S14 O'Donnell -v- The Governor and Company of the Bank of Ireland [2015] IESC 14 (25 February 2015)

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Cite as: [2015] IESC 14

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Judgment

Title:
O'Donnell -v- The Governor and Company of the Bank of Ireland
Neutral Citation:
[2015] IESC 14
Supreme Court Record Number:
403/2013
High Court Record Number:
Bankruptcy 2479 & 2480
Date of Delivery:
 25/02/2015
Court:
Supreme Court
Composition of Court:
Denham C.J., Murray J., Hardiman J., MacMenamin J., Laffoy J.
Judgment by:
Laffoy J.
Status:
Approved

Judgments by
Link to Judgment
Result
Concurring
Laffoy J.
Appeal dismissed
Denham C.J., Murray J., Hardiman J., MacMenamin J.

Outcome:
Dismiss
___________________________________________________________________________




THE SUPREME COURT


[Appeal No. 403/2013]

Denham C.J.

Murray J.

Hardiman J.

MacMenamin J.

Laffoy J.


IN THE MATTER OF THE BANKRUPTCY ACT 1988


AND


IN THE MATTER OF A PETITION FOR ADJUDICATION OF BANKRUPTCY OF THE APPELLANTS BRIAN AND MARY PATRICIA O’DONNELL

BETWEEN


BRIAN O’DONNELL AND MARY PATRICIA O’DONNELL


RESPONDENTS/APPELLANTS


AND


THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND


PETITIONER/RESPONDENT

Judgment of Ms. Justice Laffoy delivered on 25th day of February, 2015


Appeal and its background
1. This is an appeal against orders made by the High Court (Charleton J.) on 2nd September, 2013 which, after reciting that the Court was satisfied that the centre of main interests of each of the appellants was situated in Ireland, ordered that each of the appellants be and was thereby adjudged bankrupt in main proceedings in accordance with Article 3(1) of Council Regulation (EC) No. 1346/2000 (the Insolvency Regulation). The appeal was first heard in this Court on 23rd July, 2014, when there were solicitors on record for the appellants and counsel appeared on their behalf. On that occasion the hearing was adjourned with directions given by the Court in relation to the filing of further submissions. When the appeal was re-listed for hearing on 22nd January, 2015, the appellants had discharged their solicitors and the first named respondent (Mr. O’Donnell), who had practised as a solicitor in this jurisdiction until 6th February, 2012, appeared in person.

2. The procedural steps in the High Court which led to the orders made on 2nd September, 2013 were as follows:

The judgment of the High Court in outline
3. In his judgment, Charleton J. identified six questions for determination on the hearing of each of the petitions.

4. The first question was formulated as follows:

      “is the date for adjudicating the centre of main interest of a debtor the date of presentation of the petition in bankruptcy or is it the date of the hearing of that application”.
Charleton J. answered that question as follows (at para. 17):
      “I would therefore conclude that the date on which the centre of a debtor’s main interest is to be established, is that on which an application seeking to adjudicate that person bankrupt is first lodged as part of the legal process that will ultimately lead to the trial of whatever issues are necessary for judgment.”
Accordingly, as regards Mr. O’Donnell, the relevant date was 1st June, 2012 and, as regards Mrs. O’Donnell, the relevant date was 7th June, 2012. No ground of appeal has been articulated in the amended notice of appeal dated 25th November, 2013 against that element of the judgment of Charleton J. However, when the appeal was first before this Court on 23rd July, 2014, counsel for the appellants informed the Court that he had been instructed to argue that the relevant time was the hearing of the petition. This Court did not entertain that argument. Nonetheless, for the avoidance of doubt, it is appropriate to emphasise that this Court accepts that the determination of Charleton J., as quoted above, is correct, having regard to the reasoning underlying the determination and the authorities cited by him, in particular, the judgments of the Court of Justice of the European Union cited by him in paragraphs 14 and 15 of his judgment (Case C - 1/04 Staubitz-Schreiber [2006] ECR 1 - 701; and Case C - 396/09 Interedil v. Fallimento [2011] ECR 1 - 0000).

5. Charleton J. identified two questions for determination in relation to the appellants’ centre of main interests and formulated them as follows:

      “(2) is the centre of main interest of the debtors Ireland or is it England;

      (3) if the centre of main interest has changed from Ireland to England is it ascertainable by creditors;.”

Those questions were considered together comprehensively by the trial judge in his judgment (at paras. 10 to 37). He set out his conclusion in para. 35 as follows:
      “The court has had regard to all of the evidence and has listened intently to the carefully thought through submissions on behalf of Brian O’Donnell and Mary Patricia O’Donnell. It is impossible not to find that as of, respectively, the 1st of June, 2012 and the 7th June, 2012, the centre of main interest of the debtors was in Ireland.”
6. The remainder of the questions addressed by the trial judge related to the appellants’ contentions that the service of the petitions was defective and that there were defects in the petitions. On the question of service, he deemed the service good on both appellants (para. 43). He rejected the arguments that the petitions were defective. The appellants have not appealed against those elements of the judgment.

Grounds of appeal

7. In short, each of the six grounds of appeal relied upon by the appellants in their amended notice of appeal relates to the determination of the trial judge that the centre of main interests of each of the appellants at the relevant date was in Ireland, which it is contended is wrong in law and on the facts. While that is the core contentious issue on the appeal, having regard to the conduct of the appeal, it is appropriate to address the question whether there was controversy in the High Court as to on which of the parties, whether the petitioner or each of the appellants, the onus of proving that the centre of main interests of each of the appellants was in this jurisdiction when the relevant petition was presented to the High Court lay. Having read the transcript of the proceedings in the High Court and the written submissions from each side, it is clear that each side presented a different argument as to where the onus of proof lay. The position adopted by counsel who appeared on behalf of the appellants in the High Court was that the onus of proving that, at the relevant dates, the centre of main interests of the relevant petitioner was in this jurisdiction lay on the petitioner. Counsel for the petitioner, on the other hand, submitted that the High Court was bound by the decision of the Courts of England and Wales and that, as of 27th March, 2012, the centre of main interests of the appellants was not within the jurisdiction of the Courts of England and Wales but was in this jurisdiction and that it was for the appellants to adduce evidence to show that the centre of main interests of each had changed between 27th March, 2012 and 1st June, 2012 in the case of Mr. O’Donnell and 27th March, 2012 and 7th June, 2012 in the case of Mrs. O’Donnell. As will be outlined later, Charleton J. rejected the first limb of that argument, holding that he was not bound by the decision of Newey J. On the appeal, the petitioner did not pursue the second limb.

8. When the matter was initially before this Court on 23rd July, 2014, counsel who was then acting for the appellants, but who had not acted for them in the High Court, submitted that the judgment of the High Court had wrongfully placed the burden of proof on the appellants, rather than on the petitioner, in circumstances where, as a matter of law, the burden of proving that the centre of main interests of each of the petitioners at the relevant date was borne by the petitioner. At that hearing, counsel for the petitioner informed this Court that the question where the burden of proof lay was not an issue in the High Court. On the basis of the transcript of the hearing in the High Court, I consider that he was mistaken on that. Similarly, I consider that he was mistaken when he told this Court at the hearing on 22nd January, 2015 that there was no controversy as to where the onus of proof lay in the High Court, which Mr. O’Donnell, by reference to the transcript, sought to contradict in reply. However, the controversy as to what was argued in the High Court is not of relevance to the determinations this Court has to make. In the written submissions filed on behalf of the petitioner on the appeal the assertion of the appellants that “. . . the proper application of the burden of proof in an application for bankruptcy is on the Petitioner and it is a matter for the Petitioner to establish, on the balance of probabilities, that the [bankrupts’] COMI was in Ireland” was quoted. It was then stated that, as a proposition of law, that assertion was correct, but that there was no basis for the assertion that Charleton J. departed from that fundamental principle. Accordingly, on the hearing of the appeal, there was consensus that it was the petitioner who bore the burden of proving that the centre of main interests of each of the appellants was in this jurisdiction at the relevant date. Therefore, the only issue for this Court, in relation to the burden of proof, is whether the trial judge applied it correctly.

9. On the initial hearing of the appeal counsel for the appellants stated that the exposition of the law in the judgment of the High Court was uncontroversial. It was the manner in which the law was applied in the High Court which was controversial, he submitted. I understand that to mean that the appellants were satisfied that, as a matter of law, Charleton J. identified the correct legal principles and the correct test as to determining where the centre of main interests of each of the appellants was at the relevant date. Accordingly, the basis of the appellants’ appeal is that the trial judge misapplied the rule that the burden of proof lay on the petitioner and that he also misapplied the legal principles applicable to, and the test for, determining the centre of main interests of a debtor to the facts before the High Court. Before considering the appellants’ argument in support of that proposition, the legal principles identified by the trial judge as to identifying where the centre of main interests of a debtor is at a particular time will be outlined.

Identifying a debtor’s centre of main interests: legal principles
10. In his judgment, Charleton J. stated (at para. 18) that what may be found to be the centre of main interests of a debtor “is based on the definition and indications as to interpretation in the Insolvency Regulation”. He quoted a number of the recitals in the Insolvency Regulation: Recital 4, Recital 6, Recital 13 and Recital 22. Recital 13 states:

      “The ‘centre of main interests’ should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties.”
In relation to the substantive provisions of the Insolvency Regulation he quoted some elements of Article 2, which is the definition provision, and contains the meaning of certain words and phrases for the purposes of the Insolvency Regulation, including paragraph (g), which contains the definition of “the Member State in which assets are situated”, and paragraph (h), in which “establishment” is defined. He also quoted Article 3(1) and (2), which are the provisions which confer jurisdiction on the courts of a Member State to open insolvency proceedings. Article 3(1), which is of relevance in this case, provides:
      “The courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings. In the case of a company or a legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.”
11. Having stated that there was some assistance to be gleaned from it, the trial judge quoted in part the oft-quoted paragraph 75 of the Virgós- Schmidt report (Council of the EU of July 8, 1996 - 6500/96) on the interpretation of the concept of “centre of main interests”, focusing on the concept in relation to individuals, as distinct from companies and legal persons. The passage quoted by the trial judge is as follows:
      “The concept of 'centre of main interests' must be interpreted as the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties. The rationale of this rule is not difficult to explain. Insolvency is a foreseeable risk. It is therefore important that international jurisdiction (which, as we shall see, entails the application of the insolvency laws of that Contracting State) be based on a place known to the debtor's potential creditors. This enables the legal risks which would have to be assumed in the case of insolvency to be calculated. By using the term 'interests', the intention was to encompass not only commercial, industrial or professional activities, but also general economic activities, so as to include the activities of private individuals (e.g. consumers). The expression 'main' serves as a criterion for the cases where those interests include activities of different types which are run from different centres. In principle, the centre of main interests will in the case of professionals be the place of their professional domicile and for natural persons in general, the place of their habitual residence.”
12. It is also clear that the trial judge found the judgment of the High Court of Northern Ireland, Chancery Division (Bankruptcy) delivered by Deeney J. on 10th January, 2012 in Irish Bank Resolution Corporation Ltd. v. Quinn [2012] NI Ch 1 to be of assistance, having regard to his observations, in particular, on the question whether the centre of main interests of a debtor is ascertainable by the debtor’s potential creditors. That is understandable, as the decision concerned an individual, as distinct from a company or a legal person.

13. In supplemental submissions filed on behalf of the petitioner for the purposes of the appeal, it was suggested that the trial judge, in dealing with the centre of main interests issue, did not deal in detail with the case law and that he referred only to the decision in Irish Bank Resolution Corporation v. Quinn. That is not strictly speaking correct. In paragraph 27, he also referred to the decision of the Court of Justice of the European Union in Case C - 396/09 - Interedil, stating that the Court -

      “. . . emphasised at paragraphs 48 to 53 that the criteria for determining the centre of a debtor’s main interest was objective and that the presence of bodies responsible for managing a firm, the places where assets are held, where immovable property is owned and the place of the ‘existence of contracts for the financial exploitation of those assets’, as well as ascertainability by third parties, are crucial factors.”
Indeed, the factors listed by the trial judge are referred to in the cited paragraphs of the judgment in the Interedil case, although, as regards some of them, it is in the context of what is necessary to rebut the presumption contained in Article 3(1) of the Insolvency Regulation that, in the case of a company or legal person, the place of the registered office of the company shall be presumed to be the centre of main interests in the absence of proof to the contrary.

14. Moreover, in the paragraphs from the Interedil judgment cited by the trial judge, there are references to the judgment of the European Court of Justice in Case C - 341/04 Eurofood IFSC Ltd. As particular emphasis was placed by counsel for the petitioner on paragraph 33 of that judgment, which is cited and paraphrased in the Interedil case, it is appropriate to quote it. It stated:

      “That definition shows that the centre of main interests must be identified by reference to criteria that are both objective and ascertainable by third parties. That objectivity and that possibility of ascertainment by third parties are necessary in order to ensure legal certainty and foreseeability concerning the determination of the court with jurisdiction to open main insolvency proceedings. That legal certainty and that foreseeability are all the more important in that, in accordance with Article 4(1) of the Regulation, determination of the court with jurisdiction entails determination of the law which is to apply.”
The phrase “That definition” in that passage refers to Recital 13 of the Insolvency Regulation, which has been quoted earlier.

15. Counsel for the petitioner also pointed to an elaboration of the last sentence in the passage from the Virgós- Schmidt report quoted earlier contained in the judgment of Deeney J. in Irish Bank Resolution Corporation v. Quinn, an authority specifically cited by the trial judge. Having quoted paragraph 75, Deeney J. stated (in para. 20):

      “The respondent understandably relies on the reference to the COMI of natural persons being the place of their habitual residence but this is rightly said to be ‘in general’. Professor Virgós subsequently published with a Professor Garcimartín a text book, The European Insolvency Regulation: Law and Practice (2004, Kluwer Law International) which at paragraph 56(c) said as follows:

        ‘For individuals, if the debtor is engaged in an independent business or professional activity, the centre of main interest will normally correspond to the State where he has his business or professional centre (i.e. his ‘professional domicile’), provided that it is business or professional activity that is at the root of the insolvency. In other cases is will be the individual's habitual residence.’”
Distinguishing the position of an individual involved in business or economic activity from that of an individual not so involved is a reflection of the necessity for objectivity laid down by the ECJ in the judgment in the Eurofoods IFSC case.

16. Although, in the context of considering where the centre of main interests of each of the appellants was at the relevant dates, the trial judge did not cite all of the authorities to which he had been referred by the parties and did not quote all of the passages from those authorities relied on by the parties, it is quite clear from his judgment that he properly identified the legal principles applicable to determining where the centre of main interests of a debtor is for the purposes of the application of the Insolvency Regulation. Indeed, as has been noted, counsel for the appellants did not take issue with his exposition of the legal principles, but rather took issue with the manner in which he applied them.

17. It is recorded by Charleton J. in his judgment (at para. 36) that it had been argued, obviously on behalf of the petitioner, as the transcript confirms, that “the High Court in Ireland is bound by the final and conclusive judgment in England and Wales as to the same facts by Newey J. that the centre of main interest of the debtors as of the 27th March, 2012 was Ireland”. Charleton J. stated that he could not agree, thus rejecting that argument. That the petitioner did not appeal against that ruling probably explains why the petitioner adopted a different approach on the appeal in relation to the burden of proof than it had adopted in the High Court.

18. It is also important that it be emphasised that Charleton J. also stated (at para. 36):

      “It is also argued that Newey J made a decision that Ireland was the centre of main interest of the debtors as of the 27th March, 2012 and that the only period with which this Court may be concerned is the interval between that and the date of presenting a bankruptcy petition here, some eight or nine weeks. I cannot find any authority to support that proposition. Nor do I think that counsel for the debtors at any stage in the past conceded that point.”
Taking an overview of the judgment, it is quite clear that Charleton J. decided where the centre of main interests of each of the appellants was on the relevant date by reference to the application of the legal principles identified on the basis of the totality of the evidence before the High Court.

19. Before considering how the trial judge applied the legal principles to the facts, I consider it would be useful to outline the evidence on the centre of main interest issues put before the Court by the appellants in Mr. O’Donnell’s affidavit sworn on 10th June, 2013 and also to outline the approach adopted in the replying affidavit of Mr. Hanrahan.


Facts averred by Mr. O’Donnell
20. Mr. O’Donnell averred to the following facts in his affidavit sworn on 10th June, 2013:

      (a) At the date of the swearing of the affidavit, both appellants lived and operated their business interests in England, “having moved permanently to London on 29th December, 2011 and lived and worked at 8 Barton Street Westminster . . . from that date until 18th January, 2013”, when they moved to their current address in Kent. On 18th January, 2013 the appellants handed over possession of 8 Barton Street to AIB Bank pursuant to a consent order. Mr. Hanrahan’s evidence discloses that AIB had appointed receivers over the Barton Street residence on 3rd May, 2012. Since 18th January, 2013 the appellants have had a two year lease on the property in Kent, where they live and work. Prior to 29th December, 2011 they had spent large periods of time living in London in order to operate their business interests.

      (b) At the time of the presentation of the petitions to the High Court they did not “own any residential property in Ireland”. Specific reference was made to “two Irish residences”, one in County Galway and one in Dublin, of which possession had been taken by the petitioner in March 2011 and which were subsequently sold by the petitioner, the sale of the Dublin property having been completed on 6th July, 2012 and the sale of the County Galway property having been completed on 25th September, 2012.

      (c) During the year 2012 Mr. O’Donnell spent five days in Ireland and Mrs. O’Donnell spent four days in Ireland and the purpose of those visits was to appear in the High Court in response to a direction to attend for examination in aid of execution in the High Court Commercial proceedings. The appellants only spent four days in Ireland in 2013. The purpose of that visit was stated to be “legal preparation for multiple cases” taken by the petitioner against the appellants and their family.

      (d) There was extensive media coverage in Ireland and elsewhere of their petitions to the Courts of England and Wales for bankruptcy and of the hearings in the High Court in London, it being suggested that, even by “taking cursory notice of current affairs”, the asserted fact that their centre of main interests was in the United Kingdom would have been “reasonably ascertainable” by their creditors, including the petitioner.

      (e) As part of the process in the Courts of England and Wales, HM Courts and Tribunals Service wrote to all creditors, including, inter alia, the petitioner and Shale Construction Limited, on 30th March, 2012. Further, the appellants had informed their creditors of their “London residential and business address in January 2012”. However, it was disputed that they informed Shale Construction Limited.

      (f) Mr. O’Donnell’s “business interests” were in England. He had no business in Ireland “other than a passive 50% in Merchants Arch Wellington Quay Dublin 2 which is subject to a cash sweep in favour of IBRC”, over which asset he understood that “IBRC” intended to appoint a receiver, and from which he had “earned nothing for at least 5 years”.

      (g) Mr. O’Donnell was not a shareholder, director or officer of any Irish company.

      (h) Mr. O’Donnell did not have a current solicitor’s practising certificate nor did he have one at the time of presentation of the petitions to the High Court. He had retired from practice in 2011. According to the agreed “Timeline” which was before the High Court, on 1st February, 2012 Mr. O’Donnell applied “to the Law Society of Ireland for a practicing Certificate for the practice year 2012”. Further, on 6th February, 2012 Mr. O’Donnell informed “the Law Society of Ireland that he was winding down his solicitor’s practice, and his application for a practicing Certificate was not fully processed”.

      (i) Various matters were averred to in relation to the appellants’ day to day living and to their living expenses: that Mr. O’Donnell paid his taxes and national health contributions in England and that he had submitted tax returns to HMRC for the assessment year 2011 - 2012, the exhibited tax returns having been filed on 29th January, 2013; that both appellants have U.K. driving licences which are dated 15th February, 2012, and neither has an Irish driving licence; that they have reserved graves in London; that they are organ donors in the United Kingdom since 29th February, 2012; that they are library cardholders in London since January 2012; that the appellants did not have operational bank accounts in Ireland; that they are both on the electoral register in England since 23rd March, 2012 and that they are not on the electoral register in Ireland; and that they attend a Medical Centre in London and have done so since 20th January, 2012. A vast range, over seven hundred, documents, such as receipts, were exhibited to corroborate those averments.

      (j) The bankruptcy proceedings initiated by the petitioner in this jurisdiction were served on the appellants in London and correspondence by the petitioner and its solicitors, Arthur Cox, was sent by mail and courier to the appellants’ former address in London and subsequently to their current address in Kent. In relation to those averments, it is to be noted that it is not in dispute, and indeed it was averred to by Mr. Hanrahan in his affidavit, that the appellants moved to London on 29th December, 2011. Accordingly, there is consensus that they were physically located in England during the first five months of 2012 and that this was known to the petitioner and its solicitors. Indeed, the petitioner, on its own application, was joined as a party in the appellants’ bankruptcy proceedings in the High Court of Justice in London.

      (k) There was a general averment by Mr. O’Donnell that since 2011 €610,000,000 had been realised from “companies which were within our control and part of our business”, “our” obviously referring to both appellants, by financial institutions. There were also slightly more specific averments that the petitioner had sold a property in London and a property in France, receiving approximately €41,500,000 from the sales, and had realised securities it had held over “an Irish portfolio” of properties.

      (l) Having averred that he did not have “any economic activities in Ireland”, Mr. O’Donnell averred that the only economic activity he had in the first five months of 2012 was acting as a consultant for a company, Kennor Advisory Limited, identified by Mr. Hanrahan in his replying affidavit as a company registered in the British Virgin Islands, in managing a property at Canary Wharf in the City of London, for which he received STG £19,000 per quarter. However, in addition, he had been working on a book of his business experiences and had been seeking consultancy assignments in the real estate industry in the United Kingdom.

Finally, in reliance upon the foregoing matters, Mr. O’Donnell asserted that, when the petition to have him adjudicated a bankrupt was presented in the High Court, his centre of main interests was in the United Kingdom, asserting as follows: that he was habitually resident in the United Kingdom; that he conducted the administration of his interests on a regular basis there before the presentation of the petitions; and that his centre of administration as being in the United Kingdom was ascertainable by third parties.

21. The position of the appellants is that Mrs. O’Donnell’s centre of main interests is the same as Mr. O’Donnell’s centre of main interests. At the most recent hearing in this Court on 22nd January, 2015, Mr. O’Donnell confirmed that.


Replying affidavit of Mr. Hanrahan
22. Reference has already been made to the extensive and comprehensive nature of Mr. Hanrahan’s replying affidavit and the documents exhibited in it. Mr. Hanrahan dealt first with the background to the petitioner’s interactions with the appellants from obtaining judgment on 12th December, 2011 until 27th March, 2012, when the appellants petitioned for bankruptcy in the High Court of England and Wales, and from then until the petitioner presented the petitions to have the appellants adjudicated bankrupts in this jurisdiction, that is to say, to 7th June, 2012. Mr. Hanrahan then went on to reply to the specific averments made in Mr. O’Donnell’s affidavit sworn on 10th June, 2013. In relation to both sections of the replying affidavit, Mr. Hanrahan has drawn on factual matters which emerged from -

      (a) the examination of the appellants in the High Court Commercial proceedings, which took place in April and July 2012,

      (b) discovery made pursuant to an order for discovery made in the High Court Commercial proceedings on 25th April, 2012, and

      (c) the bankruptcy proceedings in the High Court in London, including facts which emerged from the cross-examination of Mr. O’Donnell in those proceedings, the relevant transcript extracts being quoted and exhibited.

23. In outlining the application by the trial judge of the legal principles to the facts based on the evidence before him, it will be convenient to point to the evidence in Mr. Hanrahan’s affidavit, which either elaborated on, or contradicted, the evidence in Mr. O’Donnell’s affidavit. It will also be convenient to record some specific arguments advanced on behalf of the appellants, principally by counsel who was then acting for the appellants when the matter was before the Court on 23rd July, 2014, but also by Mr. O’Donnell in his submissions, both in writing and oral on 22nd January, 2015, to support the appellants’ case that the trial judge took into account matters which he ought not to have taken into account and that he failed to take account of matters which he ought to have taken into account in determining where the centre of main interests of each of the appellants was at the relevant date and in failing to conclude that the evidence overwhelmingly established that it was in the United Kingdom.

High Court judgment: application of legal principles to the facts
24. Having stated (at para. 29) that it is correct, as had been asserted on behalf of the appellants, that debt alone is not a determining factor for adjudicating a centre of main interests, and having, in general terms, identified the questions which arise on such an adjudication, the trial judge stated (at para. 30):

      “It is impossible to be impressed with the genuineness in terms of setting up a new centre of main interest in England of Brian O’Donnell and Mary Patricia O’Donnell. They have left immediately behind them, in terms of time, a massive judgment in Ireland which they sought to deal with under an apparently more favourable insolvency regime. The stark nature of the dates makes this apparent.”
Indeed, the facts from which the trial judge, in that passage, inferred that the genuineness of the change of centre of main interests by the appellants was questionable - the size of the debt and the dates - speak for themselves. It is not the case, as was submitted on behalf of the appellants, that those matters are irrelevant.

25. The decision of the Court of Appeal of England and Wales in Shierson v. Vlieland-Boddy [2005] 1 WLR 3966 had been the subject of submissions in the High Court and, indeed, was referred to in the judgment of Charleton J. in the context of the first question addressed in the judgment - the relevant date for adjudicating the centre of main interests of a debtor. In that context, Charleton J. quoted the entirety of para. 55 of the judgment, in which Chadwick L.J. outlined his conclusions from (1) to (5). What was stated by Chadwick L.J. at (5), which was quoted in part by both sides in their written submissions on the appeal, is of particular relevance to the issue now being considered. Chadwick L.J. stated:

      “It is a necessary incident of the debtor's freedom to choose where he carries on those activities which fall within the concept of ‘administration of his interests’, that he may choose to do so for a self-serving purpose. In particular, he may choose to do so at time when insolvency threatens. In circumstances where there are grounds for suspicion that a debtor has sought, deliberately, to change his centre of main interests at a time when he is insolvent, or threatened with insolvency, in order to alter the insolvency rules which will apply to him in respect of existing debts, the court will need to scrutinise the facts which are said to give rise to a change in the centre of main interests with that in mind. The court will need to be satisfied that the change in the place where the activities which fall within the concept of ‘administration of his interests’ are carried on which is said to have occurred is a change based on substance and not an illusion; and that that change has the necessary element of permanence.”
It is clear from his judgment, that Charleton J. was adopting the approach adumbrated by Chadwick L.J. and was scrutinising the factual evidence with a view to coming to a conclusion as to whether it supported a finding that there was a genuine permanent change of centre of main interests on the part of the appellants from Ireland to England by the beginning of June 2012.

26. Charleton J. then went on (in para. 31) to summarise the evidence before him in relation to property and other transactions related to the appellants. This went considerably beyond the very limited information which was put before the Court in Mr. O’Donnell’s affidavit, as summarised earlier. What is stated in that paragraph of the judgment properly and accurately reflects the uncontradicted facts as deposed to by Mr. Hanrahran, as will be demonstrated by reference to a number of examples, focusing on the appellants’ interests in, and connection with, this jurisdiction at the relevant dates.

27. The first example illustrates how the appellants’ evidence in relation to their property in Ireland was amplified in the affidavit of Mr. Hanrahan. Apart from the “two Irish residences” identified by Mr. O’Donnell, Mr. Hanrahan averred that the appellants personally owned a number of properties in Ireland and interests in other properties at the relevant dates. The fact that, as regards some of the properties, a receiver may have been appointed over them by a creditor or a mortgagee before the relevant dates did not, as averred to by Mr. Hanrahan, create any change in the ownership of the property. It was not the case, as submitted by counsel for the appellants when the matter was first before the Court, that the properties outlined by Charleton J. were merely “remnants” of the appellants’ past and thus irrelevant. The trial judge was entitled to have regard to the appellants’ ownership thereof in adjudicating on where the centre of main interests of each of the appellants was at the relevant date.

28. Another fact recorded by Charleton J. in para. 31 related to a dwelling house known as Gorse Hill, Killiney, County Dublin. Charleton J. stated:

      “Brian O’Donnell told a distinguished radio commentator who was interviewing him on RTÉ, following the publicity surrounding the judgment against him that founds these proceedings, that this Vico Road property was his home.”
That statement properly reflects an averment contained in Mr. Hanrahan’s affidavit, in which a copy of the transcript of the interview was exhibited. When the appeal was first before this Court, counsel then acting for the appellants acknowledged that the interview took place on 17th December, 2011 and he acknowledged that the appellants had been residing in Gorse Hill, but he contended that there was a change of residence in late December 2011 and that by June 2012 their habitual residence was in London. As was stated by Chadwick L.J. in the Shierson case at (2) in para. 55, which was quoted by the trial judge in his judgment (at para. 13):
      “The centre of main interests is to be determined in the light of the facts as they are at the relevant time for determination. But those facts include historical facts which have led to the position as it is at the time for determination.”
Although he did not express a definitive view on the point, in determining whether the appellants had permanently changed their habitual residence to England after 29th December, 2011, it was unquestionably appropriate for the trial judge to have regard to where they resided, and where they considered their home to be, up to that date. Having said that, where the appellants’ habitual residence was during the first week of June 2012, for the reasons outlined later, is not alone determinative of where the centre of main interests of each of the appellants was at the relevant date.

29. The trial judge addressed some of the matters which had been highlighted by Mr. O’Donnell in his affidavit in relation to what I have referred to as the appellants’ day to day living and, in doing so, he had regard to the evidence contained in Mr. Hanrahan’s affidavit. He stated (in para. 32):

      “As of the relevant dates, the debtors are on the role of electors in Ireland and are entitled to vote for local and national representation and, as Irish citizens, in constitutional referenda. There are also bank accounts. Brian O’Donnell claims that he does not have any operational bank accounts in Ireland but the discovery process reveals that income from an AIB Bank account in England showed transfers to that bank in an account in Ireland of about €1.2 million in the 13 months prior to filing for bankruptcy in London. The last transaction in the relevant account in Ireland was in October 2012.”
In relation to the first matter referred to in that passage, Mr. Hanrahan had averred in his affidavit that, while the appellants were not on the electoral register in Ireland at the date of swearing of his affidavit, he believed that both were on the electoral register as of 1st June, 2012 and 7th June, 2012. That factual position was not controverted by the appellants, although it was submitted by counsel on their behalf that the failure to remove their names from the register earlier was not done in order to permit them to vote in elections or to mislead creditors, but as a matter of inadvertence or indifference and, accordingly, was irrelevant. In relation to the second matter, what Charleton J. stated in relation to bank accounts reflects what was averred by Mr. Hanrahan in his affidavit. While no evidence was put before the Court as to why payments continued to be made into the account in question until at least October 2012, counsel for the appellants submitted that it was explicable on a basis advanced in his submissions on behalf of the appellants. Whether that is so or not, what is important for present purposes is that the finding of the trial judge correctly reflected the evidence which was before the High Court.

30. Of particular significance is that, in his affidavit, Mr. Hanrahan clarified Mr. O’Donnell’s averment that he was not a shareholder, director or officer of an Irish company and averred that, in accordance with what was recorded in the Companies Registration Office (CRO) as at 1st June, 2012 and 7th June, 2012, the appellants were recorded as being directors of a number of Irish registered companies. Mr. Hanrahan has set out the relevant information in tabular form in his affidavit, from which it is clear that, in the case of four Irish registered companies Mr. O’Donnell and Mrs. O’Donnell were both directors and Mr. O’Donnell was secretary and, in the case of another Irish registered company, Mr. O’Donnell was a director and secretary. The table indicates that there were filings in the CRO after the relevant dates, the earliest having been filed on 20th June, 2012 and the latest on 11th July, 2012, recording the resignation of each of the appellants from those offices, the resignation in all cases going back to dates prior to the relevant dates. In some cases the date of the resignation was recorded as going back to 7th December, 2011 and in others to 28th January, 2012. In his judgment (at para. 34) Charleton J. stated that the Court must take into account the directorships which each of the appellants held and which were listed in the CRO. He listed the five companies referred to in Mr. Hanrahan’s affidavit. He then stated that counsel, which I assume means the counsel who appeared for the appellants in the High Court, had been instructed that the “companies are dormant and did not trade”. He continued:

      “How is any creditor to know this? No sensible business person would regard the trouble and expense of setting up at least five Irish companies as being anything other than a serious enterprise. Furthermore, as of the appropriate date, the relevant directorships speak to Ireland as being the main centre of interest of Brian O’Donnell and Mary Patricia O’Donnell.”
The submission by counsel on behalf of the appellants that a creditor could know of the dormant or non-trading status of those companies from a review of the CRO website is not a realistic answer to the hypothetical question posed by Charleton J. The reality is that as of 1st June, 2012 and 7th June, 2012 the appellants appeared on the CRO website as officers of five Irish registered companies. That fact would undoubtedly have influenced a creditor or a potential creditor endeavouring to ascertain the centre of main interests of the appellants by conducting a search on the CRO website as at those dates.

31. Although not specifically alluded to in the judgment of Charleton J., another factor which would have had a bearing on the ascertainment by a creditor or a potential creditor of the location of the centre of main interests of each of the appellants at the relevant date was the fact, as deposed to by Mr. Hanrahan, that the appellants had registered Vico Capital as a partnership pursuant to the Registration of Business Names Act 1963, which remained registered, with the address of the appellants being given as Merrion Square Dublin, until 12th November, 2012.

32. In a similar vein to his observations quoted at para. 30 above, Charleton J. observed as follows (in para. 34):

      “To any creditor, the application for a practising certificate by Brian O’Donnell on the 1st February, 2012, is at the very least evidence that he was considering his options and, together with other evidence, establishes a clear probability that his centre of main interest was to remain in Dublin. The shutting and the winding up of that practice, which started a few days later, would be seen by any reasonable creditor as the debtor following the advice that he was being given in London.
On the basis of those facts, it seems to me that it was open to the trial judge to question the genuineness of the move by the appellants to England as giving rise to a change in their centre of main interests for the purpose of the Insolvency Regulation.

33. Some of the other matters which I have characterised as relating to day to day living were also addressed by Charlton J. in his judgment (at para. 34). He stated:

      “The Court has been given a vast bulk of documentation on English activities engaged in by the debtors as to grave plots, attending events such as outdoor parties that included snail races for the jubilee celebrations of Her Majesty Queen Elizabeth, the purchase of groceries, the taking out of driving licences, the joining of libraries, the writing of a book, the move to Barton Street in London and the subsequent move to another location, the subscription to entertainments, and so on. I have considered the entire of the evidence in this regard. At the very most, these activities are equivocal as to intention in the context within which they have occurred, but do not establish a probability that as of June 2012 the debtors had established London as their centre of main interest.”
It was on the last sentence in that passage that counsel for the appellants relied to support the submission referred to earlier that, in his judgment, the trial judge had wrongfully placed the burden of proof on the appellants, rather than on the petitioner.

34. Although there was controversy between the parties in the High Court as to where the burden of proof as to the requirements which had to be complied with before the Court could accede to the petitioner’s application to have the appellants adjudicated a bankrupt, including that the centre of main interests of the appellants at the relevant dates was in this jurisdiction, lay, the trial judge did not make any express statement as to where the burden of proof lay and, in particular, in his judgment he did not expressly state that the burden of proof lay on the petitioner. However, nothing could be clearer from the first sentence of Article 3(1) of the Insolvency Regulation, which he quoted. It was obviously open to the trial judge to find that the activities he listed were equivocal as to the intention of the appellants in the relevant context which, on the basis of what was averred to by Mr. O’Donnell in his affidavit, was his assertion that the appellants were habitually resident in the United Kingdom and that their centre of main interests was the United Kingdom, an inherent element of which was an intention on their part to permanently reside in the United Kingdom. The words in the last sentence of the passage quoted above, if they stood alone, might be interpreted as indicating that the trial judge was of the view that the appellants had to establish, as a matter of probability, that their centre of main interests was in the United Kingdom and not in this jurisdiction. However, that sentence cannot be viewed on its own; it must be viewed in the context of the judgment as a whole. In so doing, one cannot conclude that the trial judge decided the centre of main interests issue on the basis that it was for the appellants to prove that it was elsewhere than in this jurisdiction.

35. In the final sentence of para. 34 and immediately before expressing his finding having “had regard to all of the evidence”, which is set out in para. 35 and has been quoted earlier, the trial judge stated:

      “Regrettably, the kind of manoeuvring demonstrated in response to the [petitioner’s] assertion that the centre of main interest of the debtors is in Ireland lacks cohesion, credibility and any reference to reality.”
Consideration of that sentence necessitates consideration of the role of this Court on the appeal.


Role of this Court on the appeal
36. The nature of an appeal to this Court, pursuant to Article 34, s. 4, subs. (3) of the Constitution and Order 58 of the Rules of the Superior Courts 1986 (the Rules) made pursuant to s. 48 of the Courts (Supplemental Provisions) Act 1961, was considered in the judgment of McCarthy J. in the Supreme Court in Hay v. O’Grady [1992] 1 I.R. 210. McCarthy J. stated at pp. 216 and 217 that the Court hears “the arguments based upon the findings of fact, including arguments that the findings are unsupported by evidence, itself a question of law”. There was no oral evidence on the hearing in the High Court and to a large extent the subsequent observations of McCarthy J. as to the role of this Court on an appeal, in reality, are of no relevance, except, perhaps, that, by analogy to the statement that, in the drawing of inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial judge, in determining issues that arise on affidavit evidence alone, an appellate tribunal is similarly in as good a position as the trial judge.

37. There have been recent cases in which this Court has had to consider the implications of issues of evidence having arisen, where the Court is trying the matter on affidavit evidence and the deponents have not been cross-examined. A stark warning was given to litigants by this Court in Boliden Tara Mines v. Cosgrove [2010] IESC 62 as to why that type of situation should be avoided. Hardiman J. stated (at para. 43):

      “It cannot be too strongly emphasised that, where evidence is presented on affidavit, a party who wishes to contradict such evidence must serve a Notice of Intention to Cross-examine. In a case tried on affidavit, it is not otherwise possible to choose between two conflicting versions of facts which may have been deposed to. In a case where there is no contradictory evidence an attack on the evidence which is before the Court must include cross-examination unless the contradicting party is prepared to rely wholly on a submission that the plaintiff has not made out its case, even taking the evidence it has produced at its height.”
That was a case where evidential issues arose on an application to rectify a trust deed in respect of a pension fund, where the application was heard on affidavit evidence only. Despite the warning, that was a case which it was held was capable of determination, because there was ample evidence unchallenged in any relevant respect to grant rectification, notwithstanding opposition on the ground of inadequacy of the evidence.

38. More recently, in IBB Internet Services Ltd. v. Motorola Ltd. [2013] IESC 53, the potentially unsatisfactory evidential situation addressed in Boliden was revisited. Having quoted the passage from the judgment of Hardiman J. quoted above, Clarke J. (at para. 7.2) quoted the following observations he had made in McInerney Homes Limited (No. 2) [2011] IEHC 4:

      “As Hardiman J. pointed out in Boliden, it is, of course, open to a party to seek to argue that, even taking its opponent’s evidence at its high point, same does not establish a material element of the matters needed to be established in order that the remedy sought be given by the court. While Hardiman J. was dealing with a case in which there was no contradictory evidence, it seems to me that similar considerations apply where there is contradictory evidence but where the evidence on both sides is given on affidavit without cross examination. It is, of course, open to a party in such circumstances, to say that the Court can rely on uncontradicted aspects of the evidence in reaching its conclusions. Indeed, to a material extent that is what counsel for both the examiner and McInerney sought to do. However, it is impossible for the court to resolve material questions when there is a conflict of evidence on matters of significance to an answer to those questions.”
In the McInerney case there was conflicting expert evidence on affidavit as to the prejudice caused by a proposed scheme of arrangement in examinership proceedings. However, Clarke J. held that there was sufficient credible evidence before the Court for the purpose of the application.

39. In the IBB case, Clarke J. made the foregoing remarks in the context of considering the role of cross-examination on an interlocutory application, being an application for security for costs. Of particular relevance for present purposes is a point he made (para. 7.3) where he stated:

      “First, the cases relied on were all cases where the court was required to make a final order and where, therefore, the substantive rights and obligations of all interested parties were to be finally determined. Insofar as the making of a final order requires a court to take a view on the facts, and insofar as material facts may be the subject of conflicting evidence placed before the court on affidavit and where the contested facts have a bearing on the order which the court will have to make, then the comments made in those cases clearly apply.”
Of course, on the bankruptcy petitions, the subject of the proceedings in the High Court and on this appeal, the High Court was required to make final orders.

40. The implications of the absence of cross-examination where there is conflicting evidence on affidavit is also considered in Delany and McGrath on Civil Procedure in the Superior Courts (3rd Ed.) at para. 20 - 91 where it is stated:

      “It should be noted that a court is not obliged to accept evidence given on affidavit even if the deponent is not cross-examined if there is conflicting evidence given on affidavit or orally that the court accepts. However, where there is a conflict of evidence on affidavit and the deponents are not cross-examined, the court may resolve the issues of fact against the party that bears the onus of proof.”
The decision of the High Court (Ó Caoimh J.) in Molloy v. Director of Public Prosecutions [2000] IEHC 89 is cited as authority for the first sentence in that passage. The authority cited for the second sentence is the decision of the High Court (Edwards J.) in Leopardstown Club Ltd. v. Templeville Developments Ltd. [2010] IEHC 152.


Assessment of the nature and quality of the evidence before the High Court
41. It is timely to recapitulate briefly on the manner in which the evidential requirements in relation to the obligation on the petitioner to establish that the centre of main interests of the debtors against whom the bankruptcy petitions were presented at the date of presentation were addressed in the High Court. First, in accordance with Order 76, rule 19 of the Rules, each of the petitions contained statements that the Insolvency Regulation applied to the proceedings and that the relevant debtor’s centre of main interests was situated in the State, the facts supporting each such statement being set out as that -

      “. . . the said debtor is domiciled, ordinarily resides and has a dwelling house within the State.”
Secondly, each petition was verified by the affidavit of Mr. Boucher endorsed on each petition wherein it was averred that “the several allegations in the petition are true”. Thirdly, Mr. O’Donnell in his affidavit sworn on 10th June, 2013 set out to prove that the centre of main interests of each of the appellants was in the United Kingdom at the relevant dates. Fourthly, Mr. Hanrahan in his replying affidavit sworn on 27th June, 2013, as it was averred to in the affidavit, set out to address each and every matter put forward by Mr. O’Donnell which he asserted established the evidential basis for the proposition that the centre of main interests of both appellants was located in the United Kingdom at the date of the presentation of the petitions. Finally, Mr. Byrne in his affidavit on behalf of the only creditor, apart from the petitioner, whose evidence was before the High Court, Shale Construction Limited, which had an unsatisfied judgment in the sum of €225,896.81 plus interest and costs against Mr. O’Donnell, averred that he held the belief that Mr. O’Donnell’s centre of main interest as of 1st June, 2012 was in Ireland.

42. To a large extent Mr. Hanrahan’s affidavit elaborated on facts which had been set out in very general terms in Mr. O’Donnell’s affidavit. An example of that is the manner in which Mr. Hanrahan addressed the averment by Mr. O’Donnell that he was not a shareholder, director or officer of any Irish company. While that averment has not been shown to have been untrue when Mr. O’Donnell swore his affidavit on 10th June, 2013, without elaboration it would have been misleading. However, Mr. Hanrahan gave a full picture of what was recorded in the CRO in relation to the involvement of Mr. and Mrs. O’Donnell with five Irish registered companies at the time the petitions were presented, clearly demonstrating that a search by a creditor or a potential creditor in the CRO on 1st June, 2012 or 7th June, 2012 would have disclosed that the appellants were directors of those companies. On the other hand, Mr. Hanrahan did contradict some averments by Mr. O’Donnell, for example, that he did not have any economic interests and did not own any residential property in Ireland. As has been outlined, Mr. Hanrahan identified a number of properties in this jurisdiction which were jointly owned by the appellants and which remained in their ownership, notwithstanding that receivers had been appointed.

43. As regards the evidential conflicts which emerged from the affidavits which were before the High Court, it is difficult to understand why neither of the parties sought leave to cross-examine the other’s deponent, particularly against the background that, in essence, a similar issue had been the subject of a seven day hearing in the High Court in London. Nonetheless, the crucial question for this Court is whether there was sufficient uncontradicted credible evidence before the High Court which supported the findings made by the trial judge on the material questions to be determined by him, namely, whether the centre of main interests of each of the appellants at the respective date of the presentation of the petition against him or her was within this jurisdiction, which he found was the case.

Conclusion
44. Bringing the necessary objectivity to bear on the criteria by reference to which the centre of main interests of each of the appellants at the relevant date is to be determined, having regard to the factual context, the principal criterion is not whether each of the appellants was habitually resident in this jurisdiction or elsewhere on the relevant date. If the factual context was different, the habitual residence of each of the appellants would be the primary consideration. However, what the evidence before the High Court clearly demonstrated was that the appellants, jointly as business partners, were engaged in an independent business conducted from Ireland, that is to say, the business of investing in property in Ireland, in the United Kingdom, in Europe and in the United States of America. The sums of money to which Mr. O’Donnell referred in very general terms in his affidavit as being sums which had been realised by financial institutions from companies which were within the appellants’ control and were part of their business, as outlined earlier, give an overall impression, albeit an imprecise impression, of the scale of the business activity in which the appellants were involved prior to 2012 and the scale and value of the assets of that business which their creditors realised after 2011. What is clear, on Mr. O’Donnell’s own uncontradicted evidence, is that the business activity in which the appellants were jointly involved is at the root of their insolvency. Accordingly, the criterion to be applied in determining in which jurisdiction each of the appellants’ centre of main interests was at the relevant date is that identified by Virgós and Garcimartín for individuals engaged in an independent business, namely, in which jurisdiction did the appellants have their business centre at the relevant dates. There was ample uncontradicted evidence before the High Court from Mr. O’Donnell’s affidavit, which was elaborated on by Mr. Hanrahan’s affidavit, from which the trial judge was entitled to conclude that the jurisdiction in which the appellants conducted the central administration of their business interests and their economic activity as a whole was this jurisdiction.

45. Further, there was ample uncontradicted evidence before the High Court on the basis of which it was open to the trial judge to conclude that a reasonable creditor or potential creditor who sought, as of the relevant date, to ascertain where the centre of main interests of either appellant was, would form the view that it was in this jurisdiction. The mere fact that the appellants themselves initiated bankruptcy proceedings in the United Kingdom, which were ultimately unsuccessful, asserting that their centre of main interests was at the time of the initiation of those proceedings in the United Kingdom, and that their action attracted a certain level of media coverage, cannot be seen as countervailing the facts which were established as being in the public domain in relation to the appellants’ business interests and economic activities at the relevant dates. These facts included: the appellants’ indebtedness to the petitioner in this jurisdiction; the properties owned by and connected with the petitioners in this jurisdiction; the registration of their business partnership under the Registration of Business Names Act 1963; and the record of their directorship of Irish business companies in the CRO. All of those matters were known or ascertainable at the relevant dates.

46. Accordingly, I am satisfied that the trial judge was correct in his conclusion that the centre of main interests within the meaning of the Insolvency Regulation of each of the appellants was within this jurisdiction when the petitioner presented the relevant petition to the High Court for the adjudication of that appellant as a bankrupt.


Order
47. I am satisfied that there should be an order dismissing the appellants’ appeal.



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