THE COURT OF APPEAL
Neutral Citation Number: [2018] IECA 7
Record No. 2016 No. 187
Peart J.
Hogan J.
Whelan J.
BETWEEN/
CHRISTOPHER LEHANE AS OFFICIAL ASSIGNEE IN BANKRUPTCY
IN THE ESTATE OF SEáN DUNNE
- AND -
GAYLE DUNNE
JUDGMENT of Mr. Justice Gerard Hogan delivered on the 30th day of January 2018
I.
1. The defendant in these proceedings, Ms. Gayle Killilea-Dunne, is the wife of Mr. Seán Dunne. The couple married in 2004 and both are Irish citizens. It would appear that both Mr. Dunne and Ms. Dunne currently reside in the US.
2. Prior to the banking crash of 2008 Mr. Dunne was a major property developer in this State. One immediate effect of the crash was, unfortunately, that his various construction and development companies experienced massive losses, thus triggering – or, at least, potentially triggering - enormous personal liabilities for him in respect of personal guarantees which he had given to various credit institutions in respect of the liabilities of those companies.
3. At some point in 2009 Mr. Dunne left Ireland for Switzerland. He later moved from Switzerland to the US where he settled in Greenwich, Connecticut. On the 29th March 2013 Mr. Dunne filed a voluntary petition for relief under Chapter 7 of the United States (Federal) Bankruptcy Code in the US Bankruptcy Court. On that day, one Richard Coan, was appointed the Chapter 7 Bankruptcy Trustee. Mr. Coan is a partner in the firm of Coan, Lewendon, Gulliver and Miltenberger LLC., a law firm based in New Haven, Connecticut.
4. Another partner in that law firm, Mr. Miltenberger, acts for Mr. Coan in the US bankruptcy proceedings. Mr. Miltenberger has sworn affidavits of law in these proceedings. As we shall see in due course, a central issue which arises in this appeal is whether Ms. Dunne is entitled to an order permitting her to cross-examine Mr. Miltenberger on certain issues of US bankruptcy law which, she contends, arises from affidavits which he filed in these proceedings and which must necessarily be determined as part of her forum conveniens application.
5. I will, of course, return to the issue presently but it is necessary now to return to our overall narrative. On the 12th February 2013 (i.e., some six weeks prior to the application before the US Bankruptcy Court), one of Mr. Dunne’s two major creditors, Ulster Bank Ireland Ltd, applied to the High Court to have Mr. Dunne adjudicated bankrupt. Those proceedings were initially adjourned on a number of occasions because of difficulties with proof of service. The other major creditor is National Asset Loan Management Ltd. (“NALM”) which acquired the loans of the various Dunne corporate entities. The total amount of indebtedness is estimated to be in the region of some €700m.
6. Mr. Dunne was ultimately adjudicated a bankrupt by the High Court on the 29th July 2013, i.e., some four months after the bankruptcy filing in the US Bankruptcy Court. The respondent, Mr. Lehane, is the Official Assignee in bankruptcy in the estate of Mr. Dunne. While Mr. Dunne appealed to the Supreme Court against that adjudication, the High Court order was affirmed by the Supreme Court in May 2015: see Re Dunne [2015] IESC 42.
7. The present proceedings were commenced by the Official Assignee in September 2014. He seeks, inter alia, a declaration that the transfer of certain shares in an entity known as Mavior from Sean Dunne to Gayle Dunne in October 2008 amounts to a fraudulent transfer. The Official Assignee seeks a similar declaration in respect of the transfer of ownership of a hotel known as the Lagoon Beach Hotel, in Cape Town, South Africa. The statement of claim filed on the 12th December 2014 recites that the proceedings “are brought by the Official Assignee on behalf of the estate and with the support of the Trustee in Bankruptcy in the United States, Mr. Richard Coan.”
8. As it happens, however, the Chapter 7 Trustee is also seeking similar relief against Ms. Dunne (and several other defendants) in the US courts in proceedings known as Adversary Complaint 15-5019 where it is contended that several transfers made by Mr. Dunne to Ms. Dunne and then on to certain other parties amount to fraudulent transfers. There is really no dispute between the parties but that these US proceedings substantially overlap with the present Irish proceedings, not least because, as Costello J. found in her judgment, a declaration that the Mavior shares were fraudulently transferred is also sought in these proceedings: see Lehane v. Dunne [2016] IEHC 690. This has given rise to two significant issues. First, what is the effect of US bankruptcy law so far as the Irish proceedings is concerned and, specifically, if the effect of US law is to vest the entire bankruptcy estate in the Chapter 7 Trustee and, then assuming that such an order would be recognized by our courts, does the Official Assignee have any continuing standing to prosecute these present proceedings? Second, even if the Official Assignee has such a standing, does the determination of the Irish proceedings create a res judicata or collateral estoppel such as would bind the Chapter 7 Trustee from re-litigating the matter in the US courts?
9. It should also be observed that Mr. Coan had also commenced proceedings known as Adversary Complaint 15-5020 solely as against Ms. Dunne in respect of the Mavior shares and debt. According to Mr. Miltenberger these proceedings have been voluntarily dismissed in view of the existence of the present proceedings in this jurisdiction. Ms. Dunne’s legal expert, Mr. Ostrow, however, has pointed out that this dismissal is on a without prejudice basis, so that by reference to the Federal Rules of Civil Procedure, the Trustee “can commence a new adversary procedure asserting the same claim.”
II.
10. By motion dated the 11th March 2015 Ms. Dunne brought a motion seeking to have the Irish proceedings struck out or stayed by reason either of the doctrine of forum non conveniens or as an abuse of process. Central to her argument that the US courts were the appropriate forum were, first, the contention that US bankruptcy law had the effect of vesting the assets in the Chapter 7 Trustee rather than the Official Assignee so that the latter no longer had any title to advance the Irish proceedings and, second, that the Chapter 7 Trustee would not be bound by the outcome of the present proceedings, thus giving rise to the possibility that the matter might be re-litigated before the US courts.
11. In the High Court Ms. Dunne had also argued that the present proceedings violated the terms of the automatic stay and prohibition on litigation in relation to Mr. Dunne’s estate. This argument, in Costello J.’s words, “fell away” once Shiff J. ruled in November 2015 that the commencement of these present proceedings was not inconsistent with the terms of that order. This issue was not pressed on appeal, save that counsel for the Official Assignee, Mr. Sanfey S.C., drew attention to Judge Shiff’s order to illustrate the practical point that, irrespective of any complex issues arising from the application of private international law rules to dual bankruptcy proceedings in separate jurisdictions, there had been and was likely to be good co-operation between the Chapter 7 Trustee and the Official Assignee.
12. In the context of the forum conveniens arguments, however, affidavits of law had been sworn by both Mr. Miltenberger on behalf of the Chapter 7 Trustee, Mr. Coan, and by a Mr. Alec Ostrow on behalf of Ms. Dunne regarding aspects of US bankruptcy law. Ms. Dunne then brought a motion pursuant to Ord. 40, r.1 seeking leave to cross-examine Mr. Miltenberger on his affidavit of laws.
13. In a judgment delivered on the 19th February 2016 Costello J. rejected the argument that Ms. Dunne should be allowed to cross-examine Mr. Miltenberger: see Lehane v. Dunne [2016] IEHC 96, saying:
“The defence submits that as a matter of U.S. bankruptcy law the estate of the bankrupt vested in the Chapter 7 Trustee and this includes the right to bring proceedings in respect of the estate of the bankrupt. The adjudication of the bankrupt in this jurisdiction was subsequent to the appointed of the Chapter 7 Trustee. It is argued that the right to bring these proceedings is vested solely in the Chapter 7 Trustee and that therefore the plaintiff has no title to bring these proceedings. She submits that this matter is in dispute between the parties and which will require to be determined as a matter of fact at the hearing of the motion. Thus, Mr. Miltenberger will require to be cross-examined in relation to this matter. I do not accept that this is a matter of fact in dispute in these proceedings. Mr. Ostrow, on behalf of the defendant, does not go so far as to say that the sole title to bring the proceedings vested in the Chapter 7 Trustee, though he confirms that he has power to bring the proceedings in the United States in the circumstances. The Chapter 7 Trustee is aware of, and has supported, the plaintiff in the institution and conduct of the proceedings. He applied for the dismissal of Adversary Proceedings 15-5020. The Chapter 7 Trustee has not asserted that he solely has the right to bring these proceedings. Furthermore, it is clear that Judge Shiff in the U.S. Bankruptcy Court has recognised the right of the plaintiff to institute and to maintain these proceedings on behalf of the estate of the bankrupt. To hold otherwise would be to make a nonsense of his order of 25th November 2015. I do not believe that it is necessary to cross-examine Mr. Miltenberger in relation to this matter in order to justly determine the issues between the parties on the motion to dismiss.”
14. So far as the duplication/res judicata issue was concerned, Costello J. likewise did not consider it necessary to permit the cross-examination of Mr. Miltenberger on his affidavits on this issue either:
“On behalf of the plaintiff, Mr. Miltenberger states that the plaintiff and the Chapter 7 Trustee are seeking to coordinate their actions and avoid duplication. In particular they wish to reduce the potential for inconsistent judgments and to avoid the potential for duplicate recoveries. To that end, the Chapter 7 Trustee intends to amend his complaint by removing certain counts seeking to recover assets located in Ireland and/or that are being pursued by the Official Assignee. It is the intention of the Chapter 7 Trustee and the Official Assignee that the Official Assignee should seek the recovery of Irish assets (and the South African assets) through litigation conducted in Ireland and the Chapter 7 Trustee should seek to recover U.S. assets through litigation conducted in the United States. As part of this cooperation the Chapter 7 Trustee sought an order dismissing Adversary Proceedings 15-5020 shortly after the plaintiff commenced these proceedings. The defendant consented to that order.
Mr. Miltenberger points out that the issues related to the venue of the proceedings and the ultimate trial proceedings are “not ripe for resolution”. He notes that the defendant is seeking to dismiss many of the claims that the Chapter 7 Trustee commenced in the United States and the Chapter 7 Trustee has been revising his proceedings to reduce the overlap between his Adversary Proceedings 15-5019 and these proceedings. He states that because of the incomplete financial information available to the Chapter 7 Trustee, his revised complaint will most likely contain some claims that the defendant believes are overlapping but he cannot determine however whether the claims or defences to the claims do in fact overlap without the benefit of discovery.
Mr. Miltenberger indicates the approach that the Chapter 7 Trustee and Official Assignee intend to take in relation to discovery. They intend trying to reach agreement with the defendant in relation to their proposals and an order from the U.S. Bankruptcy Court in relation to their proposals. He states that once the parties have engaged in this proposed discovery, the Chapter 7 Trustee and the plaintiff will seek to achieve a consensual resolution of the proper venue for any of the claims that still remain and a consensual process for trying all of the claims in the most efficient and expeditious manner. He points out that this may include joint hearings, the use of collateral estoppel or res judicata of facts found in one forum on the proceedings in the other, or having one forum adopt, in whole or in part, the proceedings held in the other. He points out that the Chapter 7 Trustee is agreeable to discussing all of these options and others but he is not in a position to determine what process is in the best interest of creditors without obtaining disclosures from the plaintiff and third parties.
In the light of this evidence, it is difficult to understand what purpose cross-examination of Mr. Miltenberger would serve. As stated above, he cannot be cross-examined in relation to the intention of the Chapter 7 Trustee or the Official Assignee. Nonetheless he has indicated that it is their intention to coordinate their actions so as to avoid duplication in relation to litigation. It is clear that the efforts in this regard are ongoing but not yet concluded. It is also clear that the outcome is determined to some extent upon the conduct of the plaintiff. Therefore, while superficially, it would be attractive to cross-examine Mr. Miltenberger in relation to the overlap between these proceedings and Adversary Proceedings 15-5019, in truth it would not actually serve to assist in resolving matters which will fall to be determined by this Court on the hearing of the motion to dismiss these proceedings.
Insofar as the strategy proposed on behalf of the Chapter 7 Trustee and the Official Assignee may require the consent or approval of the U.S. Bankruptcy Court, it is noteworthy that the transcripts of the hearings before Judge Shiff indicate that he does not believe that the existence of these proceedings amounts to an abuse of process. He is prepared to fashion orders and procedures to facilitate the conduct of the litigation in the two jurisdictions and, it would appear, does not believe that the conduct of the litigation gives rise to insuperable difficulties which cannot be resolved by agreements or orders along the lines of those indicated by Mr. Miltenberger whether by agreement or otherwise.
Of course, as I have already pointed out, it would be futile to cross-examine Mr. Miltenberger in relation to the possible arrangements, procedures or orders which might be followed at some future date in the U.S. Bankruptcy Court or indeed the U.S. Federal Court.”
15. In her second judgment delivered on the 27th July 2016 Costello J. rejected Ms. Dunne’s forum conveniens and abuse of process arguments.
16. Ms. Dunne has now appealed to this Court against both decisions. At the hearing of the appeal this Court ruled that it would be more practicable to hear the cross-examination appeal first, so that it was only in the event that that appeal failed that this Court would then proceed to hear the forum conveniens appeal. If, however, the cross-examination appeal succeeded, it was clear and not really disputed by the parties that this Court would have little option but to direct a re-trial of the forum conveniens issue. I propose, accordingly, to consider first the status of the affidavits of law before considering whether Ms. Dunne has established an entitlement to an order pursuant to Ord. 40, r.1 giving her liberty to cross-examine Mr. Miltenberger on his affidavits.
III.
17. The first thing to note is that an issue of foreign law is always a question of fact for an Irish court. The foreign law is, of course, proved by evidence normally given in the first instance in affidavit form by a suitably qualified lawyer from the jurisdiction in question. Where there is a dispute as to what the law is or where the foreign law is doubtful or even obscure on the point in question, the Irish court must ultimately adjudicate on that question and form a view as to what the foreign law provides, any uncertainties on this question notwithstanding. But it is clear that it does so qua finder of fact.
18. This is clear from a trilogy of Supreme Court decisions: O’Callaghan v. O’Sullivan [1925] 1 I.R. 90; MacNamara v. Owners of the Steamship “Hatteras” [1933] I.R. 675 and Kutchera v. Buckingham International Holdings Ltd. [1988] I.R. 61. As Walsh J. said in Kutchera ([1988] I.R. 61, 68):
“These cases quite clearly establish that in Irish law foreign law must generally be proved by expert evidence…These cases also establish that if there is any conflicting evidence as to what is the foreign law, or what is the correct interpretation of the foreign law, then it is a matter for the Irish court to decide as between the conflicting expert testimonies.”
19. What, then, are the potential issues of foreign law that are relevant to Ms. Dunne’s forum conveniens application? Two such issues appear to stand out. First, does the Official Assignee have title to sue in view of the vesting provisions of the US Bankruptcy Code or does the effect of the latter provisions mean that the entire estate (including choses in action such as title to sue) is vested in the Chapter 7 Trustee? Second, even if the Official Assignee has title to sue, would the Chapter 7 Trustee be bound by a determination by the Irish courts on the fraudulent conveyance issue or might the issue be re-litigated in the US courts?
20. It may be convenient to look first to the res judicata issue. It seems to me essential that before any question of forum conveniens can properly be determined that an Irish court must know what the likely status of its judgment vis-à-vis the foreign court actually will be. If, for example, it was clear that any such decision of the Irish court on this issue did not bind the Chapter 7 Trustee (or, for that matter, other creditors or parties to the US litigation) so that the matter could be re-litigated in the US courts this would surely have a direct bearing on any consideration of the forum conveniens question. It is against this background that we may turn to the affidavits actually filed by the two foreign lawyers.
21. Mr. Miltenberger swore the first of his affidavits on the 28th May 2015. He described the United States proceedings and the jurisprudence in the United States surrounding the commencement and prosecution of fraudulent transfer actions against transferees from a US bankruptcy debtor. He observed that in order to determine whether actions in Ireland and the United States were duplicative, the Irish Courts should only look at the counts in the US proceedings and not the preceding factual recitations in the complaint which, he said, merely provided the reader with the context surrounding the claims. Mr. Miltenberger then added that:
“….the Trustee anticipates filing an amended complaint removing certain counts of the complaint seeking to recover assets located in Ireland and/or that are being pursued by the Official Assignee.”
22. It does not appear, however, that any of the counts which the Trustee anticipated removing were ever subsequently specified and nor would it appear that to date, at least, any such counts have, in fact, been removed.
23. In response to that affidavit, Ms. Dunne filed an affidavit sworn by her attorney, Mr. Alec P. Ostrow, on the 11th June 2015 which also dealt with the Chapter 7 Trustee's US proceedings. Mr. Ostrow has specialised in bankruptcy law for thirty four years and is an adjunct Professor of Law at the LL.M. Bankruptcy Programme at St John's University, New York. As an aside it seems only fair to observe that both Mr. Miltenberger and Mr. Ostrow appear to be equally specialist and experienced in US bankruptcy law and are well qualified qua experts to opine on these issues of US law.
24. Mr. Ostrow observed that Ms. Dunne was being compelled to defend herself in two jurisdictions against the claims of two fiduciaries with regard to the same underlying facts. He deposed that there was no reason why the Chapter 7 Trustee could not pursue all viable fraudulent transfer claims against Ms. Dunne in the United States. He said that as a matter of United States law a fraudulent transfer claim was generally considered to be the property of the US bankruptcy estate, saying:
“First, although property sought to be recovered by a U.S. trustee in bankruptcy in a fraudulent transfer claim is generally not considered to be property of the U.S. bankruptcy estate unless and until it is discovered, the fraudulent transfer claim itself is generally considered to be property of the U.S. bankruptcy estate. Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities, LLC, 460 B.R. 106, 114 (Bankr. S.D.N.Y. 2011). This is so, because the U.S. bankruptcy estate includes “any interest in property that the trustee recovers under section…550” of the Bankruptcy Code. 11 U.S.C. § 541(a)(3). Section 550 of the Bankruptcy Code, in turn, contains the trustee’s right to recover transfers that the trustee may avoid and set aside” under section 544, [or] 548” of the Bankruptcy Code. 11 U.S.C. § 550(a). These two sections, 11 U.S.C. §§ 544, 548, empower the trustee to avoid fraudulent transfers.
Second, irrespective of the automatic stay, in a U.S. bankruptcy case, claims by creditors against third parties to redress injuries that affect the creditors generally, opposed to claims to redress injuries that are particularized to individual creditors, may be asserted solely by the trustee, absent a bankruptcy court order. Marshal v. Picard (In re Bernard L. Madoff Investment Securities LLC), 740 F.3d 81, 88-91 (2d. Cir. 2014); St. Paul Fire & Marine Insurance Co. v. Pepsi Co. Inc., 884 F.2d 688, 703-04 (2d Cir, 1989). During the bankruptcy case, creditors are said to lack standing to assert such general, as opposed to particularised, claims. St. Paul Fire & Marine Insurance Co. v. Pepsi Co. Inc., 884 F,2d 688, 705 (2d Cir, 1989). A fraudulent transfer claim is a paradigmatic example of such a general claim that may only be asserted by a trustee. Marshal v. Picard (In re Bernard L. Madoff Investment Securities LLC), 740 F.3d 81, 91 (2d. Cir. 2014).
Whether these results apply to the Official Assignee, who is technically not a creditor in the U.S. bankruptcy case, is a significant, unresolved issue of law that involves the interface of U.S. and Irish bankruptcy law. The point of this explanation is that this Court should not accept Mr. Miltenberger’s statements in paras. 18, 19 and 21 as settled U.S. law. In this regard, I have considered the decision of the Supreme Court of Ireland in In the Matter of Sean Dunne (a bankrupt), Appeal No. 535/2013 (15 May 2015), in which it is stated at para. 62 concerning the administration of the estate of the bankrupt that “it is likely to give rise to very complex issues, including issues of a substantive nature.”
What is significant, however, is that these results do apply to creditors in the U.S. bankruptcy case. These creditors include the same creditors that have appeared in the Irish bankruptcy proceedings.
Mr. Miltenberger states in para. 20 that there is no party in interest that can complain about the fraudulent transfer actions commenced by the Official Assignee. Whatever may be true about Gayle Killilea’s standing in the main U.S. bankruptcy case (as opposed to Adversary Proceeding 15-5019), she is a defendant in fraudulent transfer lawsuits brought by both the Official Assignee and the Trustee that concern the same underlying facts and transactions, particularly transfers from Sean Dunne to her beginning in 2005. The Trustee is seeking to recover from her property that represents the proceeds of the initial set of allegedly fraudulent transfers. Indeed, many of the other defendants in Adversary Proceeding 15-5019 are alleged to be subsequent transferees of such transfers to Gayle Killilea, and if such transfers were not fraudulent, these defendants would not have subsequent transferee liability for them.”
25. Mr. Ostrow then outlined various reasons why the United States was what he described as the “superior forum,” including the fact that there were additional defendants in the United States. He specifically averred that: “... if the Irish proceedings result in a judgment first, and the judgment is adverse to the Official Assignee, the Trustee will likely disclaim that the result is binding on him.”
26. Mr. Miltenberger swore two further affidavits on the 24th June 2015 and the 9th July 2015 saying in response:
“Attorney Ostrow avers that fraudulent conveyance cases are generally property of the estate. However, his client, Gayle Killilea-Dunne, is disputing the Trustee’s legal position that fraudulent conveyance cases are to be pursued for the benefit of all creditors in an action pending in the United States District Court for the District of Connecticut. In that litigation, Killilea argues that the Trustee cannot be allowed to intervene in a fraudulent conveyance action so that the action will benefit all creditors. This position is incorrect.
At paragraph 8 of his affidavit Attorney Ostrow states in his affidavit that “claims by creditors…may be asserted solely by the trustee absent a bankruptcy court order” (emphasis added) to support his argument that the Official Assignee may not proceed with a fraudulent conveyance action. However, the Official Assignee is not “a creditor”. Rather, like the Trustee, the Official Assignee is a representative of all creditors. In such circumstances, courts in the United States allow the creditor’s representative to proceed. See e.g. In re Tribune Co. Fraudulent Conveyance Litigation, 499 B.R. 310-23 (S.D.N.Y. 2013).
The Official Assignee and the Trustee are both seeking to benefit the same parties. As such, it would be erroneous to view the actions of the Official Assignee and the Trustee to be in conflict rather than as complimentary.”
27. I will return presently to consider the implications of these averments by the two experts. One other matter should, however, be mentioned at this point. At the hearing before this Court on the 18th January 2018, counsel for Ms. Dunne, Mr. O’Donnell S.C., drew our attention to a portion of a transcript describing an exchange between judges of the US Court of Appeals for the Second Circuit and Mr. Miltenberger (for the Chapter 7 Trustee) which took place in March 2017, i.e., the exchange post-dated the two judgments of Costello J.. This exchange appears to have taken place in the context of an appeal against the order of Judge Shiff of the US Bankruptcy Court refusing to place a stay on his lifting of the automatic stay on other proceedings so as to permit the Official Assignee to continue with the present proceedings in this jurisdiction, which appeal, incidentally, was dismissed. The exchange - which was in the following terms - is nonetheless instructive:
“Judge Livingston: Will that decision, when decision is rendered there, will that bind the U.S. Trustee?
Mr. Miltenberger: That decision will bind the U.S. Trustee if someone comes before a court and says there was sufficient privity between the Trustee and the Official Assignee to have collateral estoppel or a res judicata -
Judge Raggi [interposing]: You are not going to concede that, you are going to fight that.
Mr. Miltenberger: I can’t concede that at this time, your Honor, because I - because there are - could be years of litigation between now and then.”
28. Mr. Miltenbereger was later to observe in the course of his submissions that he would expect that if Ms. Dunne were to lose the Irish proceedings “we would hear from entities in the United States that they are not bound by the findings of the Irish High Court.”
29. I would not like it to be thought that either Mr. Miltenberger (or, for that matter, his client, Mr. Coan) should be necessarily bound by an exchange of this kind in the course of oral argument which, in any event, concerned the issue of the partial lifting of the automatic stay. The appeal to the 2nd Circuit was, therefore, not focused on this question and this res judicata issue was not squarely before that Court. But the exchange does nonetheless highlight a fundamental issue which, to date, at least has not been conclusively determined, namely, whether a finding by an Irish court on the fraudulent conveyance issue would bind the Chapter 7 Trustee or, for that matter, other parties – whether creditors or debtors – to that litigation so that the potential for overlapping and perhaps even inconsistent judgments could thus be avoided
30. In her judgment Costello J. drew attention to what she saw as the practical co-operation between the Chapter 7 Trustee and the Official Assignee and she seemed to think that Mr. Miltenberger should not be crossed-examined on what she regarded as the hypothetical issue of potentially inconsistent judgments. For my part, however, I think that the issue goes somewhat further than this and that it cannot be disregarded for present purposes as premature or hypothetical. This brings us back to the forum conveniens issue, because unless an Irish court can determine this particular issue of foreign law as an issue of fact one cannot, I think, usefully determine the forum conveniens question. It can certainly be said at a minimum that if the High Court were to find that the judgment of an Irish court on the fraudulent conveyance issue would not serve to create a res judicata or collateral estoppel which would bind the Chapter 7 Trustee (or, perhaps, creditors or other parties in the US proceedings) this would, at a minimum, have implications for any consideration of the forum conveniens question.
31. Turning next to the effect of US bankruptcy law, the basic contention of Mr. Ostrow appears to be that the automatic vesting provisions of the US Bankruptcy Code ensures that the right to sue on behalf of the bankrupt’s estate is exclusively vested in the Chapter 7 Trustee, although he concedes that the question of whether the vesting provisions apply to the Official Assignee who is not a creditor in the bankruptcy proceedings “is a significant unresolved issue of law that involves the interface of US bankruptcy and Irish bankruptcy law.”
32. If this view is correct, then, even subject to that potentially important caveat, it at least raises the question of whether the Official Assignee has title to sue in this jurisdiction. Indeed, it would seem to follow that, if Mr. Ostrow’s views are correct and subject again to that caveat, the Official Assignee does not have such title, assuming, of course, that an Irish court would, as a matter of our own private international law, also recognise any judgment or order of a US court to this effect. Mr. Miltenberger does not really appear to dispute the general vesting point, but maintains that this rule applies only to creditors suing in their own right and that, contrariwise, the Official Assignee retains title to sue qua representative of all creditors.
33. Naturally, however, the matter is not quite as straightforward as a simple vesting of all title to sue in the Chapter 7 Trustee. In the first place both the Chapter 7 Trustee and the Official Assignee have appeared to have reached a modus vivendi between them with a view to smoothing over the inevitable difficulties caused by the existence of two parallel bankruptcy procedures in two different jurisdictions so that both are operating within their respective jurisdictions with the other’s knowledge and co-operation, even if – as counsel for the Official Assignee, Mr. Sanfey S.C., was at pains to stress – the Official Assignee does not in any sense represent the Chapter 7 trustee, whether in these proceedings or otherwise. But this practical co-operation is nonetheless reflected in Judge Shiff’s order of the 25th November 2015 when he ruled that the present proceedings do not violate his previous order imposing a worldwide stay on litigation relating to Mr. Dunne’s estate. Judge Shiff had previously taken a similar view in 2013 when he indicated that there was no objection to Ulster Bank pursuing bankruptcy proceedings against Mr. Dunne in Ireland.
34. The second consideration relates to the fact that the Supreme Court has upheld the validity of Mr. Dunne’s bankruptcy: see Re Dunne [2015] IESC 42. In its judgment in Dunne the Supreme Court upheld the jurisdiction of the High Court to make a bankruptcy adjudication, holding that a prior finding of bankruptcy by a foreign court was no barrier to the exercise of this statutory jurisdiction. Laffoy J. nonetheless observed (at para. 62 of her judgment):
“While I do not accept that, if the order of the High Court adjudicating the appellant a bankrupt was properly made, the administration of the estate of the bankrupt will be a largely procedural matter, as suggested by the trial judge, and I anticipate that, on the contrary, it is likely to give rise to very complex issues, including issues of a substantive nature, I consider that it is not necessary, and it would not be appropriate, for the Court to express any view at this juncture as to whether and how those matters might be resolved. In particular, it is to be borne in mind that the proponents on this appeal are the appellant, the bankrupt debtor, and the petitioner, who is only one creditor, albeit one of two creditors, the other being NALM whose support it has, which this Court was told are due 99% of the debts owed by the appellant. Of particular significance is the fact that the Chapter 7 Trustee is not before this Court, although this Court is fully aware of the basis on which Judge Shiff modified the worldwide stay to enable the bankruptcy proceedings in this jurisdiction to be pursued by the petitioner.” (emphasis supplied)
35. A similar issue arose in B.A., a case which also involved the interaction of Irish and US bankruptcy law. In B.A. one question before the Supreme Court was whether a bankrupt had standing to object to the Official Assignee’s involvement in certain family law proceedings involving the bankrupt on the basis that the title to sue had in fact vested in a Chapter 7 Trustee as having been appointed on a first in time basis. That in turn raised the ancillary question of whether an Irish court, applying our private international law rules, would recognize the jurisdiction of the US courts and the exclusive right of the Chapter 7 Trustee to sue on the basis that under US law title to sue in respect of (inter alia) immoveable property situate in Ireland had vested in their bankruptcy trustee rather than in our Official Assignee. The obverse, of course, is that if an Irish court were to recognize any judgment or order of the US courts in the bankruptcy proceedings, the consequence – on at least one view of the effect of US law – would appear to be that the Official Assignee did not in fact have any title to sue and that exclusive role had been vested in the Chapter 7 Trustee.
36. In her judgment for the Supreme Court Laffoy J. did discuss the private international law dimensions of a dual bankruptcy proceedings at some length, although in the end she did not find it necessary to rule on these matters. She noted that in that case the bankrupt had filed for Chapter 7 bankruptcy in the US courts, thereby submitting to the jurisdiction of those courts. She considered that in these circumstances the Court could not rule on any submissions of the Official Assignee to the effect that all of the bankrupt’s assets had vested in him since the bankruptcy adjudication by the High Court “in the absence of the Court hearing the views of the Chapter 7 Trustee on that point.”
37. Laffoy J. continued:
62. The legal and factual foundation on which the Court is expected to determine whether B.A. has locus standi to prosecute B.A.’s 2015 application is riven with imponderables and hypotheses. In particular, for the reasons outlined earlier, it is neither appropriate nor possible to determine where, and to what extent, the property and estate of B.A., movable and immovable, is now vested, whether in the Official Assignee or the Chapter 7 Trustee, in the absence of the Chapter 7 Trustee before the Court. Notwithstanding that, I am satisfied that the Official Assignee has, under Irish law, an ad colligenda bona function, that is to say, a function to collect and preserve the assets of B.A., which, in my view, gives him sufficient standing to question the standing of B.A. to prosecute B.A.’s 2015 application in this jurisdiction.”
38. It is clear from this passage of the judgment in B.A. that the Supreme Court decided that it was merely necessary to rule the Official Assignee had at least an ad colligenda bona function which was enough, in itself, to give him sufficient standing to challenge a bankrupt’s application in those proceedings. The Court did not – and could not – determine the wider question of the vesting of the title to sue in the absence of the Chapter 7 Trustee.
39. What, then, is the effect of both Dunne and B.A. so far as the present application is concerned? Reading the two judgments it seems to me that the judgments are to the effect that while the High Court has jurisdiction to adjudicate on bankruptcy applications in this State irrespective of any prior adjudication to this effect in the US, the Supreme Court nonetheless appeared to suggest in both cases that this was subject to hearing from the Chapter 7 Trustee in relation to the effect of US bankruptcy law. To my mind, all of this simply underscores the necessity to hear from the US Bankruptcy Trustee in this case (including, in this context, the cross-examination of his own legal expert on this aspect of US bankruptcy law) so that the question of the effect of US bankruptcy law in respect of the vesting question can be determined. That, in other words, is part of the essential fact-finding exercise which an Irish court must conduct prior to any determination of the forum conveniens question. Insofar as Costello J. appeared to have taken a different view on the importance of this question, I would, with respect, disagree.
40. I should add, of course, that even if the effect of the fact finding exercise were to lead an Irish court to the conclusion that the US bankruptcy law did have the effect for which Mr. Ostrow contended (so that title to sue was indeed vested exclusively in the Chapter 7 Trustee), this would not necessarily be dispositive of the forum conveniens question, since an Irish court would then have to proceed to determine a question of Irish law, namely, whether we would recognize judgments and orders in US bankruptcy proceedings which proceeded from a potentially exorbitant bankruptcy jurisdiction affecting both moveable and immoveable property in Ireland. This, of course, was the issue which Laffoy J. discussed – but did not have to decide – in BA.
41. I would stress for completeness that nothing in this judgment is intended to offer any view on these questions, save to repeat again the importance of determining these foreign law issues as a question of fact as a preliminary to determining all of these other questions.
42. Viewed thus, it is manifest that fair procedures require that Ms. Dunne’s counsel should have the opportunity of cross-examining Mr. Miltenberger on his affidavits of law pursuant to Ord. 40, r. 1 if these questions of US law are properly to be determined. A similar facility must, of course, be extended to the Official Assignee in respect of the affidavit of law sworn by Mr. Ostrow.
IV.
43. It follows from the foregoing that Ms. Dunne’s appeal against the decision of Costello J. delivered on the 27th February 2016 in respect of the cross-examination issue must be allowed. It equally follows that the subsequent judgment of Costello J. delivered on the 27th July 2016 in respect of the forum conveniens question must now be vacated. I would therefore remit all these matters to the High Court so that the forum conveniens issue can be determined afresh in the light of this judgment.
44. I cannot conclude this judgment without making two observations. First, events in the last two and a half years or so have entirely confirmed the anxieties which Laffoy J. expressed in Dunne regarding the complex questions which were likely to emerge arising from the inter-action of any dual bankruptcy regime in both the United States and Ireland. While I appreciate that the Official Assignee and the Chapter 7 Trustee are determined to work together co-operatively (and have done so to date), the potential for overlapping jurisdiction, inconsistent judgments, dual recovery, additional costs and even opportunistic legal stratagems are all the inevitable by-products of parallel bankruptcy proceedings in two separate jurisdictions. If it can at all be done, the case for centralizing all these claims in one single jurisdiction is, I should think, a pressing one.
45. Second, this litigation has highlighted the urgent necessity for legal measures to be taken by this State to address the implications for domestic bankruptcy proceedings of foreign non-EU bankruptcy proceedings falling outside the scope of the (recast) Insolvency Regulation No. 2015/848 EU, whether by the making of the appropriate order under s. 142(1) of the Bankruptcy Act 1988 or otherwise.
