Brian O'Donnell & Mary Patricia O'Donnell (Petitioners) v The Governor and Company of the Bank of Ireland
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 21 December 2012 |
| Neutral Citation | [2012] EWHC 3749 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Nos: 1786 & 1794 of 2012 |
| Date | 21 December 2012 |
[2012] EWHC 3749 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN BANKRUPTCY
RE BRIAN AND MARY PATRICIA O'DONNELL
IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building, Royal Courts of Justice,
7 Rolls Buildings, Fetter Lane,
London EC4A 1 NL
Mr Justice Newey
Case Nos: 1786 & 1794 of 2012
Mr Paul Burton (instructed by Piper Smith Watton LLP) for the Petitioners
Mr Gabriel Moss QC and Miss Hannah Thornley (instructed by Berwin Leighton Paisner LLP) for the Respondent
Hearing dates: 27–30 November and 3, 4 & 6 December 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
I have before me petitions presented on 27 March of this year by which Mr Brian O'Donnell and his wife Dr Mary Patricia O'Donnell ask for bankruptcy orders to be made against them.
The central question raised by the case is whether the "centre of main interests" (or "COMI") of the O'Donnells is (or at any rate was when they presented their petitions) in this jurisdiction. The O'Donnells maintain that the answer is "Yes" and, hence, that this Court should make bankruptcy orders. In contrast, the Bank of Ireland ("the Bank") disputes that the O'Donnells' COMI has ever been anywhere but Ireland and accuses them of "bankruptcy tourism". According to the Bank, bankruptcy orders should be made in Ireland.
Basic facts
Mr and Dr O'Donnell, who are both Irish citizens, have been married since 1976. Each has a professional qualification. Mr O'Donnell had qualified as an Irish solicitor by 1976, and in 1999 he set up his own practice, Brian O'Donnell Solicitors, in Dublin. Dr O'Donnell is a qualified psychiatrist, although she ceased to practise as such after her third child was born.
In the 1980s, the O'Donnells began to invest in property. Various investments were made by them (or entities associated with them) in Ireland. The properties acquired included office buildings and a car park in Merrion Square in Dublin, an office and retail building on South William Street in Dublin, shopping centre and restaurant units in Galway and residential properties in Dublin. They also bought, through a Luxembourg company called Greystoke SA, property in Courchevel in France.
Between 2005 and 2008, there were investments in London, Stockholm and Washington DC. 15 Westferry Circus in Canary Wharf was acquired in 2005, and 17 Columbus Courtyard, also in Canary Wharf, was purchased later in that year. In 2006, Sanctuary Buildings in Westminster was bought, and the Fatburen Building in Stockholm followed in 2007. In April 2008, 2099 Pennsylvania Avenue in Washington was purchased.
The investments in London, Stockholm and Washington were effected using single purpose vehicles; in Mr O'Donnell's phrase, the acquisitions were "made in separate silos". 15 Westferry Circus was acquired in the name of Hibernia (2005) Limited ("Hibernia"), 17 Columbus Courtyard in the name of Fourteen Ninety Two Limited ("Fourteen Ninety Two"), Sanctuary Buildings in the name of Redicent Limited ("Redicent"), the Fatburen Building in the name of Myrtleville AB ("Myrtleville") and 2099 Pennsylvania Avenue in the name of Vico 2099 LLC ("Vico 2099"). Hibernia and Fourteen Ninety Two are both incorporated in England and Wales, while Redicent is registered in Cyprus, Myrtleville in Sweden and Vico 2099 in Delaware. Mr and Dr O'Donnell became directors of all the companies.
With 17 Columbus Courtyard and the Fatburen Building, the O'Donnell family's interests were held through further companies. In the case of 17 Columbus Courtyard, a British Virgin Islands company now called Havergate Investments Limited (formerly Columbus Courtyard Limited) was used. Vico Swiss Holdings AG, which is incorporated in Switzerland, was employed in relation to the Fatburen Building.
By 2005, the O'Donnells were using the name "Vico Capital". As the O'Donnells explained, "Vico Capital" is in essence a trading name, the name by which they have been known in the real estate market. In 2008, the O'Donnells registered "Vico Capital" in Ireland as a business name; the date of adoption of the name was given as 25 May 2005, and the relevant business was identified as a partnership owned by the O'Donnells. A company bearing the name "Vico Capital" had been incorporated in Ireland in 2000, but it does not appear to have traded.
There was a further Irish investment in 2006: in 84 Ailesbury Road, Dublin. Mr O'Donnell had also acquired, I think in about 2005, a 50% interest in a property in Dublin known as Merchants Arch.
The O'Donnell family came to own a substantial house near Dublin called Gorse Hill and a country estate, Gortdrishagh House, in Galway. A large house at 8 Barton Street in Westminster was bought for £10.5 million in August 2007. The O'Donnells also acquired Bentley, Daimler and Morgan cars.
Each of the properties mentioned in the previous paragraph was vested in a company. Gorse Hill is owned by Vico Limited, an Isle of Man company, Gortdrishagh House by an Irish company called Avoca Properties Limited ("Avoca") and 8 Barton Street by Vico Barton Limited ("Vico Barton"), incorporated in Jersey.
On 23 December 2010, the Bank issued proceedings against the O'Donnells in Ireland for more than €69 million. On 4 March 2011, a settlement agreement was concluded between the Bank and, among others, the O'Donnells pursuant to which the O'Donnells agreed to judgment being entered against them if, among other things, they failed to comply with a payment schedule. In the event, payments were not made in accordance with the schedule so the Bank applied for judgment. On 12 December 2011, judgment was given in the Bank's favour for €71,575,991.29 plus costs.
Shortly after this, the O'Donnells travelled to London in their Bentley. They spent Christmas at Gorse Hill with their children, but took the ferry from Dublin to Holyhead on 29 December 2011. They have not left England since except to attend hearings before the Irish High Court.
Early in January 2012, the O'Donnells consulted David Rubin & Partners, licensed insolvency practitioners. The possibility of an individual voluntary arrangement (or "IVA") was then explored, but the Bank rejected what was proposed.
By a letter dated 19 January 2012, solicitors acting on behalf of the O'Donnells had told the Bank that their clients' COMI was in London. Arthur Cox, Irish solicitors, replied on the Bank's behalf on 1 February asserting that the O'Donnells' COMI was "clearly the Republic of Ireland".
The petitions with which I am concerned were presented by the O'Donnells on 27 March 2012. On the same day, Chief Registrar Baister gave directions for the O'Donnells to file evidence in support of their contention that their COMI is in England and Wales and for notice of the hearing of the petition to be given to their creditors. Thereafter, the Bank gave notice that it opposed the petitions.
On 25 May 2012, the Bank presented a bankruptcy petition against Mr O'Donnell in Ireland. A similar petition was presented against Dr O'Donnell on 7 June. Both petitions have been adjourned to await the outcome of the petitions that are before me.
In the course of this year, Mr O'Donnell has been examined as to his assets before Kelly J in the Irish High Court. The examination extended over four days in April and continued on 5 July.
The Bank considers that the sums it is owed account for some 91% of the O'Donnells' total indebtedness. Other creditors to whom Mr and Dr O'Donnell are both indebted include Allied Irish Bank, Anglo Irish Bank, Ulster Bank and MBNA. Mr O'Donnell also owes money to Shale Construction Limited (a construction company that was employed to carry out work at Merchants Arch) and Fleishman Hilliard (though this debt is apparently the subject of dispute).
The O'Donnells have four children. The eldest, Blake, is now 29, their second son, Bruce, is 27, their elder daughter, Blaise, is 25, and their younger daughter, Alix, is 20. At least three of them continue to live at Gorse Hill.
Legal principles
Article 3(1) of EC Regulation on Insolvency Proceedings 1346/2000 ("the Regulation") provides, so far as relevant, as follows:
"The courts of the Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings".
The concept of "centre of main interests" has an "autonomous meaning and must therefore be interpreted in a uniform way, independently of national legislation": see the judgment of the [ECJ] in In re Eurofood IFSC Ltd ( Case C-341/04) [2006] Ch 508 (paragraph 31).
Light is cast on the meaning of "centre of main interests" by recital (13) to the Regulation (see Eurofood, at paragraph 32 of the judgment, and Interedil Srl v Fallimento Interedil Srl ( Case C-396/09) [2012] Bus LR 1582, at paragraph 47 of the judgment). Recital (13) states:
"The 'centre of main interests' should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties".
Recital (13) harks back to wording used in the Virgos-Schmit report (Report on the Convention on Insolvency Proceedings, Brussels, 3 May 1996). This report was designed to provide a commentary on a November 1995 Convention on Insolvency Proceedings. That Convention did not itself come into force, but it provided the basis for the Regulation.
The Virgos-Schmit report says this about the expression "centre of main interests" (in paragraph 75):
"The concept of 'main...
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