Significant Irish Judgment on Discovery in Aid of Examination
At this stage of Ireland's economic cycle, in many cases obtaining a court judgment against a debtor does not necessarily ensure payment. If the judgment debtor fails to pay, there are several procedures available to a judgment creditor to attach the judgment debtor's assets and income so as to obtain payment (a process broadly termed 'execution'). In order to make such an application, the judgment creditor must of course have some knowledge of and information about the particular asset or income. In order to build its knowledge, a judgment creditor can apply to have the judgment debtor summoned to court and questioned on oath as to "whether any and what debts are owing to the debtor, and whether the debtor has any and what other property or any means of satisfying the judgment" (an "examination order"). This is obviously a useful weapon in the armoury of a judgment creditor.
The Irish Court of Appeal has confirmed that a judgment creditor can seek disclosure of documents relating to a judgment debtor's assets and income in advance of such an examination, termed 'an order for discovery in aid of examination'. The advance disclosure permits the judgment creditor to prepare for and conduct the examination of the judgment debtor efficiently. The Court of Appeal also clarified the test that applies in granting an examination order, and by extension an order for discovery in aid of examination, as against a judgment debtor. Finally, the Court of Appeal approved a particular order seeking the disclosure of details of individual asset transfers above a threshold within the last five years (the "look back order").
The judgment will be of interest to financial institutions and other large creditors who hold unsatisfied judgments against uncooperative debtors.
Allied Irish Banks plc ("AIB") obtained a judgment against the businessman Tony O'Reilly. To assist it identify assets or income from which to obtain repayment, AIB sought an examination order in respect of Mr O'Reilly, and sought a sworn Statement of Affairs together with supporting documents relating to Mr O'Reilly's assets, including the look back order, in advance of the date set for the examination. At the hearing in the Irish High Court, AIB did not proceed with the application for an examination order due to Mr O'Reilly's ill health but continued to seek the sworn Statement of Affairs and supporting documentation. The Irish High Court (McGovern J) granted AIB the orders but reset the threshold for the look back order. Mr O'Reilly appealed the decision to the Court of Appeal arguing, amongst other things, that a further proof beyond holding an unsatisfied judgment was required by the judgment creditor, and that the orders made were too wide.
The Court of Appeal approved the High Court decision in Moorview Developments Limited v. First Active plc, which held that a court had an inherent jurisdiction to order discovery in aid of examination as a practical measure to ensure that the examination is performed in the most efficient and practical way possible. Such a discovery order is governed by and must be cast in a way which closely resembles the examination order.
In dismissing the appeal, the Court, relying on a UK Court of Appeal decision and distinguishing an Irish Supreme Court decision, ruled that absent special circumstances, a judgment creditor was prima facie entitled to an examination order, and by extension an order for discovery in aid of examination against a judgment debtor once he shows he has an unsatisfied judgment. No further proofs are required from a judgment creditor. The Court left open for another day the test that applies where the examination or disclosure order is sought against a person who is not the judgment debtor.
As regards the look back order, the Court of Appeal found that as a judgment debtor may retain a beneficial interest in, a debt on, or another entitlement in transferred property, he could be asked questions about such transfers in an examination. By extension therefore discovery of the details of such asset transfers in advance of an examination was permitted.
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