In Ireland, where a person is adjudicated a bankrupt, all the rights and interests in the property of the bankrupt vest in the Official Assignee. The conduct of, and participation in, any legal proceedings which affect the rights or interests in the property of a bankrupt is within the power of the Official Assignee.
In the recent High Court case* involving the Quinn family and Irish Bank Resolution Corporation, the Court was asked by Mr Sean Quinn (a bankrupt who had been joined as a third party to the proceedings) that he be entitled to participate in and defend proceedings issued against him in circumstances where the Official Assignee had decided not to contest the proceedings. The Official Assignee had declined to participate in the litigation as he could discern no benefit to Mr Quinn’s creditors in so doing which the Court held as a “perfectly proper basis for the Assignee to decide not to defend”.
Mr Quinn had asserted that rights of actions that are personal to a bankrupt (other than property rights) do not vest in the Official Assignee. He further asserted that he had a personal constitutional entitlement to defend proceedings in which his good name was put to hazard and that this right was also guaranteed under the European Convention on Human Rights.
However, the High Court found against Mr Quinn and determined that if Mr Quinn is not entitled to defend the proceedings and if the bank is successful, then judgment will be automatically obtained against Mr Quinn and an award in damages granted to the bank. There would be no adjudication or finding touching on Mr Quinn’s reputation or good name. There is little precedent in Ireland on this subject and, citing case law from the UK, the Court did appear to acknowledge that a bankrupt could have standing to defend proceedings in exceptional circumstances, such as defamatory matters for example, which do not impact on the property of the bankrupt.
The High Court also held that there was no infringement of Mr Quinn’s constitutional rights or breach of the European Convention on Human Rights. The Court determined that the authorities advanced by Mr Quinn did not support his contention. The Court further noted that the protection of bankruptcy provides the bankrupt with considerable advantages but that protection against creditors comes with a cost which includes the decision on whether or not to defend a claim affecting the property of a bankrupt residing in the Official Assignee.
There are a number of proposed amendments to the personal bankruptcy legislation included in the recent Personal Insolvency Bill. To view an article on the Bill, please click here.
* Quinn & Ors v Irish Bank Resolution Corporation Limited & Ors IEHC 261
Contributed by Craig Sowman.
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