Ennis Property Finance dac v Carney

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 16 July 2018
• Neutral Citation: [2018] IEHC 429
• Docket Number: [5920]
• Court: High Court
• Date: 16 July 2018

[2018] IEHC 429

THE HIGH COURT

BANKRUPTCY

Costello J.

[5920]

BETWEEN

ENNIS PROPERTY FINANCE DESIGNATED ACTIVITY COMPANY

PLAINTIFF

AND

DOMINIC CARNEY

DEFENDANT

Bankruptcy summons – European law – Consultative case stated – Defendant seeking the dismissal of bankruptcy summons – Whether an issue of European law was engaged in the proceedings

Facts: The defendant, Mr Carney, applied to the High Court seeking the dismissal, pursuant to s. 8(6) of the Bankruptcy Act 1988, of bankruptcy summons issued on the 22nd May, 2017. The defendant raised the following issues which he said would arise for trial: (1) the judgment was under appeal; (2) there was no original guarantee dated 3rd June, 2005 or there was never any guarantee granted by the defendant to Bank of Scotland (Ireland) Ltd of that date; (3) the defendant discharged the debt of Philisview Properties Ltd to Bank of Scotland Plc by way of a promissory note sent on the 10th April, 2015; (4) the plaintiff, Ennis Property Finance dac, was seeking to mislead the High Court on the basis of allegations of fraudulent representation; (5) the summons had been brought for an ulterior motive or improper purpose and on the basis of McGinn v Beagan [1962] IR 364 the summons ought to be dismissed; (6) the plaintiff should have pursued other means of recovery on foot of the judgment debt and sought the bankruptcy of the defendant only as a last resort; (7) if the receiver appointed to Philisview Properties Ltd waited for the value of the secured property to rise before selling the property that would erase the debt due to the plaintiff and therefore there would be no debt owing by the defendant on foot of the guarantee; (8) the application to extend the time for service of the bankruptcy summons was made out of time and was therefore invalid (alternatively, the application ought not to have been made ex parte and the defendant was not bound by the order because he did not consent to the order); (9) if the defendant was adjudicated a bankrupt he would be deprived of his constitutional right to property and his 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. The defendant asked that a preliminary question be referred to the Court of Justice of the European Union or to the European Court of Human Rights to enable either of those courts to determine his right to pursue his claim to his chattels against the receiver. In the alternative the court was asked to state a case directly to the Supreme Court on those points as a matter of public importance.

Held by Costello J that no issue of European law was engaged in the proceedings and therefore there was no question of any reference to the Court of Justice of the European Union pursuant to Article 267 of the Treaty on the Functioning of the European Union. Costello J held that, as the proceedings did not arise out of an appeal from the Circuit Court, but rather from original proceedings brought in the bankruptcy division of the High Court, there could be no consultative case stated to the Court of Appeal pursuant to either s. 37 or s. 38 of the Courts of Justice Act 1936.

Costello J held that no issue would arise for trial between the plaintiff and the defendant and accordingly she refused the application to dismiss the bankruptcy summons.

Application refused.

JUDGMENT of Ms. Justice Costello delivered on the 16th day of July, 2018

1 The issue for decision in this judgment is whether the bankruptcy summons issued in this case on the 22nd May, 2017 should be dismissed pursuant to s. 8 (6) of the Bankruptcy Act, 1988.

The relevant law

2 Section 8 (5) and (6) of the Bankruptcy Act, 1988 ('the Act') provides:

'(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.'

3 The Supreme Court recently considered the law in this area in The Minister for Communications, Energy and Natural Resources v. Wood [2017] IESC 16. Dunne J. gave the decision of the court and she held as follows:

'It is mandatory on the Court to dismiss the summons having regard to the provisions of s. 8(6)(b) if an issue arises on the summons. There is no choice in this matter. The summons must be dismissed. That begs the question as to what is an issue that could give rise to the dismissal of a bankruptcy summons. ...

the issue raised by an applicant must be a real and substantial issue. It should not be fanciful or unreal. It may be an issue of fact or law. If the issue raised is an issue of fact it must have some credibility. If, for example, the applicant for an order pursuant to s. 8(6)(b) of the Act of 1988 denies that he owes the money sought in a bankruptcy summons but has already suffered judgment in that amount, then the conclusion that he or she did not owe the money would simply not be credible. If the issue raised was an issue of law which was well established and as to which there was no doubt and could not avail the applicant, raising such an issue could not give rise to the dismissal of the bankruptcy summons.

...

If the issue is an issue of law which is clearly established and not open to doubt such that, as McKechnie J. in the course of his judgment in Harrisrange [Ltd v. Duncan [2003] 4 I.R. 1] identified, is it clear 'that fuller argument and greater thought is evidently not required for a better determination of such issues' then the bankruptcy summons should not be dismissed.

In looking at the situation overall one must of course consider whether what is deposed to on affidavit by the applicant is credible.

...

a mere assertion that an issue arises would be insufficient to succeed in an application to dismiss a bankruptcy summons but any evidence of fact which would, if true, arguably give rise to an issue that requires to be litigated outside the bankruptcy proceedings would be sufficient to establish that the bankruptcy summons should be dismissed.'

4 From these passages the following points emerge:

(i) Once an issue for trial arises on the summons, the summons must be dismissed.

(ii) The issue raised must be real and substantial.

(iii) The issue raised may be an issue of fact or of law.

(iv) If it is an issue of fact, it must have some credibility.

(v) Mere assertion that an issue arises is insufficient.

(vi) An assertion must be supported by evidence of fact which would, if true, arguably give rise to an issue that requires to be litigated outside the bankruptcy proceedings.

(vii) If the issue raised is an issue of law which was well established and as to which there was no doubt the summons should not be dismissed.

The facts

5 On or about the 3rd June, 2005 the defendant entered into a guarantee with the Bank of Scotland (Ireland) Ltd in respect of the debts of Philisview Properties Ltd to the bank in the sum of €100,000. In October 2010 Bank of Scotland (Ireland) Ltd merged with Bank of Scotland Plc. Subsequently by purchase deed dated 29 November, 2014 (as novated by deed of novation dated 12th November, 2014) and a deed of assignment dated 20th April, 2015 Ennis Property Finance Ltd acquired the facilities the subject matter of these proceedings from Bank of Scotland Plc.

6 Ennis Property Finance Ltd issued a summary summons on the 10th May, 2016 against Philisview Properties Ltd (in receivership), the defendant and Mrs. Niamh Carney. Ennis Property Finance Ltd changed its name to Ennis Property Finance DAC and on 14th November, 2016 the title to the proceedings was amended and they continued in the name of Ennis Property Finance DAC. The plaintiff issued a motion seeking liberty to enter final judgment against the defendant in the sum of €100,000 together with all interest costs and expenses referred to at Clause 2.6 of the guarantee and indemnity dated 3rd June, 2005. The notice of motion was...