Seán Dunne may cross-examine bankruptcy official, court rules

The Court of Appeal has ruled that Seán Dunne may cross-examine his Irish bankruptcy official in a forthcoming hearing aimed at extending the developer’s bankruptcy over alleged nonco-operation and hiding income and assets.

Mr Dunne, adjudicated bankrupt here in July 2013, was due to exit bankruptcy in July 2016 but cannot pending the hearing of official assignee Chris Lehane’s proceedings to extend it by the maximum five years permissible.

In opposing any extension, Mr Dunne maintains there is no basis for Mr Lehane’s belief of nonco-operation and hiding income and assets and he wants to cross-examine Mr Lehane as to the basis for that belief as set out in sworn statements.

After the High Court refused last February to permit cross-examination, the businessman appealed.

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The three judge Court of Appeal today allowed the appeal and ruled Mr Dunne, as a matter of “procedural fairness”, should be allowed to cross-examine Mr Lehane about various matters in the latter’s sworn statements.

Mr Dunne must specify the particular matters, it said.

It also awarded costs to Mr Dunne of the cross-examination application, with a stay on the costs orders pending the full hearing.

Giving the unanimous judgment, Mr Justice Michael Peart said the consequences for Mr Dunne of any order extending his bankruptcy are "clearly significant".

Mr Lehane has given evidence of his belief or opinion concerning the alleged nonco-operation and hiding of assets and, at the extension hearing, the High Court will be invited to take those into account as relevant evidence and to draw adverse inferences from it, he said.

Bankruptcy duration

That may all culminate in findings with implications for the duration of this bankruptcy and for Mr Dunne’s ability to exit bankruptcy, the judge said. As the evidence cannot effectively be challenged without a right to cross-examination, Mr Dunne ought, as a matter of procedural fairness, be entitled to cross-examine Mr Lehane as to the basis for his beliefs and opinions, he ruled.

The judge also observed, had the High Court been informed the official assignee’s application was now confined to section 85.A.4 of the Bankruptcy Act (providing for an extension due to nonco-operation and hiding assets), and that the official assignee is not pursuing an additional order permitting a further investigation of matters, the High Court’s consideration of the cross-examination application may have proceeded differently.

Ulster Bank had petitioned the High Court in February 2013 to have Mr Dunne adjudicated bankrupt here over default on some €164 million loans. The following month, Mr Dunne filed for bankruptcy in Connecticut in the US, when he claimed to have debts of $1 billion and assets of $55 million. In July 2013 he was adjudicated bankrupt in the Republic.