International Issues
COUNCIL REGULATION (EC) No 1346/2000
Whereas:
GENERAL PROVISIONS
Definitions
International jurisdiction
Law applicable
Third parties’ rights in rem
Set-off
Reservation of title
Contracts relating to immoveable property
Payment systems and financial markets
Contracts of employment
Effects on rights subject to registration
Community patents and trade marks
Detrimental acts
CHAPTER II
RECOGNITION OF INSOLVENCY PROCEEDINGS
Principle
Effects of recognition
Powers of the liquidator
Proof of the liquidator’s appointment
Return and imputation
Publication
Registration in a public register
Costs
Recognition and enforceability of other judgments
Public policy
CHAPTER III
SECONDARY INSOLVENCY PROCEEDINGS
Opening of proceedings
Applicable law
Right to request the opening of proceedings
Advance payment of costs and expenses
Duty to cooperate and communicate information
Exercise of creditors’ rights
Stay of liquidation
Measures ending secondary insolvency proceedings
Subsequent opening of the main proceedings
Preservation measures
CHAPTER IV
PROVISION OF INFORMATION FOR CREDITORS AND LODGEMENT OF THEIR CLAIMS
Right to lodge claims
Duty to inform creditors
Content of the lodgement of a claim
Languages
CHAPTER V
TRANSITIONAL AND FINAL PROVISIONS
Cases
In re Dunne (A Bankrupt)
[2015] IESC 42
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 I.R. 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 Q.B.D. 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. . . .”
(c) Order 124 of the Rules addresses the effect of non-compliance and rule (1) provides:
“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
(c) Order 122, rule 9,
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.
Older Cases
In the Matter of Rupert Beauchamp Lecky
a Bankrupt in England
High Court
13 January 1961
[1961] 95 I.L.T.R. 38
Budd J.
Budd J.
A great many Orders in Aid have been made and this point has not previously been raised, but it is now raised owing to the very substantial amount involved.
This matter came before me previously on December 16th, 1960. It seemed to me then that, apart from the Official Assignee who has the duty of stamping, the Revenue Commissioners might consider they had an interest, and I allowed the matter to stand. I am now informed by Counsel that the Revenue Commissioners do not wish to be represented.
Mr. Parke’s argument is based on the wording of the particular Order. The portion of it contained in Part VII, section 2 and paragraph 9, is as follows:—On every realization account of the Official Assignee in a bankruptcy matter or in a vesting arrangement, and on every certified statement of acocunts by a trustee”. It goes on to state the amounts payable and says that the document to be stamped is the Account itself. Another portion of the section which I think I should read, as it was relied on by Mr. Parke, is the portion in italics at the bottom of item No. 9, which says, “For the purpose of calculating this fee the proceeds of the sale of any part of the estate the subject of any mortgage charge or lien shall not be included in the assets. This fee shall be the first charge on any account realized or brought to credit. In bankruptcy cases where the net assets are under £10, the petitioning creditor shall lodge with the Official Assignee a sum sufficient, with the net amount realized, to provide a sum of £10”
Mr. Parke relies on the portion in italics in this way; he says that those words are applicable only to an ordinary case where the Court acts to collect the assets and distribute them among the creditors, but in this case there is no petitioning creditor, no petition and no bankruptcy in Ireland. He says that I should have regard to this part of the Order in construing the first part. This is so, but there seems no reason why, even if the words at the end are restricted to Irish cases, the beginning should not have a larger meaning.
His main argument is that there is not a Bankruptcy matter here, and, therefore, Item 9 cannot come into effect as those fees are only payable in a Bankruptcy matter. He relies on the definition of Bankruptcy in the Bankruptcy Act, 1857, in support of his argument that this is not a Bankruptcy matter. “Bankrupt” is defined in section 4 of that Act as “any person who on any petition of bankruptcy shall have been adjudicated by the Court to be a bankrupt”, and the Court therein mentioned is defined as Her Majesty’s Court of Bankruptcy and Insolvency in Ireland. Mr. Parke says that where the Court here acts on an Order in Aid there is no Bankruptcy in existence here as so defined. The Court is exercising its jurisdiction to aid the Court in England. Also, and I agree with him on this, he argued that where there is an Order imposing tax or duty or fee or other Revenue claim, the party seeking to support the tax or duty must show that the documents, as it is in this case, come within the purview of the Order.
In this case the Court is exercising jurisdiction under section 71 of the 1872 Act, which reads:—“The Court and the Courts having jurisdiction in bankruptcy in England and Scotland, and every British Court elsewhere having jurisdiction in bankruptcy or insolvency, and the officers of such Courts respectively, shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy, and an order of the Court seeking Aid, together with a request to another of the said Courts, shall be deemed sufficient to enable the latter Court to exercise, in regard to the matters directed by such Order, the like jurisdiction which the Court which made the request, as well as the Court to which the request is made, could exercise in regard to similar matters within their respective jurisdictions”.
Mr. Parke relies on certain pronouncements of Johnston J., in In re Bullen [1930] I.R. 82. A procedural question arose in that case. The trustees had been invited to attend the hearing and raise any points they might think fit. One point they raised was that this adjudication could not be made ex parte but ought to be by summons. Dealing with that, Johnston J., said, at p. 84.—“Section 71 of the Act of 1872 must be regarded, not as an enactment which deals merely with procedure, but as one conferring a separate and independent class of jurisdiction upon the Court. A similar provision was to be found in section 74 of the English Bankruptcy Act of 1869, and reenacted in 1883 and again in 1914; and it was declared by the Irish Free State (Consequential Adaptation of Enactments) Order, 1923, that section 122 of the Act of 1914 was to be construed as including the Irish Free *39 State”. He went on to say, at p. 85:—“By virtue of the adjudication of Mr. Bullen in 1923 and the subsequent steps that were taken in the matter, the whole of the bankrupt’s property, real and personal, ‘whether situate in England or elsewhere’, became vested in the Official Receiver (sect. 18, subsect. 1, and sect. 167 of the Bankruptcy Act, 1914); but, as Mr. Gavan Duffy very properly points out, that vesting is of no force or effect in the Irish Free State unless and until the intervention of this Court is sought and granted. In the present case I am asked, and I have the fullest power by virtue of section 71 of the Bankruptcy (Ir.) Amendment Act, 1872, to exercise ‘the jurisdiction which the Court which made the request … could exercise.’ That is, I have by virtue of this section of the bankruptcy code of this country all the jurisdiction which the English Bankruptcy Court could exercise in the matter; and I have, in addition, all the jurisdiction which this Court could exercise ‘in regard to similar matters’.” It seems to me from this that there may be an independent jurisdiction, but that it may be of a bankruptcy nature.
He also relied on In re Bolton [1920] 2 I.R. 324 That case considered whether the South African Courts came within the section. The portion relied on by Mr. Parke is in the judgment of Dodd J., where he says, at p. 329, that the matter is subject to the control of the South African Courts. Mr. Parke said this could not be so if it were an Irish bankruptcy matter. But it could be a bankruptcy matter here subject to the control of the Court where the adjudication originally took place, in that the foreign Court could say what the Court here was to do and what applications were to be made to it, and thus could keep control of the matter.
Mr. Lynch, in reply, said it was not necessary to have a bankrupt here to have a bankruptcy matter. He relies on the case of Chatterton v. City of London Brewery Company Limited [1915] A.C. 631.
The question really is, is there a bankruptcy matter? Firstly, clearly there must be some form of proceeding here to enable parties to come to Court and bring proceedings for its consideration. These proceedings are not necessarily a cause, but they are clearly a matter This motion itself is headed “In the Matter of Rupert Beauchamp Lecky, a Bankrupt in England”. Mr. Parke did not contend that this was not a matter, but he contended that it was not a bankruptcy matter.
Secondly, we must turn to consider what kind of a matter it is. I agree that this Court has an independent jurisdiction, a statutory jurisdiction. But this Court is not a rubber stamp or even an agent for the English Court. It may have to make substantive decisions. Then what kind of jurisdiction does it have? It seems to me that section 71 of the Act itself provides the answer. That section says:—“The Court and the Courts having jurisdiction in bankruptcy in England and Scotland, and every British Court elsewhere having jurisdiction in bankruptcy or insolvency, and the officers of such Courts respectively, shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy”. Then it goes on to say that the Court may exercise “like jurisdiction which the Court which made the request, as well as the Court to which the request is made should exercise in regard to similar matters within their respective jurisdictions”. What kind of jurisdiction is that? The jurisdiction of the Court which made the Order is a bankruptcy jurisdiction. It follows from that that the jurisdiction of this Court acting in aid is also a bankruptcy jurisdiction.
Also, in this very matter, the heading is “High Court of Justice In Bankruptcy”. The matter is brought before me as a judge of the High Court exercising a bankruptcy jurisdiction.
Finally, we come to Chatterton v. City of London Brewery Company Limited [1915] A.C. 631, and I suggest that the judgment of Earl Loreburn in that case is conclusive. The Bankruptcy Act of 1883 provided that Orders in bankruptcy matters should be subject to appeal to the Court of Appeal, but not, without the leave of that Court, to the House of Lords. In this case, the Court of Appeal refused leave to appeal to the House of Lords and, therefore, no appeal would lie if this were a bankruptcy matter. At p. 343, Earl Loreburn said:—“My Lords, it has been argued that this order is not an order in a bankruptcy matter. It has been made by virtue of the bankruptcy jurisdiction by a Court sitting as a Bankruptcy Court, by virtue of the powers which are given only to a Bankruptcy Court In my opinion, it is giving too pregnant a sense to the words of the Act to say that ‘bankruptcy matters’ mean merely matters in which there is already a bankruptcy. I think the words ‘bankruptcy matters’ include at all events matters which come within the jurisdiction of the Bankruptcy Court and within the jurisdiction of that Court alone. Were it otherwise, as has been pointed out by the learned counsel for the respondents, the *40 present appellant would not have got as far as the Court of Appeal and, therefore, a fortiori would not have been able to arïve here with his arguments”. There we have the statement that there may be a bankruptcy matter where there is not a bankrupt I think that that judgment supports what I have said regarding the construction of this section. I do not think that anything I have said in any way dissents from the judgment of Johnston J., in In re Bullen.
There is no doubt that this is a separate jurisdiction, but it is a bankruptcy jurisdiction. I take the view that there is a matter and that it is a bankruptcy matter. Accordingly, the fees must be paid and I refuse this motion. It does not seem unreasonable to me that fees should be paid here when the Court operates in aid of a foreign Court.
Motion dismissed with costs.
In re Bullen.
[1930] IR 82
Johnston J. 82
JOHNSTON J. :
This is an application to the High Court of Justice in the Irish Free State in the exercise of its Bankruptcy jurisdiction by the Official Receiver in Bankruptcy (England) in the matter of William Henry Chambers Bullen, who was adjudicated a bankrupt in London on July 3rd, 1923, whose property, real and personal, wheresoever situate, as the result of that adjudication, became vested in the Official Receiver as the Trustee in bankruptcy, for the assistance of this Court in pursuance of sect. 71 of the Bankruptcy (Ir.) Amendment Act of 1872 sect. 122 of the Bankruptcy Act, 1914, containing reciprocal legislation as regards England and Scotland.
An order was made by the English High Court of Justice (in Bankruptcy) on November 4th, 1929, on the application of the Official Receiver, that the aid of the High Court of the Irish Free State should be sought, and, in particular, that a declaration should be applied for that the whole of the bankrupt’s real and personal estate here at the commencement of the bankruptcy is vested in the Official Receiver as Trustee in the bankruptcy by virtue of the English adjudication. It is not necessary for me on the present occasion to set out in detail the bankrupt’s property in Ireland. It is sufficient to say that he is entitled to certain life and reversionary interests in certain property in County Cork under the will of his father, William Bullen, who died on May 21st, 1879. This will, dated October 1st, 1877, was duly proved in Ireland on July 25th, 1879, the probate being resealed in England on August 27th, 1879.
The application for the aid of this Court was in the first instance made ex parte the Official Receiver, according to the usual practice, and on that occasion I thought it convenient that John George Hosford and Marjorie Deanewho are the trustees of the will of William Bullen and who (having received an intimation that the application was going to be made) attended voluntarily by solicitor and counselshould receive a formal notice in writing of the application. That has been done, and the trustees, while not opposing the making of the order that is asked for, have through their counsel drawn my attention to some matters, that seemed to them, I ought to consider. I may say that I am greatly indebted for the assistance thus given.
It is suggested, first of all, that the application should have been instituted by an originating summons by reason of Or. I, r. 2, of the Rules of the High Court and Supreme Court, 1926, which provides that “all civil proceedings in the High Court other than matters heretofore commenced by petition” shall be commenced by such a summons. The words “civil proceedings,”however, must be construed in the light of the whole body of rules themselves and the forms thereunder; and when they are so construed it is plain that an application under sect. 71 is not a proceeding contemplated by Or. I, r. 2. The Court having Bankruptcy jurisdiction really acts on “the request” of the English, Scottish, or Dominion Court which requires its aid, and the applicant here is in truth the English Bankruptcy Court rather than the Official Receiver. The order of this Court, if it is to be made, is not made as the result of a proceeding instituted by one litigant against another, but as a result of the request; and it is reasonably plain that the procedure by originating summons is not applicable in any sense to such a proceeding. When the request of the British Court has reached the Registrar of this Court, accompanied by an order of that Court, and when those documents have been properly authenticated, then this Court may, by such an order as was made in the case of In re Bolton (1), signify its intention to aid the other Court. I think that r. 1 of Or. I, which provides for the continuance of the old practice in so far as it is not inconsistent with the new, governs the present situation; and that, whatever may be the purview and scope of the words”all civil proceedings,” they certainly do not include a proceeding such as the present.
Sect. 71 of the Act of 1872 must be regarded, not as an enactment which deals merely with procedure, but as one conferring a separate and independent class of jurisdiction upon the Court. A similar provision was to be found in sect. 74 of the English Bankruptcy Act of 1869, and re-enacted in 1883 and again in 1914; and it was declared by the Irish Free State (Consequential Adaptation of Enactments) Order, 1923, that sect. 122 of the Act of 1914 was to be construed as including the Irish Free State. A similar provision is to be found in most, if not all, of the bankruptcy and insolvency codes of the Dominions. The jurisdiction arises when a person has been adjudicated a bankrupt or insolvent in one of the other countries to which the section refers and when the Court of that country has sent a request to this Court for its aid, accompanied by an order setting out the nature of the difficulty and the assistance that is required. No such difficulty arises in this case as in In re Bolton (1), where Dodd J. was called upon to discuss the relationship between the Roman-Dutch law of insolvency and the modern law of bankruptcy; nor as in In re Corballis (1),where Kennedy C.J. was confronted with two rival adjudications in bankruptcy of the same personone in England and a later one in the Irish Free State; nor as in Callender, Sykes, & Co. v.Colonial Secretary of Lagos and Davies (2), where an English Bankruptcy Court had sought the aid of a British Colonial Court, which in 1877 possessed no bankruptcy jurisdiction at all. This Court possesses a jurisdiction in bankruptcy which is quite as extensive as, and corresponds closely in character to, that of the English Court, and I know of no reason why I should withhold the assistance that is required in order that justice should be done.
By virtue of the adjudication of Mr. Bullen in 1923 and the subsequent steps that were taken in the matter, the whole of the bankrupt’s property, real and personal, “whether situate in England or elsewhere,” became vested in the Official Receiver (sect. 18, sub-sect. 1, and sect. 167 of the Bankruptcy Act, 1914); but, as Mr. Gavan Duffy very properly points out, that vesting is of no force or effect in the Irish Free State unless and until the intervention of this Court is sought and granted. In the present case I am asked, and I have the fullest power by virtue of sect. 71 of the Bankruptcy (Ir.) Amendment Act, 1872, to exercise “the jurisdiction which the Court which made the request . . . could exercise.” That is, I have by virtue of this section of the bankruptcy code of this country all the jurisdiction which the English Bankruptcy Court could exercise in the matter; and I have, in addition, all the jurisdiction which this Court could exercise “in regard to similar matters.”
A suggestion is made in the affidavit which has been filed on behalf of the trustees that Mr. Bullen may have retained his Irish domicile of origin, notwithstanding his absence from this country for very many years. If he has, I think that that would be a further reason, if further reason were necessary, why this Court should assist the English Court to compel one of its own citizens to meet his financial obligations. As a matter of fact, however, I have not sufficient material before me to enable me to decide anything as to Mr. Bullen’s domicile or citizenship; but I think that the question whether or not he had lost his Irish, and acquired an English, or a Dominion, domicile is immaterial; and I observe that that was the view that was taken in the case of Wilkie v. Cook and Cathcart (3),where the aid of the Scottish Court was sought by an English Bankruptcy Court. In a case like the present I must take the adjudication in bankruptcy of the English Court as properly made with jurisdiction.
Accordingly I shall make an order on the lines settled by Dodd J. in In re Bolton (4), declaring that all the property, real, chattel real, and personal, whether of life or reversionary interest, of the said bankrupt which is within the area of the Irish Free State is vested in the Official Receiver as trustee of the property of Mr. Bullen, and ordering that this Court and its officers (including the Official Assignee) shall act in aid of, and auxiliary to, the High Court of Justice (in Bankruptcy). Any consequential or ancillary directions or orders may be applied for in this matter as they become necessary. The Official Receiver and the trustees are entitled to be paid their costs when taxed out of the estate, the trustees’ costs to be taxed as such as between solicitor and client.
I agree with Mr. Duffy that the bankrupt should get notice of this order. His present address, however, is unknown, and, accordingly, I shall direct that a notice of this order, to be settled by the Chief Registrar, shall be advertised in two London newspapers, The Times and The Daily Mail. This advertisement will be deemed to be good service of the order upon the bankrupt.
Solicitors for the Official Receiver in Bankruptcy (England):Reeves & Son.
In re Reilly, a Bankrupt
[1942] IR 416
Black J. 416
In these circumstances the Official Assignee and the English Trustee in Bankruptcy claim that all the land of the bankrupt situate in this country, which consists of, or includes, the three lots mentioned, became vested in the said Trustee by force of s. 18, sub-s. 1, and s. 167 of the English Bankruptcy Act, 1914, taken in conjunction with Art. 73 of the Constitution of 1922 and Art. 50 of the Constitution of 1937, or, alternatively, by virtue of the said order of this Court, and that accordingly the said Trustee is now entitled to the said land.
On the other hand, the Ulster Bank claims to be entitled to the purchase price of £600, including the deposit of £150, of the land comprised in Lot 3 by virtue of their mortgage by equitable deposit; and the bankrupt’s solicitor, who acted for him in connection with the purchase of Lot 2. claims to have a solicitor’s lien for his costs upon certain documents of title which came into his possession in his said capacity, that is to say, the land certificate in respect of Lot 1 and the deed of assignment of Lot 2. The solicitor claims to have a lien upon a certain weekly tenancy agreement referred to at item 3 in the second part of the schedule to an affidavit which he has filed in this motion.
This policy, whereby the Courts exercising jurisdiction in bankruptcy in Great Britain and Ireland and in the different parts of the British Imperial territory extend reciprocal aid to one another, dates back for a very long period. The result which it was intended to effect was accomplished in a different way as far back as 1825 by 6 Geo. 4, c. 16, which provided for the appointment of commissioners to convey to assignees on behalf of creditors all of a bankrupt’s lands in any British territory whatsoever. The present system of reciprocal aid between the Courts exercising bankruptcy jurisdiction in the different countries is provided for in our Bankruptcy Amendment Act, 1872, ss. 70 and 71; the English Act of 1861 (24 & 25 Vict. c. 134), ss. 206-209 and 215-220; the English Act of 1883 (46 & 47 Vict. c. 52), ss. 117 and 118; and finally the English Bankruptcy Act of 1914, ss. 121 and 122.
I am aware that some lawyers of high repute have taken the view that while the former High Court of Justice in Southern Ireland, being set up by an Imperial statute the Government of Ireland Act, 1920continued to have the powers of the High Court that had formed part of the Supreme Court under the Judicature Act, and while these powers possibly continued under the Transitory Provisions of the Constitution of 1922, these powers came to an end when the present Courts were established by the Oireachtas under Article 64 of the Constitution of 1922, and that our Constitution or laws could not, and nothing short of a British Imperial statute could, give our new Courts the extra-territorial jurisdiction possessed by the former Irish Courts in certain bankruptcy matters.
It has even been thought that this jurisdiction came to an end when the Government of Ireland Act, 1920, ceased to operate in this country by virtue of the Irish Free State (Consequential Provisions) Act, 1922namely, on December 5th of that year. This view would receive support from the English decision in Wakely v. Triumph Cycle Co., Ltd. (1); but it would receive no support from the Irish decision of Gieves v. O’Connor (2).I have already made several orders in this Court to act in aid of English Courts under s. 71 of our Act of 1872 (1).When the first of these applications was made, I decided that, whatever my own opinion might be, the correct course would be to preserve the continuity of practice and legal interpretation of this Court by following the decision of Mr. Justice Johnston in In re Bullen (2), although without that precedent I should have taken the same view myself.
A form of order appropriate to such cases was settled by Mr. Justice Dodd in In re Bolton (3). This included a declaration that the Irish land of the bankrupt adjudicated in Great Britain or the Colonies vested in the Trustee in Bankruptcy, or other corresponding official, of the Country where the adjudication took place. However, neither the vesting order so settled, nor any decision since reported, seems to indicate the solution of the present problem, namely, whether the vesting order of the Court which acts in aid operates on the bankrupt’s land within its jurisdiction as from the date of the adjudication in the other country or only as from the date of the vesting order itself. If it only operates from the latter date, it could not affect Irish land which the bankrupt might have disposed of to a purchaser without notice of the bankruptcy between the date of the adjudication and the date of the vesting order. It is perhaps surprising that the point seems to be without authority either way; for it might very seriously affect the creditors of a bankrupt, on the one hand, and purchasers and mortgagees of his property, on the other.
In regard to a statutory provision purporting to vest in a bankruptcy official land situate in another country, there is a marked difference between a British Imperial statute and a statute of a British Dominion or a statute of our Oireachtas. I am referring now to land only. Where personalty is concerned, the question of domicile has been held to make a difference, although upon this point the view taken in Dicey’s “Conflict of Laws” does not accord with what has more than once been decided. At any rate, it is quite customary for Colonial insolvency statutes to enact that a bankrupt’s land, wherever situatewhich would include his land in England or Irelandshall vest in a Colonial Official corresponding to the English Trustee in Bankruptcy or our Official Assignee. But such a provision has no force or effect in England or Ireland unless recognised by the laws of these countries. This plain truth was forcibly stated by Kay J. in In re Levy’s Trusts (1). That learned Judge added, however (at pp. 123-124), that if a Colonial Act purported to vest such property in a Trustee, and if the Colonial Court applied to the English or Irish Court to act in aid, then “an order in aid of the bankruptcy in the Colony . . . would have been made as a matter of course.” Such was the order made by Mr. Justice Dodd to which I have referred. But, until it was made, the vesting of the bankrupt’s Irish land in a Colonial Trustee by virtue of a Colonial statute had no force in the contemplation of Irish law. So far as our law was concerned, the bankrupt had not been divested of his Irish land at any time between the date of the adjudication and the date of the order of the Irish Court. During that period, our law recognised him as free to dispose of his Irish land, and if he did so to a bona fidepurchaser for valuable consideration without notice of the bankruptcy, I should be slow to hold that any Irish vesting order, made subsequent to the purchase, could be held to relate back so as retrospectively to invalidate abona fide title, which had been innocently acquired for valuable consideration at a time when, in the eyes of our law, the purchaser was entitled to buy and the property was still vested in the bankrupt vendor. No negligence could be imputed to such a purchaser; for it would be impracticable to make inquiries all over the British Empire, and it would be a grave matter if, possibly years after a Colonial adjudication of which the English or Irish purchaser had never heard, an English or Irish vesting order could relate back and deprive him of both his land and his money. Yet I think Mr. Gill’s argument went that length, although he realised that it was unnecessary for his case to press it to the extent of covering a Colonial bankruptcy. I should be reluctant to interpret s. 122 of the Act of 1914 or s. 71 of our Act of 1872 with respect to acting in aid as involving such a result. Adaptingmutatis mutandis the words of Lord Macnaghten in Galbraith v. Grimshaw (2), I might say “the Act does not say that a Colonial bankruptcy, or indeed any bankruptcy, shall have effect in England or Ireland as if it were an English or Irish bankruptcy of the same date.” The words”like jurisdiction” in s. 122 of the Act of 1914 or s. 71 of our Act of 1873 do not seem to me necessarily to involve the making of an English or Irish vesting order to operate on any land but that which in the contemplation of English or Irish law actually belongs to the bankrupt at the moment when the vesting order is made by the English or Irish Court, as distinct from land which the bankrupt had already disposed of for value to an innocent purchaser or mortgagee at a time when English or Irish law recognised the right of the purchaser or mortgagee to enter into the transaction. However, I leave this point open for argument in some future case when it may be necessary to decide it. It is not necessary to decide it now; for the simple reason that I am not concerned with a vesting under a Colonial statute or a statute of our Oireachtas.
The Trustee claims that the land in question is vested in him under an Imperial statutethe Bankruptcy Act, 1914. Now, whatever the position may be as regards any particular Dominion since the passing of the Statute of Westminster on the 11th December, 1931, with respect to the future Acts of the Imperial Parliament, there can be no doubt that a statute of that Parliament in 1914 bound even the self-governing Dominions, if its scope and object were such as to lead to the conclusion that it was intended to have that effect. It was explicitly laid down by the British Privy Council in Calendar Sykes & Co. v. Colonial Secretary of Lagos (1) and again in New Zealand Loan & Mercantile Agency v. Morrison (2) that the British bankruptcy code was intended to affect the Colonies, and that, as was stated in the latter case (at p. 358): “all the property, real and personal, of an English bankrupt, in the Colonies as well as in the United Kingdom, is vested in his assignees or trustees, whose title must receive recognition in the Colonial Courts.” If such a statute vested a bankrupt’s colonial land in the English Trustee,a fortiori it vested his land in Ireland, which was then actually a part of the United Kingdom itself. I should, therefore, have thought it clear that s. 18, sub-s. 1, and s. 167 of the Act of 1914 taken together, if they are still applicable to Ireland, vested this bankrupt’s Irish land in the English Trustee immediately upon the adjudication. But during the argument I was referred to s. 169 of that Act, which provides that “This Act shall not, except so far as is expressly provided, extend to Scotland or Ireland.”I understood, and I think so did counsel for the Trustee, that it was being contended that s. 18, sub-s. 1, and s. 167 had no application to Ireland, inasmuch as there was no express provision that these sections should apply to Ireland. If that were right, this Act of the Imperial Parliament would have vested in the English Trustee all a bankrupt’s land all over the British Empire and would even have purported so to vest his land in foreign countries, although of course it could not make the vesting effective in foreign countries unless their laws were to recognise it; but for some reason Ireland and Scotland, although then parts of the United Kingdom, as Scotland still is, were singled out, alone in the whole world, to escape the effect of an English adjudication. I should have thought the word “elsewhere” in s. 167 wide enough to include Ireland, and that, therefore, it was expressly provided by s. 18, sub-s. 1, and s. 167, taken together, that they should apply to Ireland. Indeed, were it not so, I should find it hard to see how the power given to this Court to act in aid of the English Courts would give it jurisdiction to make orders vesting an English bankrupt’s Irish land in the English Trustee, if the English Bankruptcy Act itself did not purport to give that official any right to have such land vested in him. On such a supposition, I do not see how there could have been jurisdiction to make the order made by Mr. Justice Johnston in Bullen’s Case (1) or by me in this and several other cases. However when he realised that I had understood the reference to s. 169, sub-s. 2, in the sense indicated, Mr. Newett disclaimed any intention to argue that the Act of 1914 did not vest an English bankrupt’s Irish land in the English Trustee; but merely contended that this state of affairs came to an end on 6th December, 1921, on the coming into operation of our Constitution, on which date, except in so far as they were continued by our Constitution, all laws in this country, and even the Courts themselves, had come to an end, as was said by Ronan L.J. in Armstrongv. County Court Judge of Wicklow (2). Mr. O’Leary, in his turn, maintained that a provision in a British statute purporting to vest land in Eire in an English official was inconsistent with the sovereign status of this State. I entirely agree with that. But such a provision ceases to be inconsistent with that status, if the Irish people, presumably in their own interest, and in recognition of the fact that the Irish Official Assignee is accorded reciprocal rights in the English land of an Irish bankrupt, deliberately ratify and continue the British provision by an Article of their own Constitution.
The net issue then is whether these vesting sections of the English Bankruptcy Act of 1914 were continued by Art. 73 of our Constitution of 1922; for if they were, they are in force here to-day by virtue of Art. 50 of the present Constitution. Art. 73 of the first Constitution provided that “Subject to this Constitution and to the extent to which they are not inconsistent therewith, the laws in force in the Irish Free State at the date of the coming into operation of this Constitution shall continue to be of full force and effect until the same or any of them shall have been repealed or amended by enactment of the Oireachtas.”There has been no such repeal or amendment of s. 18, sub-s. 1, or s. 167 of the Act of 1914. Do these sections constitute a law which was in force in the territory known as the Irish Free State at the moment when the first Constitution came into operation? Art. 73 does not refer to “statutes in force.” Its words are “the laws in force.”In my opinion, two sections of a statute which, taken together, enact that certain property on a certain event shall vest in the Trustee in Bankruptcy, constitute a law. That was what these sections, s. 18, sub-s. 1, and s. 167, together did. I understood Mr. Newett to admit that prior to the coming into operation of our Constitution, these two sections were effective to vest a bankrupt’s Irish land in the English Trustee, on an adjudication in England. Indeed, s. 121 of the Act of 1914 itself enacts that an order (which includes an order of adjudication) “shall be enforced in Scotland and Ireland in the Courts having jurisdiction in bankruptcy in those parts of the United Kingdom respectively, in the same manner in all respects as if the order had been made by the Court hereby required to enforce it.”
I find it impossible to take the view that a statutory provision which, at the coming into operation of our Constitution of 1922, was admittedly effective proprio vigoreto vest land in this country in the English Trustee in Bankruptcy was not a law in force in this country at the date of the coming into operation of that Constitution, or that, by virtue of Art. 73 of that Constitution together with Art. 50 of the present Constitution, it is not a law in force in this country at the present time. On the other hand, I am unable to reconcile this view with the judgment of the late Chief Justice in In re Corballis (1). Moreover, in In re Bullen (2) Mr. Justice Johnston, referring to an English adjudication under the Act of 1914, said (at p. 85): “By virtue of the adjudication . . . and the subsequent steps . . . the whole of the bankrupt’s property, real and personal, ‘whether situate in England or elsewhere’ became vested in the Official Receiver.” He then at once gave the authority for this vesting in brackets, viz., s. 18, sub-s. 1, and s. 167 of the Bankruptcy Act, 1914. So far, he was expressing precisely the view I have taken in this case. “But,” he proceeded to say, “as Mr. Gavan Duffy [now Mr. Justice Gavan Duffy] very properly points out, that vesting is of no force or effect in the Irish Free State unless and until the intervention of this Court is sought and granted.” These words might indicate that the learned Judge was treating the Imperial statute of 1914 as having no more effect in this country than if it had been a Colonial statute, and as requiring the order of an Irish Court acting in aid under s. 71 of our Act of 1872 to give the British statutory vesting any legal validity in this country at all. So construed, the words of Mr. Justice Johnston would be irreconcilable with the view I have taken of the effect of the Act of 1914. But I am inclined to think the learned Judge did not mean this, because, if he did, he would perhaps hardly have said in the preceding part of the sentence “the whole of the bankrupt’s property . . . in England or elsewhere became vested in the Official Receiver,”citing immediately the vesting sections of the Act of 1914. Accordingly, when he added that without the Irish order the vesting could have no force or effect here, I think he may well have meant no more than that without that order no machinery to deal with the bankrupt’s property in this country could be set in motion, since only the Irish Courts could set that machinery in motion. That would not prevent an Irish Court in the administration of the estate of a deceased person who had at one time been adjudicated a bankrupt in England from recognising the title of the English Trustee in Bankruptcy.
Whatever may be the implications of what was said in In re Bullen (1), the judgment in In re Corballis (2) seems directly at variance with my view here. It is obviously impossible to say that an opinion which is at variance with another judgment of a superior Court is not open to doubt. The doubt must be increased by the fact that the judgment in question was that of a Judge who had a very special acquaintance with the constitutional changes of 1921 and the statutes which they rendered necessary, and most of all in my mind by the profound respect which I have always entertained for every legal opinion of the late Chief Justice. If my decision (assuming it to be wrong) would be irremediable, I should have to think seriously whether I ought not to decide in accordance with the view of the late Chief Justice and suppress my own. But as anything I do, can, and I have reason to understand soon will, be reconsidered, and rectified if erroneous, I think perhaps the better course is to decide the point in accordance with my own opinion. I do not consider that the Adaptation of Enactments Act, 1922, or the Irish Free State (Consequential Adaptation of Enactments) Order, 1923, really help in interpreting or applying s. 18, sub-s. 1, and s. 167 of the Act of 1914. The Adaptation of Enactments Act gets over a certain difficulty of nomenclature in the continuance of existing statutes by interpreting the name”Ireland,” whether used alone or as part of certain composite expressions, as denoting “Saorstát Éireann .”On the other hand, the Irish Free State (Consequential Adaptation of Enactments) Order, 1923, would exclude this country from the term “Ireland” in s. 121 of the Bankruptcy Act of 1914, while expressly including this country in the same term for the purposes of s. 122 of that Act. This Order in Council only affects the application of the Bankruptcy Act of 1914 in Great Britain and Northern Ireland. I do not think the different treatment accorded by the Order to ss. 121 and 122 necessarily indicates any real change in the pre-1921 position in regard to the effect in England of Irish adjudications in Bankruptcy, and I note that this is the view taken in Williams on Bankruptcy; but that is a matter for the English Courts to decide and not for me.
Certain sections of the Local Registration of Title (Ir.) Act, 1891, were relied on on behalf of the bank. The first was s. 34, sub-s. 1, which makes the register conclusive evidence of title. But I think Mr. Newett admitted that it excepts the case of fraud. If the bankrupt’s Irish land vested in the English Trustee upon the adjudication, the bankrupt’s subsequent attempt to create an equitable mortgage of that land would be fraudulent, and the register would no longer be conclusive evidence of his title by virtue of s. 34, sub-s. 1. Then there is s. 36. This affirms the absolute rights of a registered owner subject only to (a) registered burdens, and (b) certain burdens which, without registration, affect the land and which are specified in s. 47. There is no burden belonging to either of these categories in question here. But a proviso-in s. 36 sub-s. 1, makes certain unregistered rights also effective against the registered transferee, if he is a transferee otherwise than for valuable consideration. I think the English Trustee in Bankruptcy must rank as a transferee “otherwise than for valuable consideration.” But the proviso in question does not say that “all unregistered rights” are to be effective against a transferee otherwise than for valuable consideration. The rights which it makes effective against such a transferee are expressed to be “all unregistered rights, subject to which the transferor held the land transferred.” I think these words contemplated only a transfer by a transferor who held the land subject to unregistered rights, and would be meaningless if there were no transfer by such a transferor. The transfer in this case, if my view as to the first branch of the case be right, was a transfer brought about by the sole force of the statute and the adjudication in bankruptcy. There was no transferor holding the land subject to unregistered rights. The bankrupt was not the transferor. The proviso would prevent a transferee who got the land without giving valuable consideration for it, whether in collusion with a dishonest transferor or otherwise, from relying upon his registration to defeat people who had unregistered rights for which they might have paid full value. I think it was not intended, and is not so expressed, as to enable people claiming unregistered rights to defeat the title of the Trustee in Bankruptcy in whom the lands became vested by law on behalf of the creditors before the date when the claimants of the unregistered rights claim that those rights accrued. When the bank took its equitable deposit, the Trustee, if the view I have taken be right, had the lands vested in him under the statute of 1914, and was there and then entitled by s. 76, sub s. 1, of the Local Registration of Title (Ir.) Act, 1891, to be registered as owner in the place of the bankrupt. When the bank took its deposit, the Trustee was still unregistered; but the bank was also unregistered, as it still is. The Trustee has since been registered as owner, namely, on the 14th October, 1941.
Tench v. Molyneux (1) has been cited in support of the Trustee’s contention. In that case the meaning of s. 81, sub-s. 5, of the Local Registration of Title (Ir.) Act was interpreted, and held not to give a deposit of a land certificate any greater efficacy than a deposit of title deeds before that Act, notwithstanding the words in that subsection”subject to any registered rights.” I do not think that, pending his obtaining registration, the Trustee in Bankruptcy in this case can be regarded as in the same position as the purchaser of registered land who negligently left the title deeds in the hands of the vendor without good reason, thereby enabling the vendor to utilise them to obtain money from innocent third parties. The adjudication was on the 17th September, 1940, and the land certificate was deposited with the Ulster Bank on the 30th December, 1940.
Sect. 44, sub-s. 1, provides that, subject to the provisions of the Act, only the registered owner may transfer or charge the land. This does not prevent a transfer from being effective in spite of the registered owner if the latter is adjudicated a bankrupt, provision being made in s. 76 for the registration of the Assignees or Trustees under the bankruptcy in such a case. Then sub-s. 2 of s. 44 enacts that “nothing in this Act shall prevent a person from creating any right in or over any registered land.” It then provides that if any such right is created after the first registration, such right shall not affect a registered transferee for valuable consideration. But it does not say that an unregistered right shall always or necessarily affect a registered transferee who is a transferee otherwise than for valuable consideration. Although I must regard the Trustee here as a transferee otherwise than for valuable consideration, I do not think that s. 44, or s. 36, or any other provision of the Act of 1891, enables the claim of the bank to be made to prevail against him.
Finally, there is the question of Mr. Maloney’s claim to a solicitor’s lien. As regards Lot 1that is item 1 in the second part of the schedule to his affidavithe admits that the land certificate in respect of this land first came into his possession about the 8th November, 1940, which was after the date of the adjudication. I do not think Mr. Maloney can claim a lien upon this land certificate. Next, there is the deed of assignment of Lot 2specified in the second part of the schedule to his affidavit. He had this in his possession long before the adjudication and I think he is entitled to a lien upon it in respect of his costs. As regards the land certificate of Lot 3, it follows, from the view I have taken, that the Trustee is entitled to have this handed over to him by the bank. The Trustee is likewise entitled to the £600 purchase money of the land sold to Mr. Duke, which includes the £150 deposit now in the hands of Mr. O’Rorke, the auctioneer, but subject to the payment of Mr. Maloney’s costs in connection with that transactiona claim which Mr. Gill properly admits, seeing that the Trustee is adopting the sale. Mr. Maloney is also entitled, for what it is worth, to a lien on the original weekly tenancy agreement of the 6th December, 1939. I accept Mr. Maloney’s statement in his second affidavit that he did not become aware of the adjudication until July, 1941.
Whether my view on the main question in this case is right or wrong, the position can hardly be regarded as satisfactory. If I am wrong in that view, it means that an Irish bankrupt can defraud his creditors after his adjudication by disposing of his English land before the aid of the English Courts can be obtained, or even before the Irish creditors know of the existence of the English property. The creditors of an English bankrupt could similarly be defrauded in respect of land situate in Ireland. The view I have taken as to a vesting in the Trustee or Official Assignee, immediately on adjudication, of all the bankrupt’s land, even though the land is situate in the other country, would prevent the result in question.
On the other hand, if my view is right, a very great hardship may result to persons who purchase or take mortgages of land if, quite unknown to them, the party they deal with has been adjudicated a bankrupt on the opposite side of the Channel. In order to ensure against that every purchaser or mortgagee of land in Ireland would have to make inquiries in England to be certain that there had been no English bankruptcy. If there had been, even though as in Ex parte Rabbidge (1) it had not been advertised at the time, the purchaser or mortgagee might lose both his money and the land. A purchaser or mortgagee in England would have to make similar inquiry in Ireland. This task of inquiry would be a very irksome burden calculated to hamper and delay both purchases and mortgages. In fact, Scottish caution and foresight have provided against it north of the Tweed. Mr. Gill has called my attention to the Bankruptcy (Scotland) Act, 1913 (3 & 4 Geo. 5, c. 20), which, by s. 97, sub-s. 3, provides that as regards land situate in England or Ireland, the Scottish sequestration shall be registered in the Chief Court of bankruptcy for the country where the land is situated, “to the intent that all persons concerned may have the same means of ascertaining whether any person has been adjudicated a bankrupt according to the law of Scotland” as they have for ascertaining whether he has been adjudged bankrupt in their own country. If my decision in this matter is upheld, it would surely be desirable that our Legislature should introduce a short amending section corresponding to the excellent provision in s. 97, sub-s, 3, of the Scottish Bankruptcy Act of 1913. Indeed, I imagine it can only have been by an oversight that the British Legislature during the last 28 years has failed to take a leaf out of Scotland’s book, and introduce into the English Bankruptcy law a provision similar to that enacted for Scotland as far back as 1913. It would seem to be badly wanted in Ireland also, if the view I have taken of the main point in this case proves to be correct.
On the other hand, if my view turns out to be erroneous, a curious result may follow. An Irish adjudication, by virtue of s. 268 of an Imperial statute, namely, the Irish Bankrupt and Insolvent Act, 1857, may still be effective to vest the Irish bankrupt’s land in our Official Assignee, immediately on the adjudication taking place; while, on the contrary, an English adjudication is ineffective to vest the English bankrupt’s Irish land in the English Trustee until a vesting order is made by the Irish Court, with the result that in the interval between the adjudication and the Irish vesting order the bankrupt can make away with his Irish land in fraud of the English creditors, and the English Trustee cannot recover it.
In accordance with this judgment the order of the High Court refused the bank’s application and directed the bank to hand over the land certificate in question to the Official Assignee.
From this decision the bank appealed to the Supreme Court (1). George V. Maloney was not represented at the hearing of the appeal.
Maurice Walker K.C. and Arthur Newitt for the appellant:
The Bankruptcy Act, 1914, never had the effect of vesting Irish land in the Trustee in Bankruptcy on an adjudication in England. Ireland is excluded from the operation of the Act by s. 169, “except so far as is expressly provided”; and although s. 167 defines “property” as including”land and every description of property, whether real or personal and whether situate in England or elsewhere,”the word “elsewhere” could not be construed as an express provision extending the Act to Ireland. Black J. was under a misapprehension in stating in his judgment that this contention was waived by counsel on behalf of the bank at the hearing.
Alternatively, if s. 18, sub-s. 1, of the Act ever applied to Ireland, the vesting contemplated was of a different nature, or was effected in a different way, from the vesting of English land. Something further was required to make the vesting under s. 18, sub-s. 1, effective in Ireland, namely, the making of an order in aid by the Court having bankruptcy jurisdiction in Ireland, as provided for by s. 122 of the Act of 1914 and by s. 71 of the Bankruptcy (Ir.) Amendment Act, 1872 (1). This fact is recognised in the three Irish cases dealing with this question. In In re Bolton (2), dealing with a Colonial bankruptcy, Dodd J. recognised the necessity for a vesting order, which, he said, should be a separate document for conveyancing purposes. In In re Corballis (3) Kennedy C.J. expressed the view (at p. 271) that “the land in question has not become vested legally merely by the effect and operation of the English vesting declaration, but . . . it is within the competence of the Irish Court exercising bankruptcy jurisdiction to make that vesting declaration effective, if asked to do so.” Johnston J. in In re Bullen (4) made it clear (at p. 85) that, in his view, the vesting on the adjudication in England “is of no force or effect in the Irish Free State unless and until the intervention of” the Court having jurisdiction in bankruptcy in Ireland “is sought and granted”; he then declared his intention of making an order on the lines settled by Dodd J. in In re Bolton (2). The main purpose of the order in aid provided for by s. 122 of the Act of 1914 is to give effect to, or complete, the vesting provisions of the Act in relation to land of the bankrupt situate in Scotland or Ireland. It is obvious that the word “vest” in s. 18, sub-s. 1, must have different meanings in relation to land in England and to land in foreign countries. In the latter case it can mean no more than to impose an obligation on the bankrupt to execute such assurances as may be necessary to transfer the property to the Trustee; see In re Corballis (3)perKennedy C.J. at p. 270. In the case of land in Scotland or Ireland, however, an alternative method of securing the transfer of the property to the Trustee is provided, namely, by an order in aid to be made by the Scottish or Irish Courts.
Even if this view of the meaning of s. 18, sub-s. 1, be incorrect and the original effect of that sub-section was to vest, in the fullest meaning of the word, Irish land in the Trustee on adjudication, this is no longer the case. Art. 73 of the Constitution of 1922 continued in force the existing laws, “subject to this Constitution and to the extent to which they are not inconsistent therewith.” A law purporting to empower the Courts of another State, by their order, to transfer Irish land to one of their officials, is inconsistent with that Constitution and with the sovereign status of this country; see the observations of Kennedy C.J. in In re Corballis (1).
[SULLIVAN C.J. referred to The State (Dowling) v.Kingston (No. 2) (2).]
Neither that case nor The State (Kennedy) v. Little (3)dealt with the question of realty in Ireland being alienated by the Courts of another State. Sect. 18, sub-s. 1, of the Act of 1914, as interpreted by Black J. in his judgment, is within the exception referred to by O’Byrne J. in The State (Kennedy) v. Little (4): it is “in principle inconsistent with the Constitution.”
Whatever may be the position as to unregistered land, recognition of the Trustee’s title in this case as having priority to the bank’s charge would be contrary to the whole policy and intention of the Local Registration of Title (Ir.) Act, 1891. When the land certificate was deposited with the bank, Hugh Reilly was registered as owner of these lands and the bank was entitled to accept this entry on the folio as correct: see s. 34, sub-s. 1, of the Act of 1891. The Trustee is a transferee otherwise than for valuable consideration and, by virtue of s. 36, sub-s. 1, of the Act, his title is subject to all unregistered rights affecting the land at the date of such transfer. From the provisions of r. 82 of the Land Registration Rules, 1937 (Stat. R. & Or., 1937, No. 264) (5) it appears that
the title of the Trustee could not be registered until the order in aid was made, no provision having been made for the registration of title under a foreign bankruptcy. This bears out the bank’s contention that no effective vesting takes place until the making of the order in aid. In the case of an Irish bankruptcy, notice of the petition must be given to the registering authority and entered on the register; bona fide transactions carried out before entry of such notice are expressly protected: see s. 76, sub-ss. 1 and 2 of the Act of 1891 (1). It is most anomalous if the Trustee under an English adjudication is in a better position with regard to registered land in Ireland, than the Official Assignee would be under an adjudication in this country; yet this appears to be the effect of the decision of Black J. The same principles would seem to be applicable even if the English adjudication had taken place several years before any order in aid was made in this country; all intermediate dealings with the land, even by bona fidepurchasers without notice, would be void as against the Trustee in Bankruptcy.
SULLIVAN C.J. :
1 July
The material facts in this case can be stated very shortly. Hugh Reilly, the bankrupt in this matter, was adjudicated bankrupt in the County Court of Newcastle-on-Tyne on the 17th September, 1940. At that time he was the owner of three lots of land in Eire, one of which comprised part of the lands of Aughavore comprised in Folio 13719 of the Land Registry of County Leitrim, of which he was registered as owner under the Local Registration of Title (Ir.) Act, 1891. On the 30th December, 1940, he lodged the original Land Certificate in respect of those lands in the Ulster Bank at Arva, County Cavan, as security for his overdraft. The bank had at that time no notice of the adjudication in bankruptcy. On the 5th June, 1941, the bankrupt agreed to sell the lands to John H. Duke for £600, of which £150 was paid as a deposit and the balance was payable on the completion of the sale on the 1st December, 1941. On the 14th June, 1941, the County Court of Newcastle-on-Tyne issued a request to the High Court of Justice in Eire in Bankruptcy to act in its aid in accordance with the provisions of s. 122 of the Bankruptcy Act, 1914; and on the 27th June, 1941, Black J., sitting in Bankruptcy, on the application of counsel on behalf of William Sinclair Martin, as the Trustee of the property of the bankrupt, made an order in the following terms:”The Court recognising the appointment of the said William Sinclair Martin as the Trustee of the property of the said bankrupt, wherever situate, doth declare that all the property of the bankrupt both real, chattel real, and personal, and whether of absolute, life, or reversionary interest which is within the area of Eire is vested in the said William Sinclair Martin as such Trustee, without prejudice as regards chattels real to the rights of the said Trustee of disclaimer thereof; and it is further ordered that the Court and the officers thereof including the Official Assignee do act in aid of and be auxiliary to the Newcastle-on-Tyne County Court in this matter.”
On the 7th July, 1941, Mr. James J. Doyle, the Official Assignee, wrote to the Manager of the Ulster Bank at Arva informing him of the adjudication in bankruptcy and of the order made by Black J., and claiming that the proceeds of the sale of the lands should be disposed of by the Court in the bankruptcy matter.
This claim by the Official Assignee was met by a claim on behalf of the bank that, as they held the Land Certificate as security for the bankrupt’s indebtedness, the proceeds of the sale should be applied in the first instance in discharge of the debt due to them.
On the 14th October, 1941, the Trustee in Bankruptcy was registered in the Land Registry as owner of the lands in pursuance of s. 76 of the Local Registration of Title (Ir.) Act, 1891.
As the parties were unable to agree as to their respective rights they had recourse to the Court; a notice of motion was isued on behalf of the bank claiming:(1) a declaration that the amount due by the bankrupt to them was well charged on his interest in the lands, and (2) an order confirming the sale of the lands to James Duke; and a cross notice of motion was issued on behalf of the Trustee in Bankruptcy and the Official Assignee claiming an order:(1) confirming the sale to James Duke and directing the auctioneer to pay the deposit and the balance of the purchase money, when paid, to the Official Assignee; (2) directing the Ulster Bank to hand over to the Official Assignee the Land Certificate, and declaring that the deposit of that Certificate with the bank was fraudulent and void as against the Trustee.
These motions were heard by Black J., and on the 12th December, 1941, he gave judgment dismissing the application made on behalf of the bank and granting the application made by the Trustee in Bankruptcy and the Official Assignee.
From that judgment and the orders made pursuant thereto the bank has taken this appeal.
The Trustee in Bankruptcy claims that the lands became vested in him:(1) by virtue of s. 18, sub-s. 1, and s. 167 of the Bankruptcy Act, 1914, as continued in force by Art. 73 of the Constitution of the Irish Free State and subsequently by Art. 50 of the Constitution of Éire; or, in the alternative, (2) by virtue of the order made by Black J. on the 27th June, 1941.
On behalf of the bank it is contended:(1) that the said sections of the Bankruptcy Act, 1914, never at any time operated to vest Irish land in the Trustee in Bankruptcy in
England; alternatively, (2) if the sections had that operation prior to the Constitution of 1922 they were inconsistent with that Constitution, and, therefore, were not continued in force by Art. 73; (3) that the vesting of Irish land in a Trustee in Bankruptcy in England was effected by an order in aid made by the Irish Court of Bankruptcy; (4) that in this case the Land Certificate was deposited with the bank prior to the 27th June, 1941, when the order in aid was made, and, as the bank had then no notice of the adjudication in bankruptcy, it effected a good equitable mortgage.
The claim of the Trustee is based on an adjudication of Bankruptcy under the Bankruptcy Act, 1914, pronounced in the year 1940, and the lands to which he claims to be entitled by virtue of that adjudication were then, and are now, situate within the area comprised in Éire; but, in view of the arguments that were addressed to this Court, it is necessary in the first instance to determine whether, prior to the Constitution of 1922, such an adjudication would have operated to vest in the Trustee the real and personal property of the bankrupt situate in Ireland.
The answer to that question depends upon the interpretation of s. 18, sub-s. 1, s. 167, and s. 169, sub-s. 2, of that Act. Sect. 18, sub-s. 1, provides that upon an adjudication of bankruptcy “the property of the bankrupt shall become divisible among his creditors and shall vest in a Trustee”; sect. 167 provides that in the Act, unless the context otherwise requires, “‘property’ includes money, goods, things in action, land, and every description of property whether real or personal and whether situate in England or elsewhere . . .”; sect. 169, sub-s. 2, provides:”This Act shall not, except so far as is expressly provided, extend to Scotland or Ireland.” As Ireland is not mentioned in s. 167 it is contended on behalf of the bank that the property that is vested in the Trustee by virtue of s. 18, sub-s. 1, does not include either real or personal property situate in Ireland.
A provision in terms similar to those contained in s. 167 is contained in s. 135 of the English Bankruptcy Act, 1825 (6 Geo. 4, c. 16), which provided that the Act should not extend to either Scotland or Ireland except where the same were expressly mentioned. Sect. 63 of that Act provided that the Commissioners should assign to the Assignees for the benefit of the creditors of the bankrupt all the present and future personal estate of such bankrupt wherever the same might be found or known . . . and all debts due or to be due to the bankrupt wheresoever the same might be found or known. Sect. 64 provided that the Commissioners should convey by deed to the Assignees for the benefit of the creditors all lands in England, Scotland, Ireland or in any of the Dominions, Plantations or Colonies belonging to His Majesty to which the bankrupt was entitled.
The effect of these sections was considered by the Irish Court of King’s Bench, Bushe C.J., Burton and Jebb JJ., in Tronson v. Callan (1) and it was held that debts due in Ireland to a person found bankrupt in England vested by virtue of s. 63 in the Assignees under the English Commission notwithstanding the provisions of s. 135. In delivering the unanimous judgment of the Court Bushe C.J. said (at p. 119): “But the meaning of this clause [s. 135] appears to us to be just this, and no more, that the subsisting code of the Irish bankrupt law shall not be altered or affected by this Act unless where it is declared in express terms so to be. . . . It is admitted that the real property in Ireland passes to the Assignee of the bankrupt in England; and so also with respect to chattels; and the messenger is empowered to take possession of them; and to break open houses, etc., in Ireland for this purpose; but it is said that debts in Ireland are not included in the Act, although the words of the 63rd section are as extensive as these: ‘and the Commissioners shall also assign, as aforesaid, all debts due or to be due to the bankrupt wheresoever the same may be found or known.’ It seems quite unreasonable to give these words a construction, the operation of which would be to defeat a principal object of the Act.” In Rogers v. Love (2) the decision of the Irish Court of Exchequer was to the same effect.
In Ferguson v. Spencer (3) the Court of Queen’s Bench in England held that under the Irish Bankruptcy Act (6 & 7 Wm. 4, c. 14),ss. 74 and 161 of which Act correspond, respectively, with ss. 63 and 135 of the English Bankruptcy Act of 1825debts and personal estate in England vested in the Assignees under an Irish Commission. Tindal C.J., in delivering the judgment of the Court said (at p. 1000): “We cannot but think that the only object of that section [s. 161] is to prevent the possibility of the bankrupt law of England from clashing and interfering with that of Ireland or Scotland, in cases where they might come in competition together. In fact, the restrictive clause appears to have been intended to operate in those cases only where the liability of the subject-matter requires the introduction of express words to bring it within the operation of the Act, but not to extend to those cases where from their very nature the subject-matter of the Act, like debts and contracts quae sunt nullius locicannot need express words to bring them within the operation of the Act. But whatever may have been the effect of former decisions, we think the point now under consideration has been decided by two cases in the Irish Courts Tronson v. Callan (1) in the Court of King’s Bench in Ireland and Rogers v. Love (2) in the Irish Court of Exchequer.” The learned Chief Justice then quotes the passage from the judgment of Bushe C.J. which I have read.
In Reilly v. Jacob (3) Blackburne M.R. in the course of his judgment said (at p. 202): “The case of Tronsonv. Callan (1), which has been cited, was one where the provisions of the two codesthe English and the Irish came in conflict; and in order to prevent their clashing, certain provisions in the English Act were held to apply to property of the insolvent in Ireland, notwithstanding a general restriction of its operation similar to that in the present statute [3 & 4 Geo. 4, c. 124]. Now, so far from dissenting from the judgment in that case, I admit its principle and make it the foundation of my judgment.”In Ellis v. M’Henry (4) the decision in Ferguson v.Spencer (5) was approved by the Court of Common Pleas in England (Bovill C.J., Willes, Keating and Brett JJ.).
The Irish Bankrupt and Insolvent Act, 1857, s. 410, provides that the Act shall not extend to either England or Scotland, except where the same are expressly mentioned, and the Bankruptcy (Ireland) Amendment Act, 1872, which is to be read with the Act of 1857 as one Act, provides in s. 2 that the Act shall not, except in so far as same is expressly provided, apply to England or Scotland. Sect. 267 of the former Act provides that when any person shall be adjudged a bankrupt all the personal estate and effects of such bankrupt . . . wheresoever the same may be . . . and all debts due or to be due to him, shall become absolutely vested in the Assignees for the time being for the benefit of the creditors; and s. 268 provides that all lands, tenements, and hereditaments (except copy or customary hold), wheresoever the same may be situate, to which such bankrupt is entitled shall become absolutely vested in the Assignees for the time being for the benefit of the creditors.
In In re Nelson (1) the Court of Appeal in England had to consider whether a certificate, granted by the Court of Bankruptcy in Ireland to an arranging debtor under s. 64 of the Act of 1872, discharged him from debt incurred in England and sued for in an English Court. It was held that it did not, on the ground that there was an essential difference between a bankruptcy and a composition arrangement, inasmuch as, in the words of Eve J. (at p. 478): “in the one, all the property of the debtor of every kind and wherever situate is taken from him for payment of his debts, and creditors wherever resident may prove their debts . . . and in the other, no such consequences necessarily follow.” In the judgments of the learned Judges who constituted the Court (Swinfen Eady, Bankes and Eve L.JJ.) it was assumed that an adjudication of bankruptcy in the Irish Court would have divested the bankrupt of his property in England, notwithstanding the provision that the Acts of 1857 and 1872, save as expressly provided, should not extend to England. In his Judgment Banks L.J. says (at p. 473): “There is no question that the two Acts of Parliament which have to be interpreted are Imperial statutes. Both expressly provide that, except in so far as the same is expressly provided, they shall not apply to England or Scotland. As was pointed out in the case of Ferguson v. Spencer (2) by Tindal C.J. this provision has no material bearing upon the question which we have to decide, as both the statutes in question contain plenty of material evidence that they are intended to apply to the assets and property in England of debtors proceeded against in Ireland under the provisions of these statutes.”
It would seem, therefore, that the question whether”property” as defined in s. 167 of the Bankruptcy Act, 1914, includes property situate in Ireland is not, notwithstanding s. 169, sub-s. 2, concluded by the fact that Ireland is not mentioned in s. 167, and that, in order to determine that question, it is necessary to consider whether an intention that “property” should include property in Ireland is expressed in the Act. I am of opinion that such an intention is expressed. Sect. 49 provides that any person acting under warrant of the Court “may seize any part of the property of a bankrupt . . . in the custody or possession of the bankrupt . . . or of any other person, and with a view to such seizure may break open any house . . . where the bankrupt is supposed to be . . . or any building or receptacle of the bankrupt . . . where any of his property is supposed to be . . .” Sect. 123 provides that any warrant of a Court having jurisdiction in Bankruptcy in England may be enforced in Ireland in the same manner as a warrant issued by a Justice of the Peace against a person for an indictable offence may be executed there. The effect of these sections when read together is that property in Ireland may be seized under the warrant of an English Court of Bankruptcy, a proceeding which would be justifiable only on the ground that such property had vested in the Trustee in England.
An intention that an adjudication of bankruptcy under the Bankruptcy Act, 1914, should operate to vest in the Trustee property situate in Ireland is consistent with the definition of property in s. 167 of that Act, as the word”elsewhere” would prima facie include Ireland; it is consistent with the recognised policy of the Bankruptcy Laws of England and of Ireland which is, and I think always has been, that the bankrupt’s property of every kind and wherever situate should become the property of the Assignees for the benefit of the creditors: Armani v.Castrique (1), per Pollock C.B., at p. 447; New Zealand Loan and Mercantile Agency Co. v. Morrison (2), per Lord Davey at p. 358; and it is recognised and given effect to by ss. 121, 122 and 123 of the Act. Sect. 121 provides that an order made by a Court having jurisdiction in bankruptcy in England shall be enforced in Scotland and Ireland in the Courts having jurisdiction in bankruptcy there “in the same manner in all respects as if the order had been made by the Court hereby required to enforce it,” and that an order made by a Court having such jurisdiction in Scotland shall be similarly enforced by the Courts in England and Ireland, and an order by a Court having such jurisdiction in Ireland shall be similarly enforced by the Courts in England and Scotland. Sect. 122 provides that the Courts having jurisdiction in bankruptcy in England, Scotland and Ireland shall act in aid of and be auxiliary to each other in all matters of bankruptcy, and that an order of the Court seeking aid with a request to another of the said Courts to enforce it shall be deemed sufficient to enable the latter Court to exercise in regard to the matters directed by the order, such jurisdiction as either the Court which made the request or the Court to which the request is made, could exercise in regard to similar matters within their respective jurisdictions. It is unnecessary to repeat the provisions of s. 123, which I have stated. The object and intent of these sectionsas of the corresponding sections in the earlier English Bankruptcy Acts and in the Irish Bankruptcy Act, 1872was, in my opinion, to ensure that a title which had been acquired to property by virtue of an adjudication of bankruptcy in one country should be enforced by the Courts of the other countries in which any of such property was situate. The request for aid contemplated by s. 122 is a request that an existing right or title be recognised and enforced, not that a new title be granted by the Courts to which the request is made.
I am therefore of opinion that prior to the Constitution of 1922 an adjudication of bankruptcy under the Bankruptcy Act, 1914, operated to vest in the Trustee the property of the bankrupt situate in Ireland, including “land and every description of property whether real or personal” (s. 167). It is no doubt a well recognised general principle that real estate is exclusively subject to the laws of the country within whose territory it is situate, but the Parliament that enacted that Act was the Parliament of the United Kingdom having power to legislate for Ireland, and there is no reason why an adjudication of bankruptcy under that Act should not have operated to vest in the Assignee land situate in Ireland, subject to any requirements that might be prescribed by the laws of Ireland as to the conditions necessary to effect such a transfer: Callender, Sykes & Co. v. Colonial Secretary of Lagos and Davies (1).
If such was the law in force in Ireland at the date when the Irish Free State Constitution came into operation the question arises:Did it continue in force after that date? Art. 73 of that Constitution provided “Subject to this Constitution and to the extent to which they are not inconsistent therewith, the laws in force in the Irish Free State at the date of the coming into force of this Constitution shall continue to be of full force and effect until the same or any of them shall have been repealed or amended by enactment of the Oireachtas.” There is no question in this case of any repeal or amendment of the law by enactment of the Oireachtas, and accordingly the only question is:Is that law inconsistent with that Constitution? If it is, then the Oireachtas would have had no jurisdiction to enact a law providing that upon an adjudication of bankruptcy in England the bankrupt’s property in the Irish Free State should vest in the Trustee. I can see no reason to justify such a limitation upon the legislative powers conferred upon the Oireachtas by that Constitution. The desirability of such legislation would be a matter to be determined by the Oireachtas alone, but the jurisdiction to enact it would, in my opinion, be unquestionable.
I have come to that conclusion with considerable hesitation as Chief Justice Kennedy and Johnston J. took a different view. In the opinion of Kennedy C.J. expressed in In re Corballis (1), the effect of the English enactments vesting a bankrupt’s property in the Trustee in England is not that the property situate elsewhere than in England vests automatically in the Trustee, but that the bankrupt, if in England, may be subjected to such coercive processes as are there available to compel him to transfer his lands situate outside England to the Trustee, and that if the English Court is not able by such processes to procure a legal vesting it may then fall back upon the jurisdiction of the Court where the land is situate and ask for its aid. It seemed to him that “it would be wholly inconsistent with the constitutional status of the Saorstat to hold that the order of an English Court could automatically transfer land situate in the Saorstát from a citizen of the Saorstát to an official of the English Court.”And accordingly he declined to hold that land in Ireland could be effectively vested in the English Trustee without an order of the Irish Court in bankruptcy. A similar view was expressed by Johnston J. in In re Bullen (2). It is not suggested in the judgments in either of these cases that the English enactments providing that the property of the bankrupt shall vest in the Trustee do not apply to property in the Irish Free State as well as to property in England, or that in its application to property in England the word “vest” does not bear its ordinary meaning, i.e.,to give the property in. I am unable to give to the word”vest” when used in reference to property in the Irish Free State the effect attributed to it by Kennedy C.J., quite irrespective of the consideration that by so doing I would be giving to it a different effect from that which it has when it applies to property in England.
I am, therefore, of opinion that s. 18, sub-s. 1, of the Bankruptcy Act, 1914, operated to vest in the English Trustee in bankruptcy the bankrupt’s property situate in the Irish Free State subject, so far as such property consisted of land, to any requirements prescribed by the law of the Irish Free State as to the transfer of such land.
If that opinion is correct it is admitted that the subsection now operates to vest in the Trustee the bankrupt’s property in Eire, subject to the same qualification.
In the present case when Hugh Reilly was adjudicated bankrupt, on the 17th September, 1940, his interest in the lands of Aughavore vested in the English Trustee. As the bankrupt’s title to these lands was registered under the Local Registration of Title (Ir.) Act, 1891, the Trustee was therefore entitled to be registered as owner of the lands in place of the bankrupt (Local Registration of Title (Ir.) Act, 1891, s. 76). He was not so registered and therefore he had not the legal estate in the lands on the 30th December, 1940, when the bankrupt deposited the Land Certificate with the Ulster Bank as security for his indebtedness, but he had an equity against the bankrupt to be registered as owner in his place. The deposit of the Land Certificate with the bank for the purpose of creating a lien on the lands had the same effect as the deposit of the title deeds of lands had prior to the Local Registration of Title (Ir.) Act (s. 81, sub-s. 5). The lien so created is an equitable charge only, and is subject to all the equities that affected the registered owner at the time the deposit was made: Tench v. Molyneux (1); Shropshire Union Railway v. Reg. (2). As between the pre-existing equity of the Trustee and the equitable charge of the Ulster Bank the former must, in my opinion, prevail in the absence of any circumstances to defeat it. I can see no such circumstances in the present case.
I am, therefore, of opinion that the order of Black J. was right, and that this appeal should be dismissed.
MURNAGHAN J. :
Hugh Reilly, the person named in this matter, being minded to purchase a farm of land, borrowed portion of the purchase money from the Ulster Bank, Ltd., and on the 1st August, 1940, he became registered as full owner on Folio No. 13719, County Leitrim, of the land so purchased by him, being described on the Folio as of Aughavore, Carrigallen, County Leitrim, farmer.
On the 30th December, 1940, he deposited the Land Certificate with the bank, as security for advances made to him, and the bank now claim to have a security upon the registered lands for the sum of £270 18s. 0d. with interest. It now transpires, but as Black J. found, without any knowledge on the part of the bank when the bank received the Land Certificate, that on the 17th September, 1940, Hugh Reilly, who had been dealing in cattle in England, had been adjudicated a bankrupt in England in a local Bankruptcy Court.
The substantial question which has been argued is whether the Trustee in the English bankruptcy has a title to the registered land free from the right of the bank which would otherwise arise from a deposit of the Land Certificate.
The claim of the Trustee in Bankruptcy is founded upon the effect which he contends follows from the vesting provisions of the Bankruptcy Act, 1914.
The Court of Bankruptcy and Insolvency was set up in Ireland in the year 1857 by statute (20 & 21 Vict. c. 60), and, at a somewhat earlier date, Courts of Bankruptcy had been created in England. There is, I believe, no decision since the setting up of these Courts which directly decides that an adjudication of bankruptcy in England or Ireland had the effect of vesting land situate in the other country until Black J. gave the decision now the subject-matter of this appeal. Indeed, after the Irish Free State had been set up, Kennedy C.J. decided in In re Corballis (1) that an adjudication of bankruptcy in England did not vest lands situate in the Irish Free State in the English Trustee, and the same opinion was expressed by Johnston J. in In re Bullen (2). Black J., however, thought it right to decide the point according to the view which he himself formed. The whole matter is of course open in this Court and has been argued by counsel with great care and learning.
In this case the bank dealt with a full owner of land registered in the Land Registry free of equities, but the decision of Black J. is that the bank has no title to an equitable deposit taken bona fide and without notice, solely by reason of the fact that the registered owner had, some time previously, been made a bankrupt in an English local Court of Bankruptcy.
It is provided by s. 18 of the Bankruptcy Act, 1914, that notice of every order adjudging a debtor a bankrupt, stating the name, address and description of the bankrupt, the date of the adjudication and the Court by which the adjudication is made shall be gazetted and advertised in a local paper in the prescribed manner.
Few people would, I think, have felt it necessary in this countrycertainly since the decision in In re Corballis (1)to have searched in all the local papers in England or in the files of the London Gazette to ascertain whether an otherwise perfect title was bad by reason of an adjudication of bankruptcy in England. If such really is the law it makes dealing with land in Eire very difficult. If, however, the Trustee in Bankruptcy has by statute a title to the land situate in Eire no argument founded upon inconvenience can prevail against the statutory title.
In the discussion of cases of this kind, there are two matters which must be kept clearly distinguished. One deals with the rules of international law founded upon the comity of nations, by which foreign countries give varying degrees of recognition to orders in bankruptcy made by Courts of another country; the other is conversant with legislation passed by a Legislature, such as that of the United Kingdom, which has power, if it so wishes, to bind by enactment one or more countries subject to its jurisdiction. It is a question of interpretation whether statutes passed by such a Legislature are intended to apply to one or more of the countries subject to the Legislature. After the union of the United Kingdom of Great Britain and of the Kingdom of Ireland, Ireland retained a separate Judicature and a distinct code of laws, but the Parliament of the United Kingdom was competent to bind by its enactments either the whole United Kingdom of Great Britain and Ireland or any part or parts thereof. Thus, in an early statute dealing with adjudications of bankruptcy in England6 Geo. 4, c. 16it was expressly enacted that upon adjudication in England the Commissioners of Bankruptcy should convey or assign the lands of the debtor situate in Ireland.
As the claim of the Trustee in Bankruptcy is based upon the provisions of the Bankruptcy Act, 1914a statute made by the Imperial Parliament at a time when that Parliament had authority to bind the territory now known as EireI shall first consider the effect of that Act on the point at issue at the date of the passing of the Act. It is another question whether, if this Act had the effect contended for, any alteration was brought about by the setting up of the Irish Free State.
Sect. 18 of the Bankruptcy Act, 1914, vests upon adjudication the property of the bankrupt in the Trustee and, by force of the definition of property in s. 167, this word includes land “in England or elsewhere.” Avoiding all difficulties as to the application of the Act for the moment, so far as concerns the persons upon whom the Legislature imposes its commands their property in land in England or elsewhere vests in the Trustee. But it does not follow that all property vests in the same way. It is a principle of international law that land is subject to thelex loci rei sitae. Accordingly, if a bankrupt in England owns land situate in the United States of America this property vests under the section, but in a different sense from land in England. The legal title to the land in England passes to the Trustee by force of the statute made by the Legislature which governs England. The legal title to the land in the United States of America does not pass to the Trustee; but the command of the statute binds the bankrupt to do all acts necessary to vest in the Trustee a title good according to the law of the United States of America. See In re G. W. Harris (1), from which it will be seen that the practice is for the Trustee to move the Court to order the bankrupt to execute the necessary conveyance, and if the bankrupt refuses to obey the order he may be committed.
The vesting in s. 18 may therefore have a different effect in reference to land in foreign countries as compared with its effect upon land in England. The Trustee in Bankruptcy contends in the present case that, in reference to land in Ireland, the vesting effected was the complete transfer of the bankrupt’s interest by statute, although it is admitted that any special requirements of the Local Registration of Title (Ir.) Act, 1891, must be complied with. If the Trustee has under the section merely a right to call upon the bankrupt to execute a transfer of land in Ireland, rights in respect to land in Ireland, acquired before a transfer is executed in favour of the Trustee, may have a valid priority. Now, a statutory vesting of the legal title as claimed by the Trustee is somewhat different from the method of conveyance employed under the earlier statutes,e.g., 6 Geo. 4, c. 16, under which the Commissioners of bankrupts were authorised to execute a conveyance of the bankrupt’s lands situate in Ireland; but if it was the intention of the Legislature it was quite competent for the Legislature to effect such a vesting.
It has been decided by a case of high authority, Callender, Sykes & Co. v. Colonial Secretary of Lagos and Davies (2), a decision of the Privy Council, that the English Bankruptcy Act of 1869 had the effect of vesting land in Lagos, a part of the British Dominions. The statute being an Imperial statute, could vest in the Trustee all immoveable property situate in the British Dominions, and, interpreting the words of the Act, Lord Hobhouse in the advice read by him stated (at p. 467):”and their Lordships hold that there is no good reason why the literal construction of the words should be cut down so as to make them inapplicable to a Colony.” In arriving at this conclusion Lord Hobhouse relied upon the very comprehensive words of the corresponding section (s. 268) of the Irish Bankruptcy and Insolvent Act, 1857, which enacts that upon adjudication “all lands, tenements and hereditaments (except copy or customary hold), wheresoever the same may be situate, to which any such bankrupt is entitled . . . shall become absolutely vested in the Assignees for the time being for the benefit of the creditors of such bankrupt.”
The decision in the case just referred to would be an apposite rule of interpretation for the effect of very general words vesting land situate in Ireland or England were it not for a distinction which did not exist in the case before the Privy Council. Adverting to the fact that the Imperial Parliament had in the year 1914 complete authority to direct a statutory vesting of land in Ireland, and to the fact that in s. 18 of the Bankruptcy Act, 1914, the vesting directed is of land situate in England or elsewhere, we have nevertheless to interpret the Act of 1914 in the light of s. 169 of that Act, which says:”This Act shall not, except so far as is expressly provided, extend to Scotland or Ireland.” Accordingly neither s. 18 of the Act nor the definition section (s. 167) incorporated as defining”property” extends at all to Ireland unless the provisions of s. 169 are satisfied. The natural meaning of s. 169 seems to me to be that only such parts of the Act extended to Ireland as are extended by express provision. Express provision can be made by saying in any section:”This section shall extend to Ireland”; or express provision can be made by naming Ireland in a section. An instance of this latter sort will be found in s. 122 which reads:”The High Court, the County Courts, the Courts having jurisdiction in bankruptcy in . . . Ireland shall . . . act in aid.” Corresponding clauses expressed in words of similar import are found in the Irish Court of Bankruptcy and Insolvency Act, 1857, s. 410 of which enacts:”This Act shall not extend to either England or Scotland except where the same are expressly mentioned.” In the Bankruptcy (Ireland) Amendment Act, 1872, which is to be read with the Act of 1857 as one Act, a section occurs not in any way substantially different from s. 169 of the Bankruptcy Act, 1914. This section (s. 2) in the Act of 1872 reads:”This Act shall not, except in so far as same is expressly provided, apply to England or Scotland.”
The Trustee in Bankruptcy seeks first to narrow the literal meaning of such clauses by contending that such clauses have a limited or conventional meaning, and, secondly, he contends that if the natural meaning is given to s. 169 of the Bankruptcy Act, 1914, express provision is in fact made that s. 18 shall apply to Ireland.
In support of an established conventional meaning by which such a clause has a limited scope, certain early decisions were cited. Tronson v. Callan (1) was a decision of Bushe C.J., given in 1827. The action was for debt, and objection was taken that 6 Geo. 4, c, 16, s. 63, did not authorise the Commissioners of bankrupts in England to assign a debt in Ireland due to a trader becoming bankrupt in England: vide the second objection at p. 115 of the report. This particular statute enabled the Commissioners to convey and assign land belonging to the bankrupt situate in Ireland, and also to assign the chattels of the bankrupt found in Ireland. The 63rd section enabled the Commissioners to assign “all debts due or to be due to the bankrupt wheresoever the same may be found or known,”but s. 135 provided “that this Act shall not extend to Scotland or Ireland except where the same are expressly mentioned.” Bushe C.J. was influenced by the fact that lands and chattels in Ireland might be assigned by the express provisions of the Act, and he did not see why the same course did not follow in respect of debts. It did not appear to him to be satisfactory to say that “wheresoever the same may be found or known” was an express mention of Ireland, and he gave the section (s. 135) a very artificial meaning. At p. 119 Bushe C.J. said:”But the meaning of this clause appears to us to be just this, and no more, that the subsisting code of the Irish bankrupt law shall not be altered or affected by this Act unless where it is declared in express terms so to be.” Tronson v. Callan (1)was followed in Rogers v. Love , reported in the note to Nevins v. Kieran (2). Reilly v. Jacob (3) was also cited and relied upon. The English Insolvent Act (1 & 2 Vict. c. 110) took away, in the circumstances of the case, the remedy of elegit and the Act contained a clause similar to that dealt with in Tronson v. Callan (1). It was sought to restrain in Ireland the statutory equivalent of elegit,which was, nevertheless, allowed to be put in force. The Master of the Rolls says (at p. 202):”But, further, the conflict here would be between a right under the English Act and one founded on the common law; and I am of opinion that, unless expressly affected or taken away by the English Act, the existing rights of judgment creditors at common law must prevail.” As I read this decision it does not confine the effect of an Act with a clause like that under consideration in the way suggested in Tronson v. Callan (1).
The actual decision in Tronson v. Callan (1) was approved in England by Tindal C.J. in Ferguson v. Spencer (2). It was held that the Assignees under an Irish Commission might maintain an action in England to recover a debt contracted with the bankrupt in England. Tronson v.Callan (1) and Ferguson v. Spencer (2) dealt with debts, and Tindal C.J. expressly marked the distinction which exists between debts and land. I do not find any current of authority which attributes a limited and non-natural meaning to clauses dealing with the non-application of statutes framed as are the clauses under consideration.
A much more authoritative case dealing with the construction of such a clause is In re Nelson (3), a decision of the Court of Appeal in England. In that case a debtor had presented a scheme of arrangement in Ireland in accordance with the statutes of 1857 and 1872 already mentioned, and had obtained a certificate of conformity, which, by s. 64 of the Act of 1872, operated to all intents and purposes as if it were a certificate of conformity under the Bankruptcy Acts. Such a certificate of conformity under the Bankruptcy Acts effected a release of all debts provable in bankruptcy. A creditor sued in England in respect of a debt contracted in England and he relied upon s. 410 of the Act of 1857 and s. 2 of the Act of 1872 as preventing the certificate from operating as a release of the debt in England. The members of the Court did undoubtedly make a distinction between the effect of a bankruptcy and of a scheme for arrangement, but in reference to these sections Swinfen Eady L.J. said (at p. 470):”It must be remembered that the Acts under consideration are not to apply to England or Scotland except so far as expressly provided. There is no express provision that a certificate in the Form in Schedule C which is not a certificate of conformity is to have the effect of such a certificate in England. The language of the statute is satisfied if it has that effect in Ireland.” Eve J. in the same case expresses himself much to the same effect (at p. 476):”The Irish Bankrupt and Insolvent Act, 1857 (20 & 21 Vict. c. 60) and the amending Act of 1872 do not extend to England or Scotland ‘except where the same are expressly mentioned,’ and as no express mention is made either of England or Scotland in s. 64 or in any of the sections of the 1857 Act providing for this particular mode of liquidation by arrangement, the operation of the whole procedure is prima facie limited to Ireland.”
Assuming that s. 169 of the Act of 1914 must be given its natural meaning, does the definition of the word “property”as including land “in England or elsewhere,” incorporated into s. 18, afford express provision that the section was intended to apply to Ireland, in the sense that it is an express provision that this section should apply? In the first place, without applying to Ireland in the sense of effecting a statutory transfer of the legal title to land in Ireland, scope can be given to the section as binding the bankrupt to do what is necessary to transfer the land in Ireland, in the same way as it vests land situate in foreign countries. In the second place, the word “property”occurs so frequently in the Act of 1914 that, if the definition can be resorted to as an express provision applying the Act to Ireland, the results will be very unexpected. The Irish Bankruptcy Acts contain provisions as to disclaimer of property. Is s. 54 of the Act of 1914, dealing with disclaimer of onerous property, to repeal these provisions in general, or is an English Trustee in Bankruptcy to have rights of disclaimer in Ireland different from those contained in the Irish code? In the third place, there is room at least for a presumption founded upon the analogy of thelex loci rei sitae that the statute was not intended to apply to land in Ireland. I also am of opinion that the established practice of declaring the same person bankrupt in England and in Ireland, and the existence of the statutory procedure of orders in aid support the view which I have taken, that the section does not vest land in Ireland in the full sense of the word. If the meaning now given to the English Bankruptcy Act is that it vests all the property of the bankrupt, including land, in the English Trustee, once there has been an adjudication in England there would be nothing left upon which a subsequent adjudication in Ireland could operate. Thus, the question agitated in In re Corballis (1) could not arise, viz., whether the Trustee in a prior English bankruptcy or the Official Assignees in a subsequent Irish bankruptcy should be paid the proceeds of the sale of land belonging to the bankrupt. There have been, in practice, I believe, many cases in which adjudications in Ireland have followed adjudications in England, and vice versa.
Nor, in my opinion, does this interpretation of the statutes leave the English Trustee in Bankruptcy without a speedy and efficient method of securing the proceeds of land in Ireland to which the bankrupt is entitled. Sect. 71 of the Bankruptcy (Ireland) Amendment Act, 1872, enacts:”The Court and the Courts having jurisdiction in bankruptcy in England and Scotland, and every British Court elsewhere having jurisdiction in bankruptcy or insolvency, and the officers of such Courts respectively, shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy, and an order of the Court seeking aid, together with a request to another of the said Courts, shall be deemed sufficient to enable the latter Court to exercise, in regard to the matters directed by such order, the like jurisdiction which the Court which made the request, as well as the Court to which the request is made, could exercise in regard to similar matters within their respective jurisdictions.” Sect. 122 of the Bankruptcy Act, 1914, begins:”The High Court, the County Courts, the Courts having jurisdiction in bankruptcy in Scotland and Ireland”and continues in precisely the same words as those found in s. 71 of the Act of 1872. In pursuance of these sections the English Trustee in Bankruptcy applied on the 27th June, 1941, and obtained an order from Black J., which, if it had been obtained prior to the deposit of the Land Certificate, would in my opinion have ousted the right of the bank.
In my opinion s. 18 of the Bankruptcy Act, 1914, never had the effect of vesting lands in Ireland in such a way as to deprive a bona fide holder of a charge, created before any order in aid was obtained by the English Trustee, of his rights acquired by such charge, as e.g., by a deposit of the Land Certificate.
In reference to In re Corballis (1), it seems to me that Kennedy C.J. was of opinion that, even if the Bankruptcy Act of 1914 did vest, in the full sense, lands in Ireland, since the Treaty and passing of the Constitution such vesting was no longer possible. In the view which I have taken I do not think it necessary to deal with this matter.
MEREDITH J. :
The essential facts, which raise the important and interesting questions involved in these proceedings are few.
The bankrupt was the registered owner of certain lands in Co. Leitrim and obtained an authorised overdraft on an undertaking to deposit the Land Certificate with the bank. The Certificate was duly deposited with the bank on the 30th December, 1940, but in the meantime, viz.,on the 17th September, 1940, the bankrupt had been adjudicated bankrupt in England, but an order in aid was not obtained in Ireland until the 27th June, 1941. The English Trustee in Bankruptcy registered his title as owner on the 14th October, 1941. The bank had no notice of the adjudication, and it is not disputed that, as far as they were concerned, the transaction was perfectly innocent; but the bankrupt was guilty of constructive fraud, though, as I shall show later on, not of actual fraud, that is, fraud in fact. The question then is whether the registered title of the English Trustee is subject to a charge created by the equitable deposit by the bankrupt of the land certificate with the bank.
Several preliminary questions were argued at length, and I shall deal with them before coming to the main question.
The first was whether the relevant sections of the English Bankruptcy Act of 1914 apply to this country; and this resolves itself into two questions, viz., whether they applied prior to the Treaty and Constitution, and, if so, whether they apply now, having regard to the provisions of the Constitution.
The material sections of the Act of 1914 are:ss. 18, 53, 121 to 123, 167 and 169. A good deal of time would have been spared at the hearing if we had not merely been referred to s. 18, sub-s. 1, but also at an earlier stage to s. 53, on the point of the vesting in the English Trustee. Sect. 18, sub-s. 1, is in itself quite indefinite and merely provides, in a general way, for the vesting on adjudication of the property in an unspecified and unidentified trustee. Until a particular trustee is named the provision is altogether incomplete and inchoate, and, therefore, s. 18 must necessarily be read with the section that specifies the trustee in whom the property is to vest. Sect. 53, sub-s. 1, provides:”Until a trustee is appointed, the official receiver shall be the trustee for the purposes of this Act, and, immediately on a debtor being adjudged bankrupt, the property of the bankrupt shall vest in the trustee.”Sub-s. 2 then provides:”On the appointment of a trustee, the property shall forthwith pass to and vest in the trustee appointed.”
The question, therefore, is not whether the indefinite s. 18, sub-s. 1, considered alone, had pre-Treaty application to Ireland, but is the much easier one of the application of the complex of provisions in ss. 18 and 53, which must all be read together and apply or not as a whole, one of the sub-sections of s. 53, to which I shall refer later, unquestionably applying to Ireland without it being necessary to rely solely on the definition of the word”property.” “Property” is defined in s. 167 and includes”every description of property, whether real or personal and whether situate in England or elsewhere”; and the first question is, whether this is an express reference to Ireland sufficient to satisfy s. 169, sub-s. 2, which provides:”This Act shall not, except so far as is expressly provided, extend to Scotland or Ireland.” A reference to things or persons is equally express whether it is by individual name or collectively. If a schoolmaster said:”None of you, children, are to leave this room until I return,” the order refers as expressly to each and every child in the room, as if each had been named individually. This denotation is very clearly expressed by Lord Blackburne in Metropolitan District Railway Co. v. Sharpe (1):”I do not think that because the words used in the Act are ‘expressly varied,’ it is essentially necessary that there should be express words saying, This particular section or provision shall not apply.” A reference is “express,” if from the immediate meaning of the terms of the reference what is referred to can be immediately identified. The word “elsewhere” means, according to the construction of the sentence, “in another place,” or “in any other place,” that is, anywhere else. It would, therefore, require a very clear context to justify a limitation of the word”elsewhere” which would exclude Ireland, and the precise limitation sought to be introduced should be clearly stated and submitted to criticism and justified, that is to say, there should be a coercive context supporting a precise alternative meaning. In the present case, before coming to the context, it is obvious on the least reflection that it would be impossible to assign any intelligible meaning to the words “or elsewhere” that would exclude Scotland or Ireland. Counsel for the bank did not tell us what meaning he proposed should be assigned, and, if he had attempted to do so, his argument would have been brought to an immediate standstill. But the context, so far from even suggesting non-application to Ireland tells in favour of the natural meaning of the words “or elsewhere.”There can be no doubt that sub-s. 4 of s. 53 is consequential and dependent upon sub-s. 2, which provides:”On the appointment of a trustee, the property shall forthwith pass to and vest in the trustee appointed.” Sub-s. 4 then provides:”The certificate of the appointment of a trustee shall, for all purposes of any law in force in any part of the British dominions requiring registration, enrolment or recording of conveyances or assignments of property, be deemed to be a conveyance or assignment of property, and may be registered, enrolled, and recorded accordingly.”This sub-section implements and presupposes a vesting under sub-s. 2, and, consequently, as it clearly extends to Ireland so also must sub-s. 2. Similarly, the order in aid provided for by s. 122 is clearly only an auxiliary section, which implements the vesting under s. 53, and, as s. 122 indisputably extends to Ireland, so also must s. 53, sub-s. 2. Similar considerations apply to the orders and warrants specified in ss. 121 and 123.
As to whether the relevant portions of the Act of 1914 are not now void as regards Eire as inconsistent with the provisions of our Constitution, it is obvious that in general the fact that a law taken over may be immediately repealed is irrelevant. If the law is inconsistent with the Constitution it is not taken over, and no question of repeal can arise. But while there may be laws not taken over because they would derogate from the status of Eire, where the question is one of status the position is peculiar, because the power of immediate repeal implies sovereign status. It is very convenient that certain reciprocal rights and powers should exist between specified authorities in different countries, and the recognition of such rights and powers has never been regarded as a derogation of status as they only exist by agreement and can be repealed immediately. Reciprocal recognition of adjudications in bankruptcy is an instance. If the Act of 1914 had contained a reciprocal power in the Irish Court of Bankruptcy to affect property in England, there can be no question as to the Act not being inconsistent with our Constitution. But the absence of such a reciprocal provision cannot affect the question since that is a question of policy for the Oireachtas, which can immediately repeal the law if reciprocal recognition is not accorded. Accordingly, in my opinion, the relevant provisions of the Act of 1914 were not inconsistent with the Constitution. I am, therefore, of opinion that the provisions of the Act of 1914 did vest Irish property in the English Trustee, but, of course, only subject to the law of the land. This means that those provisions did not vest the land in such a way that the unregistered title of the English Trustee would prejudice a bona fide registered assignee or an equitable chargeant deriving title from a registered owner; but that the English Trustee acquired a title, and that, in a sense, the lands vested in him, is apparent, as otherwise the Registrar of Title would have had nothing to register.
[1942]
1 I.R. In re Reilly, a Bankrupt
Meredith J. 461
Supreme Court
The next question that arises is whether the vesting took place immediately under the Act of 1914 or only on the making of the order in aid. Once it is clear that the Act applies to Ireland it is obvious that the word “vest” must have the same meaning in its application to Ireland that it has when applied to England. No order in aid has to be made in England to give the word “vest” its full and ordinary meaning. In Middlesex there is a register and the positions there and in Ireland are precisely analogous in all material respects. This in itself seems to me conclusive. But, furthermore, if an order in aid in Ireland is necessary to make the vesting under the Act of 1914 a vesting in the full meaning of the word, then there is no residuum of meaning left for the word “vest” in the Act. To say that the order is necessary to make the vesting effectual is idle when the meaning of the word “effectual,”as well as that of the word “vest,” is left in the air, and it is not shown in what way, relevant to the word “vest,”the order in aid does something that was not done by the sections of the Act of 1914. Besides, implementing by the provision of machinery in order that a vesting may have all the usual consequences of vesting does not qualify the meaning of the word “vest.” But, in truth, the order does not so much provide machinery, as oil existing machinery and set it in motion. In England, of course, the officials of all departments would at once recognise the English adjudication and the certificate of appointment of the Trustee, but in Ireland, in the case of an English bankruptcy, the matter would have to be gone into carefully. The order in aid gets rid of this delay. For these reasons I am of opinion that the vesting takes place under the Act of 1914 and that the order in aid has nothing to do with the vesting.
But fraud will vitiate any transaction, even in the case of the most positive provisions of a statute, and it was on this ground that Mr. Justice Black based his judgment. Equity will resort to its appropriate actio in personam to prevent the statute being used so as to effectuate a fraud. The leading case on this is McCormick v. Grogan (1) in which Lord Westbury said (at p. 97):”The Court of Equity has, from a very early period, decided that even an Act of Parliament shall not be used as an instrument of fraud; and if in the machinery of perpetrating a fraud an Act of Parliament intervenes, the Court of Equity, it is true, does not set aside the Act of Parliament, but it fastens upon the individual who gets a title under that Act, and imposes on him a personal obligation, because he applies the Act as an instrument for accomplishing a fraud.”This jurisdiction may even be exercised to the prejudice of a third person who is a purchaser for value without notice. In Forbes (Lord) v. Deniston (1) a lease of lands was neglected to be registered and was fraudulent and void under 6 Anne, c. 2. The lessor, taking advantage of this, granted a new lease to another person, who brought an ejectment and recovered. It was held that the original lessee was relievable in equity; for the statute, being made to prevent fraud, should never be used as a means to cover it.
As it is a Court of Equity whose intervention is sought, actual and constructive fraud stand, as a general rule, on the same footing, and the constructive fraud that would suffice to have a deed set aside is all that need be proved. Counsel on both sides and the learned trial Judge seem to have taken it for granted that this general rule applies to the present case. But is constructive fraud sufficient in the case of a registration statute? In Wormald v.Maitland (2) and in In re Allen’s Estate (3) it was held that it was. But in Chadwick v. Turner (4) Turner L.J. held (at p. 319) that the notice by which a registered deed is postponed “must be clear and distinct, and amounting in fact to fraud.” This view was adopted by the Court of Chancery Appeal in Ireland in Agra Bank v. Barry (5).Christian L.J. in the course of his judgment said (at p. 163) in reference to Wormald v. Maitland (2):”It was in that case decided that there is in England no difference between the notice which will take away the protection of the legal estate and that which will take away the protection of the Registry Act. Sir E. Sugden, sitting in Ireland, says there is a difference, and that difference is just this, that whereas merely constructive notice will be sufficient for the former, it will not do for the latter.” This decision was upheld by the House of Lords (6) and the distinction is now firmly established.
At the date when the bankrupt deposited the land certificate with the bank, he was the registered owner of the land, but had been adjudicated bankrupt in England. It is said his action was fraudulent, but as he was the registered owner it is necessary that his act should be one of fraud in fact in order to prevent the bank getting a good equitable title by the deposit. On behalf of the English Trustee it was contended that when the bankrupt made the deposit with the bank he had no title at all. But he was the registered owner, and the question is one of the priority of title of the bank and the Trustee. The vesting in the English Trustee was subject to the law of the land, and the contention seems to me to overlook the fact that s. 53, sub-s. 4, provides for the registration of the certificate of adjudication as if it were an ordinary conveyance. To my mind the result is that the bank has priority provided the bankrupt was not guilty of actual fraud. The statute was intended to protect assignees and owners of equitable charges who took assignments or charges from persons appearing on the register as registered owners, and that protection would be lost if a person, who, for value without notice, took a deposit of title deeds, could be postponed to a stranger who had not registered his title or even lodged a caution. It is because that is not so and because the English Trustee had simply a statutory right to have the certificate registered as a conveyance that the Registrar did not enter on any further investigation of title or require the Land Certificate to be produced. If the registered owner had no title at all and the title of the Trustee in Bankruptcy was not perfected by registration the position was certainly anomalous as, despite the register, no one had a good title to the lands. I cannot agree with the view that the English Trustee had some right or equity that would give him a priority. His rights are defined by s. 53, sub-s. 4, of the Act and are neither more nor less, and those rights are not those of an assignee for valuable consideration. He is in no better position than a mere volunteer, and equity does not assist a mere volunteer to perfect his title, or recognise that he has any equity pending the perfection of his title. It is admitted that the transaction by the banka purchaser for valuable consideration who did not know of the adjudication in England, was perfectly innocent. Was it, then, proved that there was in fact fraud on the part of the bankrupt in depositing his Land Certificate with the bank? When he did so no order in aid had been made in Ireland, and there was nothing to raise a suspicion in his mind that his lands in Ireland were affected by the English adjudication. The whole question of whether in point of fact they were or not has been the subject of prolonged argument before us. Equity presumes an intention of carrying out a bargain, and it must be assumed that the deposit was simply an honest attempt by the mortgagor to carry out the undertaking he had given to the bank. But it is not necessary to press the presumption in favour of the bankrupt, for the onus of proving actual fraud is on the Trustee in Bankruptcy, and no attempt whatever was made to discharge the onus, and the trial Judge had no material on which he could possibly find fraud in fact. The transaction must therefore be taken to have been a perfectly innocent transaction on the part of the bankrupt. That being so, the effect of the positive provisions of ss. 34 and 36 of the Local Registration of Title (Ir.) Act, 1891, cannot be avoided by a Court of Equity and the title of the bank is absolute and unassailable.
There is no appeal against the order of the learned trial Judge in respect of the validity of the solicitor’s lien of George V. Maloney.
Accordingly, in my opinion, the appeal should be allowed and a declaration made, and an account directed, and the orders applied for made as in the bank’s notice of motion.
GEOGHEGAN J. :
I concur with the judgment of Mr. Justice Meredith.
O’BYRNE J. :
With reference to the two main questions argued before, us, viz., (1), the effect of s. 18 of the Bankruptcy Act, 1914, and (2), the effect of the Constitution, I have read the judgments which have been delivered by the Chief Justice and Mr. Justice Meredith and am in entire agreement with them and have nothing further to add.
It seems to me that, on the adjudication, the lands of the bankrupt vested in the Trustee. This vesting was, however, subject to the laws of this country, including the Local Registration of Title (Ir.) Act, 1891. The Trustee, thereupon, became entitled to be registered as owner of the land in pursuance of the provisions of s. 76 of the said Act. Pending such registration the legal estate, and nothing more, remained vested in the bankrupt, whilst the Trustee, on behalf of the creditors, was, in my opinion, entitled to a “right” in the registered lands within the meaning of the said Act. The subsequent deposit of the Land Certificate had the same effect as a deposit of the title deeds of the bankrupt’s unregistered lands would have had; but this is expressly subject to any registered rights (s. 81, sub-s. 5).
The right of the Trustee was prior to that of the bank in point of time and I know of no principle of law or equity which would have the effect of postponing it. If the bank had obtained a registered charge on the lands, it could have relied upon s. 44, sub-s. 2, of the Act; but, in the absence of registration, I am of opinion that the claim of the Trustee is entitled to priority.