Times Newspapers Ltd v Michael Bernard McNamara
| Jurisdiction | England & Wales |
| Judge | Mr Registrar Baister |
| Judgment Date | 13 August 2013 |
| Judgment citation (vLex) | [2013] EWHC J0813-2 |
| Docket Number | Case No: 5384 of 2012 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 13 August 2013 |
[2013] EWHC J0813-2
IN THE HIGH COURT OF JUSTICE
IN BANKRUPTCY
IN THE MATTER OF MICHAEL BERNARD McNAMARA
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
No 7 The Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Registrar Baister
Case No: 5384 of 2012
David Hirst (instructed by Legal Department, Times Newspapers Limited) for the Applicant
The Respondent did not appear and was not represented
Hearing date: 18 July 2013
The petition and the application
On 2 November 2012 Michael Bernard McNamara presented his own bankruptcy petition to this court. It was supported by a statement of affairs in Form 6.28 and by a further lengthy witness statement which appears to have been made in anticipation of questions that were likely to be raised as to the location of Mr McNamara's centre of main interests. A bankruptcy order was made that day by Mr Registrar Jones. From the order it would appear that the registrar did not hear the debtor, but the order records that the registrar read the petition, the statement of affairs, the witness statement and the exhibits.
Mr McNamara, the respondent to this application, is one of a number of Irish citizens who, having found themselves insolvent, frequently with very substantial debts, have come to this country in recent years seeking relief from creditor pressure in the form of an English bankruptcy order. The phenomenon of "bankruptcy tourism" (a term I use neutrally) and the circumstances that give rise to it have become matters not only of legal but of general public interest. Among those interested is Mr Mark Tighe, a journalist specialising in legal and financial matters, who works for The Sunday Times of Ireland, which is owned by the applicant company.
On 28 November 2012 the applicant issued an application pursuant to rule 7.31A(6) Insolvency Rules 1986 seeking inspection of the court file. The application is supported by two witness statements of Barney Monahan, a solicitor in the applicant's legal department, but was opposed by the respondent who has also filed and served two witness statements. The respondent did not appear at the final hearing. He wrote to the court (and the applicant) on 16 July 2013 explaining that his financial situation was such that he could not engage representation and asking that the contents of his witness statements be taken into account. He did not apply (formally or informally) for an adjournment. Both of the respondent's witness statements are well drafted. I compliment him on the clarity with which he has advanced his reasons for opposing inspection.
Background
The background facts and reasons for seeking inspection of the court file are set out in Mr Monahan's first witness statement:
"5. The Sunday Times (Ireland) has a history of reporting on matters of great national and international concern and of quality, investigative journalism on matters of significant public interest. In particular, the Sunday Times (Ireland) has avidly reported upon the financial crisis in Ireland and the impact of Irish businessmen relocating to this jurisdiction in order to avail [themselves] of the more lenient bankruptcy regime (referred to as " bankruptcy tourism").
6. Mr McNamara is very well known in Ireland (and in the United Kingdom) from his role as a property developer and hotelier. Mr McNamara was one of the leading property developers in Ireland before the property bust. He was involved in some of the most expensive and controversial land deals done in Ireland during the boom. When the crash occurred his loans of some €1.5 billion were taken over by the National Asset Management Agency (NAMA), the "bad bank" set up by the Irish government. Mr McNamara was reported to have been paid up to €300,000 by NAMA while managing his affairs with NAMA. He declared bankruptcy in England shortly before NAMA sought to have a multi-million euro judgment registered against him in the Irish High Court. Mr McNamara was a former Fianna Fail politician and stood for the election to the Dail, the Irish parliament, in 1981. Fianna Fail was the party in power from 1997 to 2011 in Ireland. Mr McNamara's companies were know for their close support of Fianna Fail and for winning many lucrative public contracts. When NAMA was first established many saw it as a "bailout for the developers" by Fianna Fail.
7. Mr McNamara and his companies amassed debts o[f] €1.5 billion largely with banks that now have been bailed out by the Irish or British taxpayers. Despite his bankruptcy it has been reported that Mr McNamara continues to work in property development and continues to live in relative luxury. I understand as part of his bankruptcy application Mr McNamara would have had to declare what security banks or other creditors had over his assets. There is a strong public interest in discovering what security, if any, the banks took from Mr McNamara before issuing massive loans that had the property prices in Ireland in the last decade before the property bubble burst. There is also a public interest in discovering what, if any, steps NAMA took to prevent Mr McNamara from dissipating his many assets before he declared bankruptcy. Also, although McNamara has been able to wipe away over €1.5 billion of debt in Ireland it is not clear on what basis he has established his Centre of Main Interest (COMI) is in England and not Ireland where he has [been] known to be based. It is in the public interest for it to be revealed how Mr McNamara has established his COMI as England when it appears not even NAMA his biggest creditor was aware of this as it pursued him through the Irish courts.
8. I identified grounds of strong public interest supporting the application for access to the court documents identified above in section (b) of the application notice, namely the process (on a case by case basis) by which bankruptcy petitioners from the Irish republic, notably those involved in property development, are able to be declared bankrupt in England and Wales, and thereby select a preferred forum for their bankruptcy (the process of being discharged from bankruptcy may take up to twelve years in Ireland compared to one in England). Secondly I identify that the Respondent owes substantial sums to Irish banks which have been bailed out by Irish taxpayers, the state and European bailout funds.
9. I understand, that in particular, property developers, of whom Mr McNamara was one, borrowed heavily from Irish banks to fund their activities in the last decade. (One of Mr McNamara's biggest creditors was Anglo Irish Bank, which has now been taken over by the Irish state at a cost of over €31 billion.) Through bailout agreements with the EU and other states, such as the UK, Ireland has been saddled with substantial debts of around €180 billion, money which has been spent, in large part, recapitalising Irish banks which had lent on property development. I understand that by submitting their affairs to the courts in England and Wales to declare bankruptcy here, wealthy developers who owed €2 billion to Irish banks or the state have submitted to the jurisdiction of the Court in England and Wales as part of a wave of "bankruptcy tourism". This has led, I gather, to discussions of the urgent reform of the bankruptcy system in Ireland as well as European harmonisation of personal insolvency rules. Accordingly, the English courts have discretion over substantial assets which may be owed to Irish banks.
[…]
11. A third element of public interest exists. It is in the public interest that the amounts owed by the Respondent to each bank and the security those banks have on the loans should be publicly disclosed. Frequently during the boom years loans were given out based on insufficient security such as personal guarantees or property assets with over-inflated values — sometimes the same property was used as security for several loans. Through my [ sic] investigations I hope to establish whether the banks gave these multi-million euro loans out without sufficient security. There is a public interest in exposing the mechanics of the rampant speculation which took place.
[…]
13 The applicant, through Mr Tighe's journalism, has [been] reporting seriously on the issue of bankruptcy tourism for three years. A small, non-exhaustive selection of other UK newspaper cuttings exhibited to this statement (exhibit BM1) demonstrate that the matter is, and remains, one of public interest in UK and Ireland.
[…]
15. The applicant does not seek to publish any sort of "celebrity" story and is sensitive to any legally recognised privacy interest Mr McNamara or his close family members could have in information on the file, such as his address or name of the school his children (if any) attend, which would not be used. Such matters are against the law and the Press Complaints Commission Code of Conduct, abided by by the applicant. Any article may be published by the applicant's Irish or UK titles, as editorial interests dictate."
In his second witness statement he makes the point that if Mr McNamara had been made bankrupt in Ireland his bankruptcy file would have been open to public access thorough the Bankruptcy Office of the Irish Courts Service.
The law and the submissions
In "normal" proceedings the right of a non-party to obtain documents from the court file is governed by CPR 5.4C. The position is different in the case of insolvency proceedings.
Rule 7.31A Insolvency Rules 1986 provides as follows:
"(1) The court must open and maintain a file in any case where documents are filed with it under the Act or the Rules.
(2) Any documents which are filed with the court under the Act or the Rules must be placed on the file opened in accordance with paragraph (1).
(3) The following persons may...
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