The High Court ruled that the Official Assignee can continue proceedings over assets allegedly transferred by bankrupt businessman Sean Dunne, and that the Chapter 7 trustee in the United States would be bound by the Irish court’s decision in this case.
Mr Justice Brian McGovern delivered the judgment on 22 June 2018. It addresses two questions about US bankruptcy law referred back to the High Court after the Court of Appeal overturned an earlier decision because the defendant had been denied the opportunity to cross-examine a US law expert.
The Official Assignee’s underlying claim seeks declarations that transfers of Mavior shares and other assets to Gayle Dunne, also referred to in the judgment as Gayle Killilea, or companies controlled by her, were void under Irish bankruptcy and fraudulent conveyance law. The assets identified include Mavior director’s loans, shares transferred in October 2008, the Lagoon Beach Hotel in Cape Town, and assets covered by a February 2008 agreement. These remain claims in the proceedings; the court did not decide whether the transfers were unlawful.
On the first question, the judge concluded that US law vested the entire bankruptcy estate in the Chapter 7 trustee, but that the Official Assignee had standing to bring these Irish proceedings. He relied on a US bankruptcy judge’s order lifting the automatic stay nunc pro tunc to permit the Official Assignee to pursue the claims, and on the appellate court’s decision upholding that order. The judge said this arrangement did not conflict with Irish public policy.
On the second question, the judge found, on the balance of probabilities, that a decision in the Irish proceedings would bind the Chapter 7 trustee in the US through res judicata or collateral estoppel. He accepted evidence that it would be extremely difficult for the trustee to revive the US claims concerning Mavior after they had been dismissed or discontinued to allow the Irish action to proceed. He said this conclusion was specific to this case and the circumstances in which the US stay was lifted.
The judgment does not resolve the defendant’s motion to dismiss or strike out the proceedings on grounds of forum non conveniens or abuse of process. Those issues remain to be determined. The judge said he would hear from counsel on how the case should proceed after they had considered his ruling.