O'Connell v Wymes

JudgeMr. Justice Meenan
Judgment Date20 March 2018
Neutral Citation[2018] IEHC 213
Docket Number[No. 580P/579P]
CourtHigh Court
Date20 March 2018






[2018] IEHC 213

[No. 580P/579P]



Bankruptcy – The Bankruptcy Act 1988 (as amended) – Service of bankruptcy summons – Acts of bankruptcy – Service of bankruptcy summons

Facts: The petitioners filed a bankruptcy petition against the respondents for the adjudication of the respondents ('debtors') as bankrupts. The first named respondent contended that he was not under any obligation to pay the debt as he had made an application for setting aside the service of bankruptcy summons within the prescribed time limit. The petitioners argued that the aforesaid application was dismissed as a result of which the first named respondent had committed an act of bankruptcy by not paying the debt within 14 days of service of the bankruptcy summons.

Mr. Justice Meenan adjudicated the debtors as bankrupts and held that the petitioners were entitled for the relief sought. The Court held that it retained an inherent jurisdiction to stay bankruptcy proceedings prior to adjudging the debtors as bankrupts. The Court found that the debtors had committed an act of bankruptcy by not paying the debt, and there was compliance with s. 11(1)(c) of the Bankruptcy Act 1988 as the act of bankruptcy occurred within three months prior to the presentation of the bankruptcy petition by the petitioners. The Court observed that the debtors had no arguable defence in the present case so as to entitle the Court to exercise its discretion for staying the bankruptcy proceedings.

JUDGMENT of Mr. Justice Meenan delivered on the 20th day of March, 2018.

The bankruptcy proceedings herein originate from the decision in Bula Ltd (In Receivership) and Others v. Tara Mines Ltd and Others. On 24th February, 1997 Lynch J. made an order for costs against the above named respondents, Mr. Michael Wymes and Mr. Richard Wood. The issue of costs was itself the subject of protracted litigation.


On 31st July, 2003 a certificate of taxed costs was issued for the amount of €3,297,493.33, which together with interest amounted to a total sum of €4,881,735.59. The petitioners then set about recovering this amount from the respondents. This was the subject of further protracted litigation. Subsequnetly, bankruptcy summonses were served on both respondents on 1st March, 2010.


Further proceedings were commenced challenging the validity of these bankruptcy summonses and the first named respondent, Mr. Wymes, brought an application to dismiss the summons. This application was dismissed by McGovern J. in the High Court on 29th April, 2010 and the matter was subsequently appealed to the Supreme Court.


The Supreme Court delivered judgment on the appeal on 9th March, 2017 ( Minister for Communications, Energy & Natural Resources v. Wood & anor. [2017] IESC 16), and a further judgment followed on 26th July, 2017 ( Minister for Communications, Energy & Natural Resources v. Wood & anor. [2017] IESC 58). The appeal was dismissed and the validity of the bankruptcy summons was upheld. The petition herein was issued on 10th June, 2010. The hearing of the petition was adjourned on a number of occasions to await the outcome of Mr. Wymes's application to dismiss the bankruptcy summons.


The hearing of the petitions to have the respondents adjudicated bankrupt came before this Court on 23rd January, 2018. Mr. Wymes appeared in person and filed several affidavits in opposition to the petition. The second named respondent, Mr. Wood, was represented by counsel who adopted the position that he was not consenting to the orders being sought. Mr. Wood did not file any affidavits in relation to the proceedings.


In spite of the fact that litigation has been on-going for nearly fifteen years (from the date of the certificate of taxation on 31st July, 2003) involving numerous issues, it is important not to lose sight of the basic statutory requirements necessary to adjudicate a person bankrupt and the requisite proofs that are clearly set out. Even where the requisite proofs have been established, the court retains an inherent jurisdiction to stay bankruptcy proceedings. In the proceedings herein, it will be necessary to determine if any such circumstances exist to invoke this jurisdiction.

Statutory Provisions

The relevant legislation is the Bankruptcy Act 1988 (as amended) ('the Act of 1988'). The following are the relevant provisions:-

Section 7:-

'7(1) An individual (in this Act called a 'debtor') commits an act of bankruptcy in each of the following cases—

(a) ...

(b) ...

(c) ...

(d) ...

(e) ...

(f) ...

(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.'

Section 11(1):-

'(1) A creditor shall be entitled to present a petition for adjudication against a debtor if—

(a) the debt owing by the debtor to the petitioning creditor (or, if two or more creditors join in presenting the petition, the aggregate amount of debts owing to them) amounts to more than €20,000,

(b) the debt is a liquidated sum,

(c) the act of bankruptcy on which the petition is founded has occurred within three months before the presentation of the petition, and

(d) ...'

Section 14:-

'(1) Subject to subsection (2), where the petition is presented by a creditor, the Court shall, if satisfied that the requirements of section 11(1) have been complied with, by order adjudicate the debtor bankrupt.

(2) Before making an order under subsection (1), the Court shall consider the nature and value of the assets available to the debtor, the extent of his liabilities, and whether the debtor's inability to meet his engagements could, having regard to those matters and the contents of any statement of affairs of the debtor filed with the Court, be more appropriately dealt with by means of -

(a) a Debt Settlement Arrangement, or

(b) a Personal Insolvency Arrangement,

and where the Court forms such an opinion the Court may adjourn the hearing of the petition to allow the debtor an opportunity to enter into such of those arrangements as is specified by the Court in adjourning the hearing.

(3) ...

(4) ...'

Application of Statutory Provisions:

The first issue to be determined is whether the respondents (the debtors) have committed an 'act of bankruptcy'. A bankruptcy summons was served on each of the debtors. In the case of Mr. Wymes, an application was brought in the High Court to dismiss the summons. As detailed above, this application was rejected by the High Court, a decision that was subsequently affirmed by the Supreme Court. Therefore, there is no issue concerning the validity of either of the debtors' summonses.


The debt was not paid within fourteen days after the service of the bankruptcy summons. It follows therefore that an 'act of bankruptcy' has taken place, as per s. 7(1)(g) of the Act of 1988. In reaching this conclusion, I have considered the argument put forward by Mr. Wymes that there was no obligation on him to pay the debt on foot of the bankruptcy summons in circumstances where he has made an application to dismiss the summons within the fourteen days. I will return to this argument later in the judgment.


As an 'act of bankruptcy' has occurred, the petitioners under s. 11(1)(c) of the Act of 1988 were entitled to present a petition for adjudication against the debtors. The 'act of bankruptcy' on which the petition was founded occurred within three months before its presentation, as required by s. 11(1)(c).


The wording of s. 14(1) is unambiguous. If the court is satisfied that s. 11(1) has been complied with, then the court shall adjudicate the debtors bankrupt. However, the court retains an inherent jurisdiction to stay the bankruptcy proceedings. I will consider this issue in the context of the various defences raised by Mr. Wymes.


The provisions of s. 14(1) were considered by Baker J. in ACC Loan Management Limited v. P [2016] IEHC 117. Baker J. states:-

'Inherent jurisdiction

46. Counsel for the debtor also argues, and this is not denied by the Bank, that I have an inherent jurisdiction to stay the bankruptcy proceedings. I accept that I have such jurisdiction, but consider that a number of matters must guide me in the exercise of that discretion. The newly available personal insolvency options, which offer an insolvent debtor a possibly more benevolent means of dealing with his creditors, must guide my approach. However, I cannot fail to have regard to the provisions of s. 14 (1) of the Act of 1988 as follows:

'14(1) Where the petition is presented by a creditor, the court shall, if satisfied that the requirements of section 11(1) have been complied with, by order adjudicate the debtor bankrupt.'

47. This creates, in my view, a prima facie entitlement on the part of a petitioning creditor that the adjudication order be made, and s. 14(2) must be seen as an exception...'


In his unsuccessful application to dismiss the bankruptcy summons before the High Court, Mr. Wymes relied on a number of grounds. It is clear that a number of the grounds that were relied on in that application are now being raised as defences to the petition. This Court, when considering the defences raised by Mr. Wymes, cannot allow him to either re-litigate issues that have already been decided or to raise issues that...

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