The High Court has ruled that the Official Assignee in bankruptcy is the only person entitled to defend Permanent TSB’s proceedings against Simon and Lilian Kennedy or pursue Mr Kennedy’s counterclaim. Mr Justice Noonan said the counterclaim had vested in the Official Assignee when Mr Kennedy was adjudicated bankrupt in 2012. The judge left consequential orders to be discussed with the parties.
Permanent TSB’s proceedings concern loans advanced in 2006 and 2007. The first, for €501,250, was advanced to Mr Kennedy and was to be secured on his former solicitor’s practice premises at 4 Charles Street, New Ross. The second, for €320,000, was advanced to both defendants and, according to the bank, was to be secured on their family home, Ardlegréine, in Duncannon.
The bank alleged breaches of the loan terms and solicitor’s undertakings concerning the security. Mr Kennedy disputed that the family home was to secure the 2007 loan, saying the undertaking had been signed inadvertently on his behalf while he was in the United States. He also alleged that the bank refused an additional €180,000 he said had been agreed for an extension, and unlawfully set off €100,000 in his account. The judgment records that he later obtained the additional money from Bank of Scotland (Ireland), which took a first charge on the home. The defendants defaulted on loan payments, and the proceedings began in February 2009.
Mr Kennedy’s counterclaim alleged that the bank’s actions—including restricting access to funds, threats to report or sue him, ending banking facilities and notifying a credit bureau—damaged his practice. The judge said its primary, and perhaps only, complaint concerned financial loss to Mr Kennedy’s estate. He noted that no defamation or personal injury claim had been explicitly pleaded; even if one could be implied, the counterclaim would at most be a hybrid claim that remained under the Official Assignee’s control.
Mr Kennedy was adjudicated bankrupt on 18 June 2012. The Official Assignee repeatedly told the bank he would neither defend the bank’s claim nor pursue the counterclaim, and consented to judgment as a proven debt in the bankruptcy. Mr Kennedy argued that preventing him from litigating was unfair and breached rights to a fair hearing. The judge rejected that argument, noting that Mr Kennedy had been discharged from bankruptcy by operation of law in 2015 and that the counterclaim had vested in the Official Assignee on adjudication.
The ruling determined who had standing to conduct the proceedings. It did not itself set out the consequential orders, which the judge said he would discuss further with the parties.