ACC Loan Management Ltd v M (C)
|Ms. Justice Costello
|14 January 2015
| IEHC 96
|14 January 2015
 IEHC 96
THE HIGH COURT
Bankruptcy – S. 8 of the Bankruptcy Act 1988 – O. 76, r. 13 (2) of the Rules of the Superior Courts
Facts: The debtor/applicant sought an order for dismissal of bankruptcy summons issued to him following the statutory demand by the creditor against the debtor.
Ms. Justice Costello refused to grant an order for dismissal of bankruptcy summons. The Court held that before dismissing the bankruptcy summons, the Court should not investigate the case on merits and it should dismiss the summons only if it was satisfied that there were issues that needed to be litigated outside of the bankruptcy proceedings. The Court found no substance in the assertions made by the debtor regarding the form of making the demand and being misled by certain entries in the spreadsheet.
JUDGMENT of Ms. Justice Costello delivered the 14th day of January 2015
1. This is an application to dismiss a bankruptcy summons issued on the 23 rd June, 2014, following the making of a statutory demand dated 4 th April, 2014, by the creditor against the debtor Mr. C. M. The application is brought pursuant to s.8 of the Bankruptcy Act 1988, as amended, which provides as follows:-
2 "(5) A debtor served with a bankruptcy summons may apply to the Court in the prescribed manner and within the prescribed time to dismiss the summons.
(6) The Court-
(a) may dismiss the summons with or without costs, and
(b) shall dismiss the summons if satisfied that an issue would arise for trial."
2. The application is also brought pursuant to the inherent jurisdiction of the court.
3. There have been a number of cases where the principles governing an application to dismiss a bankruptcy summons pursuant to s.8 has been discussed. The most recent authoritative judgment was that of Dunne J. in Marketspreads Ltd v. O'Neill & Rice IEHC 14. She considered the test as established by the Supreme Court in St. Kevin's Company against a Debtor ( Ex tempore, Supreme Court, 27 th January, 1995) as interpreted by McGovern J. in the Minister for Communications v. M. W. . McGovern J. noted at p.4 that:-
"… the correct interpretation of s.8(6)(b) of the Act of 1988 was that the High Court should not undertake an investigation into the merits of the case once it was satisfied that an issue arose on the summons. In those circumstances, the Supreme Court stated that it was mandatory for the court to dismiss the summons if it was satisfied that an issue arose between the parties and the issue would have to be litigated separately outside the bankruptcy process."
4. In the Minister for Communications v. M. W. McGovern J. stated that the test was is there a real and substantial issue and one which is at least arguable and has some prospects of success. Dunne J. held as follows:-
"…the obligation of the Court is to be satisfied that there is an issue between the parties and, if so, then one must dismiss the bankruptcy summons. It seems to me that in considering the approach of the Court in deciding whether or not there is an issue, one has to have regard, of course, to whether or not the issue is, to use the words of McGovern J., "a real and substantial issue and one which is, at least, arguable and which has some prospect of success To put it another way, if one was to re-phrase the test, could it be said that the summons should be dismissed if the Court was merely satisfied that there was an issue, that it was unreal and illusoiy, that it was not arguable and had no prospect of success, could it be said in those circumstance, the Court is nonetheless obliged to dismiss the bankruptcy summons? Although there is no written judgment of the Supreme Court in the St. Kevin's case, it is clear that the Court was of the view that there should not be an investigation into the merits of the case once it was clear that an issue arose. Equally, the Court indicated that that such an issue was one which would have to be litigated separately outside the bankruptcy process. The court therefore has to consider the arguments that are put forward in any given case to satisfy itself that there is, in fact, an issue. An unreal or illusory issue raised by a party will not give rise to the dismissal of a bankruptcy summons …
In the course of the arguments, reference was made to the approach of the Courts in applications for summary judgment as to whether a defence has been raised requiring the matter to be adjourned to plenary hearing. I think that the test in such cases is of assistance in considering the test identified by McGovern J. Therefore, it seems to me that, in considering if the party seeking the dismissal of the bankruptcy summons has raised an issue such that the summons should be dismissed, the Court could derive some assistance from the approach to be found in cases such as Harrisrange Limited. v. Duncan and to the well known principles set out in the judgment of McKechnie J."
5. Dunne J. also referred to the decision of Clarke J. in McGrath v. O'Driscoll  IEHC 195 where he held:-
"…that a mere assertion of a defence is insufficient but any evidence of fact, which would, if true, arguably give rise to a defence will, in the ordinary way, be sufficient to require that leave to defend be given so that that issue of fact can be resolved"
6. I accept that these are the principles which should be applied in determining whether or not the bankruptcy summons herein should be dismissed.
7. If the debtor is to succeed in his application to dismiss the bankruptcy summons he must satisfy the court that an issue would arise for trial. The debtor relied upon a number of arguments which he said amounted to such an issue. Two technical points were taken by the debtor in relation to the bankruptcy summons. The first related to the fact that the statutory demand and statutory summons were brought in the name of ACC Bank Plc but the petition was brought in the name of ACC Loan Management Ltd. Mr. Michael Leogue, team leader in specialised asset management of ACC Loan Management Ltd. swore an affidavit on 15 th August, 2014, herein on behalf of the creditor and explained the situation as follows. He said that on 27 th June, 2014, ACC Bank Plc re-registered as a private limited company known as ACC Bank Ltd and, on the same day, a certificate of incorporation on change of name was issued by the Registrar of Companies certifying that ACC Bank Ltd had changed its name and was now incorporated under the name ACC Loan Management Ltd. The name was entered on the register accordingly. He exhibited the certificate of incorporation on reregistration as a private company and a certificate of incorporation on change of name both dated the 27 th June, 2014. He states that it was therefore correct to issue the bankruptcy summons on 23 rd June, 2014, in the name of ACC Bank Plc and the petition of bankruptcy on 16 th September, 2014, in the name of ACC Loan Management Ltd.
8. The debtor complained that there was a change of name between the date of the issuing of the bankruptcy summons (23 rd June, 2014) and the date of the service of the summons upon him (3 rd July, 2014) and that there was also a change in the status of the creditor company from a public limited company to a private limited company. He also pointed to the fact that the creditor did not renew its banking licence by the time the petition was presented. He thus challenged the entitlement of the petitioner, ACC Loan Management Ltd, to bring the proceedings in the circumstances. The precise objection he raised was not clarified other than to say that the articles of association might have been changed so that the petitioner might not have been entitled to collect debts which had been due to ACC Bank Plc.
9. In my opinion this submission is ill founded and cannot affect the ability of the petitioner to bring a petition pursuant to the bankruptcy summons in this case. Section 23(4) of the Companies Act 1963 provides as follows:-
"A change of name by a company under this section shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against the company, and any legal proceedings which might have been continued or commenced against it by its former name may be continued or commenced against it by its new name"
10. This governs the change of name from ACC Bank Plc to ACC Loan Management Ltd. The change of status from a plc to a limited liability company can have no bearing whatsoever on the capacity of the creditor to collect debts due to it. Likewise whether or not the company holds a banking licence is irrelevant to the collecting of debts. There has been no evidence advanced to establish that the articles of association of the creditor were amended, much less that it has lost the right to recover judgment debts due to ACC Bank Plc. Insofar as the debtor seeks to have the bankruptcy summons dismissed on this ground, I reject this claim.
11. The second technical objection advanced by the debtor is based on the wording of O. 76, r. 13 (2) of the Rules of the Superior Courts. This provides:-
"There shall be endorsed on the summons in addition to an intimation of the consequences of neglect to comply with the requisition of the summons, a notice to the debtor that if he disputes the debt and desires to obtain the dismissal of the summons he must file an affidavit within fourteen days after service of the summons stating (a) that he is not so indebted or only so...
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