Allied Irish Banks Plc v Ivan Yates

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Dunne
• Judgment Date: 21 August 2012
• Neutral Citation: [2012] IEHC 360
• Date: 21 August 2012

Allied Irish Banks PLC v Yates

BANKRUPTCY

IN THE MATTER OF A BANKRUPTCY SUMMONS ISSUED ON BEHALF OF ALLIED IRISH BANKS PLC OF BANK CENTRE, BALLSBRIDGE, DUBLIN 4 ON THE 14 th DAY OF MAY, 20112.

BETWEEN:

ALLIED IRISH BANKS, PLC

APPLICANT

AND

IVAN YATES

RESPONDENT

[2012] IEHC 360

[No 5373]

THE HIGH COURT

Bankruptcy - Bankruptcy summons - Liabilities - Guarantee - Demand for repayment - Appointment of receiver - Overstatement - Conclusive evidence clause - Certificate requirements - Bankruptcy Act 1988

Facts: The respondent received a bankruptcy summons in relation to a substantial sum claimed by the applicant in consideration of a guarantee between the parties that the respondent would meet the liabilities of Celtic Bookmakers Limited. The respondent applied to dismiss the summons on 6 grounds. First, he denied any liability to the applicant. Secondly, if he did owe an amount, it was a sum less than the amount claimed

Thirdly, the respondent did not receive a valid four day demand notice before the issue of the summons. Fourthly, the applicant did not make demand for payment more than once before the issue of the summons. Fifthly, the applicant failed to lodge all documentation referred to in the grounding affidavit of the summons to the court before the issue of the summons. Sixthly, the applicant failed to issue a true copy of this grounding affidavit of the summons. The applicant indicated that there may have been a mix up meaning the respondent in fact received his wife's affidavit but that no prejudice arose from this.

Held by Dunne J that the first issue could be dismissed as the parties had agreed on the matter during the course of the hearing. On the second issue, Dunne J held that where the sum owed is actually less than the figure on the bankruptcy summons, there is no act of bankruptcy where the figure claimed is not paid. On the applicant's point regarding the conclusive evidence clause in the guarantee, it was held that a relevant certificate on foot of it had to be properly issued to enable the clause. Dunne J accepted that there was an issue over whether the requirements for the certificate had been properly met. As such, the matter should be heard.. This, along with the fact there was a potential challenge to the amount stated which should be determined at a further hearing, meant the bankruptcy process was not appropriate at that stage and the summons would be dismissed.

The third issue was not considered due to the dismissal of the summons. On the fourth point, Dunne J stated he was satisfied that the applicant had made a demand for payment on more than one occasion based on the evidence of a letter and demand from the applicant to the respondent before him. On the fifth issue, Dunne J felt there was no prejudice to the respondent in the late lodgement of relevant documents and so was not a basis for the dismissal of the bankruptcy summons alone. Similarly, on the last point, it was said that if there was a mix up that meant the respondent accidentally received his wife's affidavit, the affidavit's would be identical and so there would be no prejudice to the respondent.

Bankruptcy summons dismissed.

BANKRUPTCY ACT 1988 S7(1)(G)

BANKRUPTCY ACT 1988 S8(5)

RSC O.76 r11

O'MAOILEOIN v OFFICIAL ASIGNEE 1989 IR 647

SHERLOCK (A BANKRUPT), IN RE 1995 2 ILRM 493 1995 12 3310

O'C (M) v W M & W (R) 2010 3 IR 1

BACHE & CO v BANQUE VERNES 1973 LLR 437

COLLIER, RE 1891 64 LT 742

DEBTOR, RE EXPARTE A DEBTOR 1908 2 KB 684

DOBBS v NATIONAL BANK OF AUSTRALASIA LTD 1935 53 CLR 643

MAHER v AG 1973 IR 140

MCELDOWNEY, STATE v KELLEHER 1983 IR 289

LEWISON ON INTERPRETATION OF CONTRACTS 13.06

SHOMAT PTY LTD v RUBENSTEIN UNREP SUPREME NSWR EQ 4.12.1995

NATIONAL AUSTRALIA BANK LTD v SAMSON UNREP SUPREME 9.9.1991

MOOHAN v S & R MOTORS 2008 3 IR 650

HEGARTY & SONS v ROYAL LIVER FRIENDLY SOC 1985 IR 524

SISK & SONS LTD v LAWTER PRODUCTS BV 1976 -1977 ILRM 204 1976/7-9/1332

NORTH SHORE VENTURES LTD v ANSTEAD HOLDINGS INC & ORS 2012 EWCA CIV 11 2012 1 CH 31

BRITISH LINEN ASSET FINANCES LTD v RIDGEWAY 1999 GWD 2 78

IIG CAP LLC v VAN DER MERWE 2008 2 AER COMM 1173

ST KEVINS CO A DEBTOR UNREP SUPREME 27.1.1995 (EXTEMPORE) TRANSCRIPT NOT AVAILABLE)

RSC O.76 r 11(1)

BANKRUPTCY ACT 1988 S8(6)(B)

1 JUDGMENT of Ms. Justice Dunne delivered the 21st day of August 2012

2 The respondent herein was served with a bankruptcy summons issued on the 14 ^th May, 2012. He has now sought to have that bankruptcy summons dismissed.

Background

3 The bankruptcy summons was issued in respect of the respondent (hereinafter referred to as "the debtor") herein on the 14 ^th May, 2012, in respect of the sum of €3,692,852.13 being the sum claimed by the applicant on foot of particulars of demand served on the debtor in or around the 6 ^th April, 2012. The said sum is stated to be due on foot of a guarantee dated the 13 ^th April, 2010, and made between the debtor of the one part and the applicant of the other part, whereby the debtor agreed to pay on demand all the liabilities due and owing by Celtic Bookmakers Limited (now in liquidation) to the applicant herein, including those liabilities due pursuant to a letter of sanction dated the 26 ^th February, 2010, issued by the applicant and addressed to the borrower as supplemented and replaced by a letter of sanction dated the 23 ^rd November, 2010 subject to the principle limit of €6,769,000 together with interest thereon from time to time. The bankruptcy summons herein was served on the debtor on the 14 ^th June, 2012, by ordinary prepaid post pursuant to an order for substituted service granted on the 6 ^th June, 2012. By notice of motion dated the 25 ^th June, 2012, the debtor sought to have the bankruptcy summons issued on behalf of the applicant dismissed on a number of grounds.

The Grounds for Seeking the Dismissal of the Summons

4 Six grounds were relied on by the debtor in seeking the dismissal of the summons namely,

5 (i) That he did not owe any amount to the applicant.

6 (ii) That in the event that he owed any sum, the sum due is lower than the sum of €3,392,852.13 specified in the summons.

7 (iii) That the debtor was not served with a valid four day demand notice prior to applying for the issue of the summons as required by statute.

8 (iv) That the bank did not demand payment of the debt claimed on more than one occasion prior to applying for the issue of the summons.

9 (v) That prior to applying for the issue of the summons the applicant did not lodge with the proper office of the court, bills, notes, guarantees, contracts, judgments or orders referred to in the affidavit on foot of which the summons was issued and

10 (vi) That the applicant failed to serve a true copy of the affidavit on foot of which the summons was issued on the debtor.

The Law

11 There are a number of provisions on the Bankruptcy Act 1988, (hereinafter referred to as "the Act") which are of relevance. Firstly, s. 7(1)(g) provides as follows:-

"An individual (in this Act called a "debtor") commits an act of bankruptcy…"

12 (g) if the creditor presenting a petition has served upon the debtor in the prescribed manner a bankruptcy summons, and he does not within fourteen days after service of the summons pay the sum referred to in the summons or secure or compound for it to the satisfaction of the creditor."

13 Section 8(5) provides:-

14 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.

15 (6) The Court

16 (a) may dismiss the summons with or without costs, and

17 (b) shall dismiss the summons if satisfied that an issue would arise for trial."

18 It would also be helpful to refer to the provisions of O. 76, r. 11 of the Rules of the Superior Courts. It provides as follows:-

"r. 11(1) A creditor desirous that a bankruptcy summons may be granted shall, not earlier than four clear days after he shall have served a notice in the Form No. 4, file in the proper office a copy of such notice, together with an affidavit in the Form No. 5 of the truth of his debt made by himself or by any other person who can swear positively to the facts verifying the truth of his debt, and that no form of execution has issued in respect of such debt and remains to be proceeded upon, and shall lodge with the proper officer any bills, notes, guarantees, contracts, judgments or orders referred to in his affidavit together with the summons which it is proposed to issue."

The Issues

19 The first issue raised on behalf of the debtor was to the effect that he did not owe the amount alleged to be due. That point was expanded upon by him in his affidavit grounding this application and the point made was that he had signed a number of documents at various times in his capacity as a director of the company Celtic Bookmakers Limited and that the copy guarantee purported to have been signed by him was a poor and indistinct photocopy and for that reason he was unable to assess whether he had signed that guarantee. At the hearing of the application before me, it was accepted on behalf of the debtor that the document relied on by the petitioner had indeed been signed by the debtor and was authentic. Accordingly that issue was not pursued.

20 The second issue raised by the debtor relates to what is alleged to be an overstatement of the amount actually due. This arises in a number of ways. The first of these is stated to be an overpayment to the receiver of the company in the sum of €162,000 as a result of an excess of fees charged by a receiver over the assets of the company. A decision was made on the 2 ^nd December, 2010, to appoint a receiver and it is stated by the debtor that the receiver, Neil Hughes had indicated that the costs...