The High Court has dismissed a challenge to the conditions for discharge from bankruptcy after finding that the plaintiff had not established standing to contest the relevant provision of the Bankruptcy Act 1988.
The claim concerned section 85(4), which allows discharge after a bankruptcy has lasted 12 years only where the bankrupt’s estate has been fully realised, provision has been made for bankruptcy expenses, fees and costs and preferential claims, all after-acquired property has been disclosed, and the court considers discharge reasonable and proper.
The plaintiff argued that requiring payment of expenses and preferential claims before discharge could leave some bankrupt people in bankruptcy indefinitely. He claimed the provision was incompatible with constitutional protections and the Convention’s reasonable-time guarantee. His separate request to be released from bankruptcy was not pursued; his counsel accepted that discharge could not be automatic and had to follow the statutory procedure.
The plaintiff was adjudicated bankrupt in 1991 on a petition citing tax, social insurance and VAT arrears, interest and a High Court judgment. The judgment recorded preferential revenue claims of €75,632.51, while no evidence was given of the expenses, fees and costs due in the bankruptcy. It also described unfinished proceedings brought by the Official Assignee to set aside a pre-bankruptcy transfer of a house and farm to the plaintiff’s wife and daughter. The court said it would draw no inference about why those proceedings had not been completed.
The judge found that the plaintiff had not shown that his estate had been fully realised, a separate precondition for discharge. The pending proceedings concerning the transferred property meant the court could not conclude that this condition had been met. The plaintiff therefore had not shown that removing the payment requirement would make him eligible for discharge, leaving his challenge without a live issue of prejudice.
The court also said the plaintiff had not pursued available routes that might have assisted a discharge, including a composition with creditors or seeking the court’s assistance in relation to the Official Assignee’s proceedings. It rejected the Convention argument, explaining that the claim concerned automatic discharge after 12 years, rather than delay by State bodies in bringing a legal process to judgment within a reasonable time. The constitutional argument was also described as misconceived. The court made no finding that the statutory payment condition was incompatible with the Constitution or the Convention; it dismissed the claim.