Carney v Ennis Property Finance DAC

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 16 October 2020
• Neutral Citation: [2020] IECA 281
• Date: 16 October 2020
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2019/443

IN THE MATTER OF THE BANKRUPTCY ACT 1988

AND IN THE MATTER OF DOMINIC CARNEY (A BANKRUPT)

BETWEEN/

ENNIS PROPERTY FINANCE DAC

RESPONDENT

- AND –

DOMINIC CARNEY

APPELLANT

[2020] IECA 281

Whelan J.

Noonan J.

Haughton J.

Record Number: 2019/443

Court of Appeal Record No. 2020/13

THE COURT OF APPEAL

JUDGMENT of Mr. Justice Robert Haughton delivered on the 16 ^th day of October 2020

Introduction

1 This judgment concerns two appeals by the Bankrupt (“Mr. Carney”) against judgments and orders of Pilkington J. made on 14 October 2019 and 12 November 2019 respectively. In the appeal bearing record no. 2019/443 Mr. Carney appeals against the refusal of Pilkington J. to recuse herself from adjudicating on the application of Mr. Carney to Show Cause against the validity of the order adjudicating him a bankrupt made on 11 March 2019 (“the Recusal Appeal”). In the second matter bearing record number 2020/13 Mr. Carney appeals against the order of Pilkington J. made on 12 November 2019 dismissing Mr. Carney's application to Show Cause against the validity of the order of adjudication of bankruptcy made on 11 March 2019, (“the Show Cause Appeal”). In both appeals the respondent is the petitioning creditor.

2 As there is a common background in respect of both appeals, and as they involve the same parties and the same trial judge, and as both appeals were heard together, this judgment deals with both appeals. Having set out the background it is logical that this judgment should first deal with the Recusal Appeal, and then address the Show Cause Appeal.

Background

3 On 3 June 2005 Mr. Carney entered into a guarantee with Bank of Scotland (Ireland) Limited. The guarantee was for the debts of a company called Philisview Properties Limited and was limited to the sum of €100,000. In October 2010 Bank of Scotland (Ireland) Limited merged with Bank of Scotland plc. Subsequently Ennis Property Finance Limited acquired the facilities, the subject matter of these proceedings from Bank of Scotland plc.

4 On 10 May 2016 Ennis Property Finance Limited issued summary proceedings against Philisview Properties Limited (in Receivership), Mr. Carney and Niamh Carney (High Court record no. 2016/781S). It was necessary for the plaintiff to obtain an order for substituted service on Mr. Carney. On 14 November 2016 an order was made amending the title of the proceedings as the plaintiff had changed its name to Ennis Property Finance DAC, the respondent in these appeals.

5 On 27 February 2017 Twomey J. granted the respondent summary judgment against Mr. Carney in the sum of €100,000.

6 With a view to commencing these bankruptcy proceedings against Mr. Carney, the respondent served its Particulars of Demand on Mr. Carney on 19 April 2017. A Bankruptcy Summons then issued on 22 May 2017.

7 On 31 May 2017 Mr. Carney brought an application to this court seeking an order extending the time within which to appeal the order of Twomey J.

8 On 19 June 2017 the respondent made an ex parte application for substituted service of the Bankruptcy Summons, and for renewal of that summons. The renewed summons was served on 27 June 2017. The respondent refrained from seeking to have Mr. Carney adjudicated a bankrupt until this court had dealt with Mr. Carney's application seeking an order extending the time to appeal the order of Twomey J.

9 Mr. Carney's application for an extension of time to appeal was determined by this court on 6 November 2017. The Court of Appeal refused Mr. Carney's application for an extension of time, on the basis that it was not satisfied that he had raised an arguable ground of appeal. Accordingly the judgment of Twomey J. became final and unappealable, and Mr. Carney's debt to the respondent in the sum of €100,000 could no longer be challenged.

10 Mr. Carney then brought an application to set aside the Bankruptcy Summons. That application was refused by Costello J. in the High Court in a judgment delivered on 16 July 2018 reported at [2018] IEHC 429. Costello J. rejected all arguments made by Mr. Carney, and it is important to summarise some of these because, as I record later in this judgment, it is not open to Mr. Carney to repeat the same arguments before this court on the present appeals. One ground for the application was that the judgment of Twomey J. was under appeal, but that was no longer the case after the Court of Appeal refused an extension of time in November 2017. Mr. Carney also sought to challenge the existence of any valid guarantee, but Costello J. found –

“His arguments were rejected in the High Court and the Court of Appeal refused leave to extend time for bringing an appeal on the basis that he had disclosed no grounds of defence. This Court cannot go behind the judgments and orders of the High Court and Court of Appeal.” (para. 14)

Other contentions rejected by Costello J. on the same basis were Mr. Carney's assertion that he had discharged the debt of Philisview Properties Limited by way of a promissory note, and that the respondent was seeking to mislead the High Court on the basis of allegations of fraudulent misrepresentation. She also rejected the argument that the Bankruptcy Summons had been brought for an ulterior motive or improper purpose, on the basis that there was no evidence and no inferences that the court might draw to support such suggestions. Costello J. also rejected arguments that the respondent should have pursued other means of recovery on foot of the judgment debt; and that if the receiver waited for the value of the property to rise before selling this would raise the debts due to the respondent; and that the application to extend the time for service of the bankruptcy summons was made out of time, or ought not to have been made ex parte; and that if Mr. Carney were to be adjudicated bankrupt he would be deprived of his constitutional right to property and rights under the European Convention on Human Rights to property as he would not be able to pursue the receiver for the return of his chattels. Costello J. did not consider that any issue of European law was engaged in the proceedings and that there was therefore no question of any reference to the Court of Justice of the European Union pursuant to Art. 267.

11 Mr. Carney appealed the order of Costello J. to the Court of Appeal, which upheld the order of the High Court. The judgment of Irvine J. delivered on 20 February 2019 reported at [2019] IECA 71 on behalf of the court states –

“38. … I am entirely satisfied that the High Court judge correctly determined each and every one of the issues detailed at paras 14 – 16 of her judgment”

At paragraph 44 of her judgment Irvine J. states –

“… There is simply no evidence that Ennis commenced the bankruptcy proceedings for an improper purpose.”

In particular she concluded at paragraph 45 that there was no evidence from which the High Court could reasonably have concluded that the bankruptcy proceedings had been instituted to bring an end to Mr. Carney's proceedings against the receiver. She also rejected an argument that the bankruptcy proceedings were premature or that Ennis ought to have sought to avail of a range of other enforcement proceedings. From para. 52 on Irvine J. also rejects a submission by Mr. Carney that the bankruptcy rules take precedence over other Rules of the Superior Courts, and that they are all amenable to enlargement or abridgment under O. 122, r. 7. In para. 61 Irvine J. rejects Mr. Carney's submission that the High Court should have set aside the Bankruptcy Summons because “the balance of justice” warranted such an approach, stating –

“First, that the balance of justice would favour the outcome proposed by Mr. Carney was not clearly established on the evidence. More importantly however is the fact that where the ‘balance of justice’ lies forms no part of the Court's assessment on an application to set aside a bankruptcy summons.”

12 By order of Pilkington J. made on 11 March 2019 Mr. Carney was adjudicated a Bankrupt.

13 Mr. Carney appealed the order of adjudication of bankruptcy, and the appeal was assigned a hearing date of 26 June 2019. On 21 June 2019 this court refused Mr. Carney's application to vacate that hearing date, and by order of this court dated 26 June, 2019 that appeal was dismissed as Mr. Carney had failed to file proper books of appeal. In particular, Mr. Carney had not taken up a copy of the digital audio recording (the DAR) and consequently there was no transcript of the High Court proceedings before the Court of Appeal.

14 On 25 March 2019 Mr. Carney issued a “Notice by Debtor to Show Cause Against the Validity of Adjudication”, returnable before the Bankruptcy Court on 13 May, 2019. This pleaded, by reference to section 11(1) of the Bankruptcy Act, 1988 notes four grounds for showing cause: -

“(1) Section 11(1)(b) the liquidated sum claimed is not an absolute figure as the Petitioner has failed to realise the security asset to determine the actual debt due and has failed to mitigate its losses.

(2) Donal O'Sullivan was not authorised to issue any Bankruptcy Summons nor any Petition for the petitioning Creditor.

(3) That the Petition of Bankruptcy by a Person other than the Debtor was not issued with any Authority from the Petitioning Company in accordance with Section 11(1)(c) of the Bankruptcy Act, 1988.

(4) The Petition has not been issued nor executed in accordance with the statutory requirements of the Bankruptcy Act, 1988.”

15 On 13 May 2019 Mr. Carney's application to show cause was listed before Pilkington J., but as it was apparent that it would take more time to hear it than was available on that date Pilkington J listed it for hearing on 4 November 2019. On 13 May 2019 Mr. Carney made known to Pilkington J. his objection to her hearing the Show Cause application. Pilkington J. then gave leave to Mr. Carney to bring an application on notice...