Judge questions facts of O'Donnells' move to London

The High Court judge in London dealing with property investors Brian and Mary Patricia O’Donnell’s application for bankruptcy has expressed surprise that no evidence exists that they told creditors, apart from two banks, of their move to London.

Facing a challenge from Bank of Ireland, the couple have argued that they qualify under European Union rules for bankruptcy in England and Wales, where the period for which one must remain as a bankrupt is significantly shorter than in Ireland.

The couple, said Bank of Ireland’s barrister, Gabriel Moss, wrote to the bank on January 19th, three weeks after they had moved from their Killiney home, asserting their centre of main interest was in London.

The move was entirely calculated, he said, to force their two biggest creditors, Bank of Ireland and Allied Irish Banks into accepting a step short of bankruptcy called an individual voluntary agreement (IVA) for fear the couple would declare bankruptcy if refused.

Demands rejected

In the end, the demands for an IVA were rejected, said Mr Moss during final submissions in the case. Under UK rules, three-quarters of creditors by value must agree to partpayment of debts over time before an IVA is accepted. Neither of the banks agreed.

Repeatedly questioning the couple’s barrister, Paul Burton, Mr Justice Newey said nothing had been shown to the court to prove they had told any creditors other than the two banks of their move.

Mrs O’Donnell, he said, had given “the company line” during her evidence about where their centre of main interest (Comi) lay, saying she believed years ago it was in London.

“Nobody thinks about their Comi,” he said.

Similarly, he raised questions about Mr O’Donnell’s business if his actions were limited to unpaid work for his children’s trusts, “where capital gains would not be paid” to him. “There has to be something that you are doing for yourself, rather than for someone else, surely,” he said.

Bank of Ireland and AIB were formally notified in mid-January last of the permanence of the London move, Mr Burton said, though he accepted that no evidence exists that other creditors were similarly told.

“Surprising, that, isn’t it?” said Mr Justice Newey.

Finalising his case, Mr Moss said the couple’s bankruptcy filings last March were “littered with lies and errors”, adding that Mr O’Donnell’s “most significant omission” had been his failure to mention the annual fees of £120,000 (€148,600) he gets as a property consultant.

List of dates

In evidence, Mr and Mrs O’Donnell gave a list of dates when they said they knew they had been in the UK over the last seven years, but argued that the real number was far higher.

However, Mr Moss said travel movements are easily provable “by ferry or airline tickets”.

Ireland’s bankruptcy laws are tougher than those in the UK, carrying with them an element of “public morality”, said Mr Moss, adding that there was “a public interest in keeping them out of being directors of limited companies”.

However, Mr Moss’s charge that it was clear the O’Donnells intended to go back to Ireland after they were discharged as bankrupts, if that happened, was rejected strongly by their barrister, Mr Burton.

The purchase by the couple of a house in Barton Street, Westminster, in 2007 was “a milestone” in the couple’s gradual transfer from Ireland, which began from 2005 when they started doing more property deals from London.

“We don’t seek to set a date [of the transfer]. If this was a cynical application they would have made a better job of it. If they were doing it for that reason they would have done it differently,” he told the judge.

The house in Barton Street had been bought for £10 million (€12.4 million), he said. “It was not bought to save on hotel bills. At £1,000 a night that would take 27 years. They were looking for somewhere to live. Any suggestion [their business] was conducted from Ireland after Barton Street falls away.”