to the enclosed covering letter, which was dated 18th June, 2013, that the hearing of the petition was to take place on 1st July, 2013. Subsequently, on 22nd July, 2013 at approximately 4.30pm Eastern time (the time zone in which Connecticut lies and which the Appellant equates with approximately 9.30pm Irish time) a letter was delivered to Zeisler & Zeisler which referred to the petition having been served on the office of Zeisler & Zeisler on 18th July, 2013. As a result of that letter Zeisler & Zeisler learned that the hearing of the petition was on 29th July, 2013. On 25th July, 2015 the Appellant attended at the offices of Zeisler & Zeisler, at which stage the package delivered on 18th July, 2013 was opened. Zeisler & Zeisler stated in the letter that the Appellant had only then “become formally aware” that the petition was listed for hearing on 29th July, 2013. It was also stated that he did not have time before that day to properly instruct his Irish attorneys to act on his behalf, but that it was the Appellant’s intention to take further advice in Ireland in relation to the documents which had been received and in relation to the jurisdiction of the High Court to entertain a bankruptcy application against him. It was requested that the letter of 26th July, 2013 be brought to the attention of the High Court on 29th July, 2013 and it was commented that, obviously, the Appellant would need and was entitled to time to deal with and respond to the many complex legal, procedural and jurisdiction issues arising from the Petitioner’s filing.

80. There was no appearance on behalf of the Appellant before the High Court on 29th July, 2013, so that no adjournment of the hearing of the petition was sought on his behalf. The letter of 26th July, 2013 from Zeisler & Zeisler was put before the Court. The position of the Petitioner is that the High Court (Dunne J.) was satisfied that there had been compliance with the order for substituted service and, indeed, although not recited in the order of 29th July, 2013, it is implicit that that was the case.

81. On the following day, 30th July, 2013, the solicitors now on record for the Appellant appeared before the High Court and applied for an extension of time within which the Appellant might file a notice to show cause against the validity of the order of 29th July, 2013. That application was acceded to and things moved on from there. Counsel for the Petitioner make the point that the Appellant did not appeal the finding made on 29th July, 2013 that there had been compliance with the order for substituted service and suggested that it is impermissible for the Appellant to seek to re-open the question of the validity of service at this juncture. Indeed, as already recorded, the trial judge concluded (at para. 24 of his judgment) that, in the absence of some fresh evidence, it is impermissible for the bankrupt to seek to re-open the question of the validity of service, because that would effectively amount to an appeal. In particular, he concluded that, having regard to the contents of s. 85C(1)(b) (formerly s. 85(5)(b)) of the Act of 1988, a challenge to the adjudication on the basis of service in the case before him would be permissible only if there was some new evidence that had not been available before the judge who made the adjudication.

82. At the outset, I expressed approval of the approach adopted by the trial judge in treating the application of the Appellant on the basis of being an application pursuant to s. 16 in combination with what is now s. 85C(1)(b) of the Act of 1988, subject to a reservation in relation to the procedure adopted, which will be addressed at the end of the judgment. Determining the appropriateness of the pragmatic approach adopted by the trial judge involves considering from a procedural perspective whether the issues raised by the Appellant, other than the issues as to compliance with the requirements of s. 11(1)(d), of which only one remains on the appeal, the domicile issue, constitute this application an “other case” where the Appellant might possibly establish that he “ought not to have been adjudicated bankrupt” within what is now s. 85C(1)(b) of the Act of 1988. I am satisfied that they do. While there seems to be some disparity between the broad approach adopted by the trial judge to the overall determination of the issues, that is to say, not merely determining them by reference to s. 16, and the narrow approach he adopted to the determination of the service issue, in concluding that that could only be determined if there was fresh evidence on the application before him which had not been before the Court on the hearing of the petition, having regard to the manner in which the issues are before this Court, I am satisfied that the proper course is to consider whether the Appellant has made out a case that the adjudication of the Appellant should be annulled on the ground that the petition was not properly served, and that it is open to the Court to do so for the following reasons. First, I am not satisfied that the discretion conferred on the Court to annul a bankruptcy order by s. 85C(1)(b) is fettered in the manner suggested by the trial judge. Secondly, in any event, there was no affidavit evidence as to the Appellant’s version of the events in relation to the service of the petition on him before the High Court on the hearing of the petition on 29th July, 2013. All of the affidavit evidence adduced on behalf of the Appellant was filed on the application to show cause.

83. I have already referred to and, to the extent necessary, quoted from the relevant Rules in relation to the service of the petition: rule 25 of Order 76 and rule 9 of Order 122. As the kernel of the Appellant’s complaint is non-compliance with the Rules, I consider that the Court is entitled to have regard to rule 15 of Order 9 and rule 1 of Order 124, which have also been referred to and quoted. The order for substituted service made on 10th June, 2013 did not truncate the requirement of Order 76, rule 25 that the Appellant be served with the petition not less than seven days before the hearing of the petition on 29th July, 2013. Even though the package containing the petition was delivered to Zeisler & Zeisler on 18th July, 2013 in accordance with the order for substituted service, because of the manner in which it was addressed, it was not opened until 25th July, 2013. Further, because of the confusion in relation to the date of the hearing of the petition, the Appellant was not served by delivery at the office of Zeisler & Zeisler with notification of the date of the hearing of the petition and, in reality, with the petition, until 4.30pm Eastern Time (as distinct from Greenwich Mean Time) on 22nd July, 2013, when the date of the hearing of the petition as being 29th July, 2013 was notified to the Appellant via Zeisler & Zeisler.

84. Having regard to the combined effect of -

(a) section 18 of the Interpretation Act 2005, which deals with general rules of construction, and which provides as follows at para. (i):

“Time. Where time is expressed by reference to a specified hour or to a time before or after a specified hour, that time shall be determined by reference to the Standard Time (Amendment) Act 1971”,

(b) section 1(1) of the Standard Time (Amendment) Act 1971 which provides:

“Notwithstanding s. 1(1) of the Standard Time Act 1968, the time for general purposes in the State shall during a period of winter time be Greenwich mean time, and during such a period any reference in any enactment or any legal document (whether passed or made before or after the passing of this Act) to a specified point of time shall be construed accordingly unless it is otherwise expressly provided”, and

to the factual circumstances of the Petitioner’s attempt to comply with the order of 10th June, 2013 for substituted service, in my view, it is not possible to conclude that the petition was served on the Appellant in Greenwich, Connecticut not less than seven days before the hearing of the petition, in accordance with Order 76, rule 25 and the order of 10th June, 2013. However, that is not fatal to the Petitioner’s entitlement to the relief it claimed on 29th July, 2013, assuming that the Court was entitled, upon just grounds, to declare the service actually effected sufficient. As is summarised in Delany and McGrath (op. cit.) at para. 3.13:

“The exercise of the court’s power in that regard is informed by what Morris J. identified in

Lancefort Limited v. An Bord Pleanála

[[1997] IEHC 83] as the purpose and object of proper service, namely ‘to ensure that the party concerned is adequately informed of the matters contained in the notice so as to suffer no prejudice’. Thus, in general, failure to effect service in strict compliance with the requirements laid down in the Rules will not be fatal and service will be deemed good where the proceedings have actually been brought to the attention of the defendant and he has not suffered any prejudice by reason of the defect in service.”

85. There is absolutely no doubt that on 25th July, 2013 the contents of the petition and the fact that the petition was to be heard on the following Monday were brought to the attention of the Appellant by his attorneys. The Appellant could have instructed the solicitors who subsequently came on record for him to appear in the High Court on the hearing of the petition and to inform the Court of his position and to seek an adjournment of the petition. However, the Appellant chose not to pursue that course. Instead, the letter of 26th July, 2013, at the request of Zeisler & Zeisler, was put before the Court. Bearing in mind how the proceedings were progressed from the time the petition was first returnable before the High Court on 15th April, 2013 and what the Court learned from the affidavit dated 22nd July, 2013 of Mr. Hurson, which had been delivered to Zeisler & Zeisler on that day, which exhibited copies of the filings and orders made in the proceedings in the US Bankruptcy Court in relation to the Petitioner’s motion for the modification of the worldwide stay, the High Court was wholly justified in proceeding with the hearing of the petition on the basis that the service actually effected on the Appellant was sufficient.

86. Apart from that, however, in the unusual circumstances of this case, the Appellant has suffered no prejudice whatsoever by reason of having had less than seven days notice of the date of the hearing of the petition. The purpose of the application to show cause was to enable the Appellant to argue that his adjudication should be annulled on the ground of failure to comply with the requirements of s. 11(1) of the Act of 1988. On that application the Appellant also argued two further points as grounds for annulling the adjudication order: the point that the Court did not have jurisdiction to make the adjudication order; and the point that the service was defective. His arguments were heard in the High Court by McGovern J. over three days in November 2013. He has had an opportunity to appeal against the decision of the High Court to this Court on all the grounds on which he relies and his appeal was heard in this Court ran into a third day in March 2015. In those circumstances, he has not suffered any prejudice.

87. Accordingly, I consider that the Appellant is not entitled to have the adjudication order annulled on the ground that the service of the petition on him was defective.

Procedural matters
88. The order of the High Court dated 30th July, 2013 extended the time within which the Appellant might file notice to show cause against the validity of the adjudication. Clearly what was envisaged was an application under s. 16(2) of the Act of 1988. The actual application which was filed, the notice to show cause filed on 12th August, 2013, was clearly based on the correct form in the Rules (Form No. 16 in Appendix O) for the purposes of the application under s. 16(2). However, as has already been outlined, the case made on the form went beyond what was envisaged in s. 16 and asserted the invalidity of the order of adjudication on the additional grounds of lack of jurisdiction and defective service of the petition. There is no doubt but that the Court has jurisdiction under what is now s. 85C(1)(b) to annul an adjudication order if it is of the opinion that it ought not to have been made. From a procedural point of view it would have been preferable, in my view, if the Appellant had separated the application to show cause under s. 16 from the other challenge to the validity of the order and specifically invoked s. 85(5)(b), as it then was, in relation to the latter claim. However, as I have said, the trial judge took a pragmatic view about the matter and, apart from his conclusion that the defective service issue could not be pursued in the absence of fresh evidence, I agree with the approach he adopted. There has been no impediment to the proper consideration of the Appellant’s case.

89. It would also have been procedurally preferable if the Petitioner had made a separate application to the Court on 29th July, 2013 for an order deeming service on the Appellant to be good. As is pointed out in Delany and McGrath (op. cit.) in footnote 21 in relation to para. 3 - 13, although the Rules are silent on the point, it appears that such an application can be brought ex parte. It would have brought clarity to the matter if such an application had been brought and if an order had been made on that day deeming service good.

Summary of conclusions and order
90. For the reasons outlined above, I have reached the following conclusions:

(a) The High Court had jurisdiction when the Petitioner’s petition was heard by the High Court on 29th July, 2013 to make an order under s. 14 of the Act of 1988 to adjudicate the Appellant bankrupt, notwithstanding the pre-existence of the Chapter 7 proceedings in the US Bankruptcy Court, subject, however, to proof of compliance by the Petitioner with the applicable statutory and procedural requirements.

(b) The fact that the findings of the trial judge on the hearing of the Appellant’s application to show cause of compliance by the Petitioner with certain requirements of s. 11(1)(d) of the Act of 1988 have not been appealed against to this Court means that the issue as to whether the Appellant was or was not domiciled in the State when the Petitioner’s petition was presented to the High Court on 12th February, 2013 is, in effect, moot, because having regard to the unappealed findings made in relation to the application of the other requirements of para. (d), overall the requirements of s. 11(1) have been complied with. If it was necessary for this Court to determine the domicile issue, for the reasons outlined earlier, it would not be possible to conclude that the Appellant has discharged the onus of proving that he was not domiciled in the State on 12th February, 2013, the date of the presentation of the petition to the High Court, by reason of having acquired a domicile of choice in the United States of America.

(c) On the hearing of the Petitioner’s petition on 29th July, 2013, the High Court was entitled to deem service of the petition on the Appellant sufficient and to proceed with the hearing of the petition. In any event, having regard to the circumstances as outlined above, the Appellant has not suffered any prejudice, having been afforded the opportunity on the application to show cause to pursue all of his arguments against the validity of the adjudication and to appeal the decision of the High Court to this Court.

91. While counsel for the Appellant have argued that there are considerable practical difficulties likely to arise in the administration of the Petitioner’s bankruptcy in this jurisdiction concurrently with his Chapter 7 bankruptcy in the US Bankruptcy Court, it must be clearly understood that all this Court is concerned with on this appeal is to determine whether the bankruptcy should be annulled. No view is expressed by this Court on the future conduct of the bankruptcy proceedings.

92. Accordingly, there will be an order dismissing the Appellant’s appeal.

BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ie/cases/IESC/2015/S42.html

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Supreme Court of Ireland Decisions
You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> In the matter of Sean Dunne (a Bankrupt) [2015] IESC 42 (15 May 2015) URL: http://www.bailii.org/ie/cases/IESC/2015/S42.html Cite as: [2015] IESC 42

Supreme Court of Ireland Decisions