O'Donnell & Anor v Bank Of Ireland

On 21 December of last year, following a seven-day trial, I handed down a judgment by which I dismissed petitions that Mr Brian O’Donnell and his wife Dr Mary Patricia O’Donnell had presented on 27 March for bankruptcy orders to be made against them. I did so on the basis that the O’Donnells’ “centre of main interests” (or “COMI”) was in Ireland rather than England when the petitions were presented.

What are before me now are applications for the orders I made on 21 December to be reviewed. The O’Donnells contend that those orders should be set aside and that I should instead make bankruptcy orders.

The applications are made pursuant to section 375(1) of the Insolvency Act 1986. That empowers the Court to “review, rescind or vary” any order made by it in the exercise of its jurisdiction under the Second Group of Parts of the Act.

Useful guidance as to the principles to be applied when considering an application under section 375 is to be found in the judgment of Laddie J in Papanicola v Humphreys [2005] EWHC 335 (Ch), [2005] 2 All ER 418. At paragraph 25 of his judgment, Laddie J said this:

“It seems to me that a number of propositions can be formulated in relation to s 375…. (1) The section gives the court a wide discretion to review vary or rescind any order made in the exercise of the bankruptcy jurisdiction. (2) The onus is on the applicant to demonstrate the existence of circumstances which justify exercise of the discretion in his favour. (3) Those circumstances must be exceptional. (4) The circumstances relied on must involve a material difference to what was before the court which made the original order. In other words there must be something new to justify the overturning of the original order. (5) There is no limit to the factors which may be taken into account. They can include, for example, changes which have occurred since the making of the original order and significant facts which, although in existence at the time of the original order, were not brought to the court's attention at that time. (6) Where the new circumstances relied on consist of or include new evidence which could have been made available at the original hearing, that, and any explanation the applicant gives for the failure to produce it then or any lack of such explanation, are factors which can be taken into account in the exercise of the discretion”.

Laddie J went on (in paragraph 26):

“The second and fourth of these propositions merit some expansion. Inherent in s 375 is the concept that something has changed so that it is appropriate for the court to reconsider its own earlier order. If there is no change in circumstances, the only way to challenge the order is by appeal. The court is not to review its order simply on the basis that the applicant wants to present essentially the same facts and the same arguments but more forcefully or attractively”.

Papanicola v Humphreys has been cited in more than one subsequent case. In HM Revenue and Customs v Cassells [2008] EWHC 3180 (Ch), [2009] BPIR 284, Sir Andrew Morritt said (in paragraph 2) that he “would emphasise the point made in the second of the stated principles, … namely that the circumstance must be one which justifies the exercise of the statutory discretion in favour of the applicant”. In Raguz v Scottish & Newcastle Ltd [2010] EWHC 1384 (Ch), [2010] BPIR 945, Proudman J stressed (at paragraph 51) that the jurisdiction “should only be exercised in an exceptional case, and only where there is something new which has occurred since the decision in question”.

Mr Gabriel Moss QC, who appears for the Bank of Ireland with Mr Richard Fisher, said that he and Mr Fisher were unable to think of any case in which there had been a successful section 375 application following a full trial with cross-examination. Mr Moss did not submit, and it cannot be the case, that the fact that there has been such a trial represents an absolute bar to an application under section 375. In practice, however, it is, I think, likely to be harder to succeed under section 375 where (as in the present case) the order which the applicant wishes to have reviewed was made after a lengthy trial at which there was cross-examination and the applicant was represented by experienced lawyers. The circumstances must be exceptional for the Court to accede to any section 375 application. It must be particularly unusual for the circumstances to warrant an order under section 375 when there has been a trial such as took place in this case.

On this occasion, unlike at the trial, the O’Donnells have not instructed lawyers to represent them. Mr O’Donnell (who is himself, of course, a solicitor by profession) appears in person and also represents his wife.

The O’Donnells’ case is essentially that an order under section 375 is warranted by new evidence. Mr and Dr O’Donnell have each made witness statements exhibiting documents which were not before me at the trial and which they say would or might have altered my conclusions.

Certain of the documents produced by the O’Donnells post-date not merely the presentation of the petitions, but my judgment. This category includes a document confirming that Mr O’Donnell submitted a tax return to HM Revenue and Customs on 29 January 2013 and a tenancy agreement that the O’Donnells have recently entered into in respect of a house in Kent. It includes too the printouts from the Irish Companies Registration Office that the O’Donnells have exhibited. Some of the printouts concern the striking off of four Irish companies in February of this year. The last printout relates to the registration of “Vico Capital” as a business name and states “Ceased”, “Effective date: 01/04/2011”. In the course, however, of submissions, Mr O’Donnell told me that these details were based on information that had been supplied to the Companies Registration Office since the judgment. They would not, therefore, have been available to anyone searching at the Companies Registration Office up to 27 March 2012, when the petitions were presented. The other documents in this category must be of no significance for similar reasons. None of them can shed any light on what a third party could have discovered when the petitions were presented last March.

Some of the other documents that the O’Donnells have produced add nothing material to evidence that was available at the trial. That is true of the documents relating to the Vico Capital website. These show that the website gave the Barton Street address and English telephone and fax numbers. However, evidence about the website was before me at the trial, and I noted in the judgment (at paragraph 45) that Vico Capital’s address was stated as 8 Barton Street on its website. In certain other respects, as I recorded in paragraph 46(i) of the judgment, the website referred to Ireland.

The correspondence with the Bank of Ireland and Allied Irish Bank also seems to me to provide no new information of any importance. The judgment assumed that the Bank of Ireland and Allied Irish Bank had both been informed of a move to the United Kingdom. Documents confirming that the banks were told of, and addressed communications to, the Barton Street address can thus take matters no further.

The articles from the press that the O’Donnells have exhibited are, I think, of no real assistance, either. As Mr O’Donnell pointed out, they refer to Vico Capital as “London-based” or “based in London” and to investments in the United Kingdom. However, they also speak of Vico Capital as a “company” and of investments elsewhere in Europe and in the United States. More importantly, perhaps, they contain Irish references. For example, Mr O’Donnell is described as an “Irish lawyer”, as an “Irish solicitor”, as “one of Ireland’s leading corporate lawyers”, as having established a legal practice “involved in some of the country’s [i.e. Ireland’s] biggest takeovers and mergers”, as having spent most of his career with “one of Dublin’s biggest law firms” and as having established a legal practice “based in historic Merrion Square in Dublin” and “on a panel of solicitors used by Ireland’s bad bank”. The O’Donnells are, moreover, described as having a “Killiney home”. As late as 27 March 2012, the day the petitions were presented, an article was published in which it was said that the O’Donnells “live on Vico Road in Killiney, Dublin” and faced losing “their palatial Killiney home”.

Several other documents supplied by the O’Donnells are similarly unhelpful. The extract from the Defence and Counterclaim of Shale Construction Limited may show that someone acting for Shale had looked at the Vico Capital website, but (a) that website conveyed a mixed message and (b) the Defence and Counterclaim also referred to the website for Mr O’Donnell’s Dublin firm, which was stated to have a “proven record of successful outcomes in the Irish Commercial and High Court”. Shale’s 2011 accounts reveal nothing at all about the O’Donnells’ COMI. The letter from the Law Society of Ireland indicates that it had been told that Mr O’Donnell’s home address was in Barton Street, but it also tends to confirm that the winding-up of his (Dublin-based) practice remained uncompleted. As regards the letter from Irish Life, Mr O’Donnell has a pension policy with Irish Life; it is not a creditor.

That leaves correspondence with creditors other than the Bank of Ireland and Allied Irish Bank. This is more obviously material.

In paragraph 55 of the judgment, I said this:

“As mentioned above (paragraph 40(viii)), it was asserted by Mr O’Donnell in cross-examination that all his and his wife’s creditors (and not merely the Bank [of Ireland] and Allied Irish Bank) had been informed by letter of their move to the United Kingdom. I do not accept, however, that that was the case”.

In paragraph 40 (viii) of the judgment, I had said this:

“Mr O’Donnell claimed in cross-examination that all his and his wife’s creditors (and not merely the Bank and Allied Irish Bank) had been informed by letter of their move to the United Kingdom. For example, he said:

‘we wrote to our creditors and provided them with the information and asked them to redirect or to send or contact or phone us at all times in Barton Street’.

I cannot accept this. Had it been the truth, the O’Donnells would have copies of the letters and would have exhibited them. Further, Mr Byrne of Shale Construction Limited confirmed that his company had not received such a letter”.

The documents on which the O’Donnells rely are designed to show that creditors other than the Bank of Ireland and Allied Irish Bank were told of a move to London. The documents include a letter dated 17 January 2012 in which Mr O’Donnell asked Anglo Irish Bank to “amend your records so that all statements are addressed to me at the above address [i.e. 8 Barton Street]”, a letter to Mr O’Donnell of 24 January 2012 in which MBNA acknowledged receipt of a “recent address change notification” and an email of 29 February 2012 to Ulster Bank in which Mr O’Donnell’s address was given after his name as 8 Barton Street. Finally, there is an email of 9 January of this year to Mr O’Donnell from his former personal assistant which reads as follows:

“I think it was around December 2011 or January 2012, can’t confirm exactly when. Suzanne Murphy pa to James Morrissey was looking for payment on an invoice at the time. You had requested a breakdown of the invoice. If you still have access to Vico emails I would have sent email to you around that time. Hope this helps”.

In one of his witness statements, Mr O’Donnell said of this document:

“I understand that Mr Morrissey’s personal assistant was in contact with my then personal assistant on 23 January 2012 and was informed I was living in the UK”.

This documentation is not without relevance. On balance, however, I do not think it justifies the reopening of the orders I made in December.

In the first place, there is no adequate explanation of why the documents were not produced earlier. According to Mr O’Donnell, the correspondence was available at the time of the trial and “could have been produced at the shortest notice”. Mr O’Donnell now seeks to blame his then lawyers for the fact that the material was not in fact made available, but what he says does not seem to me to afford a good enough excuse. There is no documentary support for Mr O’Donnell’s accusations against his lawyers, and they could be expected to dispute them strongly. Even assuming, however, that the allegations are well-founded, it is not obvious that the O’Donnells should be allowed to disavow conduct of their representatives. In any case, I cannot see how Mr O’Donnell can escape personal responsibility for the fact that the correspondence was not disclosed at the trial. He was challenged on his evidence as to communications with creditors in cross-examination on both 29 and 30 November. It was put to him in terms that, if his evidence on the point were correct, he “would have exhibited those letters” and that he had not “produced a single piece of paper to suggest a general circularisation to [his] creditors”. The point also came up more than once in closing argument. Mr Moss submitted that “there was actually no hard evidence at all of a general circularisation, and specific evidence against, in the case of Mr Byrne”. During the O’Donnells’ counsel’s submissions, I said:

“I’m afraid I do find it surprising that if those letters were written they’re not in the bundles”.

The O’Donnells’ counsel responded:

“My Lord, it is – yes, if anyone had access to them, then they would be in the bundles. Why they haven’t, I don’t know. It’s not for me to speculate”.

It is to be noted (a) that Mr O’Donnell was in Court during the closing submissions, (b) that a week had passed since Mr O’Donnell had first been asked about letters to creditors in cross-examination (so that there had been plenty of time to assemble the documents) and (c) that he was a solicitor of many years’ experience.

Secondly, I have not been persuaded that the additional documents would have changed my decision had they been before me at the trial. While they indicate that several more creditors had been informed that the O’Donnells’ address had changed to 8 Barton Street, they do not bear on whether such a move was ascertainable by third parties generally. A linked point is that my rejection of Mr O’Donnell’s evidence as to what his and his wife’s creditors had been told was by no means the only reason I gave for concluding that the O’Donnells’ COMI remained in Ireland. The new evidence does not affect either my reasons for thinking that the O’Donnells’ COMI was in Ireland up to December 2011 or paragraphs 52-54 of my judgment (in which I dealt with some of the factors bearing on whether the O’Donnells’ COMI shifted from Ireland to England between December 2011 and 27 March 2012). Further, the documents the O’Donnells have exhibited do not establish that Mr O’Donnell was correct when he maintained in cross-examination that all his and his wife’s creditors had been informed by letter of their move to England. In particular, the materials do not seem to me to cast any doubt on my finding that Shale was not told. The evidence relating to Mr Morrissey is also far from compelling. The email Mr O’Donnell has exhibited in this connection may be consistent with his explanation of events, but it does not confirm it. Moreover, Mr O’Donnell’s former personal assistant has not made a witness statement, and Mr Moss has had no opportunity to explore the issues with her in cross-examination. In addition, there would, as Mr Moss pointed out, have been scope for argument as to what significance should be attached to informing creditors of a change of correspondence address.

In all the circumstances, I do not consider that this is one of those relatively rare cases in which it is appropriate to reopen a decision pursuant to section 375. To the contrary, the O’Donnells have not, in my view, demonstrated the existence of circumstances justifying the exercise of the statutory discretion in their favour. I shall accordingly dismiss the O’Donnells’ applications.