Two former trustees of a non-denominational church have failed to have their bankruptcy annulled by the High Court.
Brendan and Sheila Hade were trustees of Victory Christian Fellowship (“VCF”) and were declared bankrupt in 2019 due to default on a €2.2 million loan advanced to them in 2008 by the Bank of Scotland (BoS).
The couple, along with another man, as trustees of the VCF, had also received a £17.6m advance from the BoS to build a ‘new church and centre’ on land in Firhouse Road, South Dublin. In December 2013, the High Court entered a judgment against them in favor of BoS for €18.5 million in relation to this loan.
BoS sold its own loan to Feniton Property Finance in 2016 and filed for bankruptcy on the basis of €1.8m outstanding.
Before that, however, BoS called receiverships on two properties they owned, including their home in Rockbrook Rathfarnham, Dublin, which had been used as collateral for the €2.2m loan.
If they get the bankruptcy quashed, they can, on their own, sue for what they said was unfair treatment by the BoS in 2013 when the bank appealed to receivers.
The appointment of receivers had followed VCF’s loss of charitable status due to its right to claim VAT relief on various items purchased for use in the construction of the new church.
Although they emerged from bankruptcy in 2019, to sue they still need permission from the court-appointed official, the Official Assignee (OA), who oversaw their bankruptcy. The OA’s position is that it is willing to discuss the possibility of allowing such proceedings to be instituted if they fail to seek cancellation.
Feniton opposed the cancellation request.
Hades, in affidavits, said that when the bankruptcy process began, they sought “guidance, help and comfort within our church and its congregation.”
Due to “our state of mind and health at this time”, they fired their attorneys and retired “to our spiritual home in our ongoing church at Victory Christian Fellowship”, they said.
They did so because of the extreme difficulties they were in and because of “the pressure that we were no longer able to bear”. Media coverage of the issues at the VCF also caused them enormous distress and caused them to take a “certain position” on legal issues, the court heard.
Among their arguments for annulment, they indicated that there was a discrepancy in the amount of debt cited in the bankruptcy summons of €63 and that this was fatal to the validity of such claims.
Feniton said it was a clerical error due to a simple inadvertent transposition of two digits from the interest calculation. Interest was assessed at €90,907.93 when it should have been €90,970.93, he said. Judge Mark Sanfey denied their request to have it set aside.
He had sympathy for the plight of the couple who are both of advanced age. But, he said, “they chose not to take their case to court, but now want the court to come to their aid and undo” Feniton’s efforts to realize the value of their property in to collect the debt.
He said it was difficult to see how such a course of action could be “fair and equitable” to Feniton, or to other creditors as a whole.
The total sum owed, including interest, was around 1.8 million euros and that was the correct amount, the judge said. Hades could have paid this sum but did not and did not use their right to do so during the bankruptcy proceedings and did not contest this hearing, he said. .
He said “a few minutes with a calculator” would have made them realize that the €63 discrepancy “was most likely a clerical error and that the amount requested on the bankruptcy summons itself was correct”.
He did not consider that the particulars appended to the bankruptcy summons invalidated the summons itself, which claimed the correctly calculated amount of the debt.