Gladney (Collector General on Behalf of the Minister for Finance) v O'M (P)

CourtHigh Court
JudgeMs. Justice Costello
Judgment Date20 November 2015
Neutral Citation[2015] IEHC 718
Date20 November 2015

[2015] IEHC 718


Gladney (Collector General on Behalf of the Minister for Finance) v O'M (P)
No Redaction Needed


P. O'M.

Bankruptcy – Revenue – The Bankruptcy Act 1988 – Dismissal of Bankruptcy summons – Delay – Unenforceable agreement – Whether part payment of debt was sufficient consideration to conclude a legally enforceable agreement

Facts: Following the grant of three judgments to the petitioner against the debtor for the recovery of tax arrears, which having been discharged, the petitioner initiated bankruptcy proceedings against the debtor for the current tax liabilities also claiming the interest due on foot of those three judgments apart from the judgment obtained to recover the amount due on the current tax liabilities. The debtor now sought an order for extension of grant of time to apply for dismissal of bankruptcy summons along with an order for dismissal of bankruptcy summons.

Ms. Justice Costello dismissed the application to extend the time to seek the dismissal of bankruptcy summons with the observation that the debtor would have an opportunity to raise the issue of delay while defending the petition to adjudicate him as bankrupt and hence the time of the Court would be saved. The Court, however, adjourned the petition and granted some time to the debtor to ascertain whether any of the alternatives set out under s. 14 (2) of the Bankruptcy Act 1988 could be explored for settling the present dispute. The Court held that there was no agreement in place between the petitioner and the debtor as alleged by both parties for want of consideration to the effect that the debtor would be entitled for waiver of interest in relation to the prior three judgments entered against him. The Court held that a mere promise to pay a part of the debt was no good consideration and there was no offer of collateral advantage by the debtor to the petitioner and thus, their arrangements had no legal enforceability. The Court found that since the debtor had failed to establish that the bankruptcy summons were not due and owing, the petitioner was entitled to petition for the debtor's bankruptcy.


1. This case involves a lengthy history between the Collector General and P. O'M. ("the debtor") going back to 1988. The debtor tax payer fell into arrears in respect of taxes and ultimately the Collector General (whom I shall refer to as "the petitioner" which expression includes his predecessors in title) instituted proceedings and obtained judgment against the debtor as follows:-

Record No.

Date of Judgment

Judgment Sum













2. The petitioner caused bankruptcy proceedings to issue against the debtor under record number 2003/40 IP claiming the total amount due as of the date of the Petition was €496,555.58.


3. The petitioner and the debtor settled the bankruptcy proceedings by terms reduced to writing on 5 th February, 2004, and which are referred to in these proceedings as the 2003 Agreement. The Agreement provided as follows:-

"[w]e hereby confirm that the following terms of settlement of the above matter have been agreed between the Petitioner and the Debtor:"

1. €150,000 payable by bank draft by the Debtor to Matheson Ormsby Prentice, solicitors for the Petitioner, ("MOP"), on or before 28 October 2003;

2. Monthly payments of €5000 by the Debtor to MOP as and from 28 November 2003, each cheque to be payable on 28 th of the month thereafter, until the balance of the tax liability (€150,587.35) has been discharged in full, at which time the interest payable will be reviewed;

3. Legal costs of €8,500 to be paid by the debtor to MOP on or before 28 October 2003;

4. There will be no moratorium placed on the interest due from the date of the judgment, and once the balance of the tax liability in the sum of €150,587.35 has been discharged in full, the Petitioner will review the interest due;

5. Provided the Debtor makes payment as per the terms of paragraph 2 above, the Petitioner will waive all interest due from the date of settlement (being 31 October 2003). However, should the Debtor breach the terms of paragraph 2 above, all interest will become immediately due and payable including interest due from the date of settlement, subject to such credits as will be allowable in respect of payments already made.

6. The bankruptcy petition will be struck oat of the bankruptcy list with liberty to re-enter immediately should the Debtor fail to make payment on time of any of the instalments referred to in paragraph 2 above." (Emphasis added)


4. It is common case that the debtor discharged the sum of €309,087.35 pursuant to the 2003 Agreement. There were some occasions when the payments of €5,000.00 were delayed and the sum of €2,198.76 was applied as a credit rather than as a payment.


5. The debtor fell into arrears in respect of current tax liabilities and the petitioner issued two further sets of High Court proceedings under record numbers 2006/427R and 2006/559R respectively.

Record No

Date of Judgment

Judgment Debt










6. The petitioner elected not to seek any further interest on the judgment debts the subject of the 2003 Agreement after 31 st October, 2003. However, he sought to recover the outstanding interest which was due on those debts up to 31 st October, 2003, which came to a total of €136,190.99. By letter dated 27 th February, 2007, the petitioner's solicitors wrote to the debtor's solicitors noting that the petitioner had reviewed all five cases in detail and that, according to the petitioner's records, there was still a substantial amount of interest outstanding in respect of the three older judgments. The letter set out that the interest up to 31 st October, 2003, amounted to €136,190.99 and that the sums then due in respect of cases bearing record numbers 2006/427R and 2006/559R amounted to €125,545.13 and €20,085.75 respectively. The letter stated that the petitioner was prepared "strictly without prejudice, to allow [the debtor] a period of 18 months in which to discharge this liability in full. [€281,821.87]"


7. The letter concluded by stating:-

"[p] lease note that should these terms not be agreed and payments subsequently maintained strictly on time, we will be instructed to institute Bankruptcy Proceedings against [the debtor] in respect of the full balance outstanding at that time."


8. The debtor's solicitors replied on 14 th March, 2007, with a counter offer. The terms offered were not clearly set out. However, it appeared that the debtor was offering to pay €22,614.63 in respect of interest accrued on the older judgments and to pay in full over time the amount claimed in the proceedings brought in 2006. In other words he was refusing to pay the interest in the sum of €113,576.36 which related to the case bearing record number 1999/293R.


9. Unfoxtunately, in reply, the petitioner's solicitors wrote as follows:-

"Our client has confirmed that they are prepared, strictly without prejudice, to accept your client's proposal to discharge the outstanding liability as set out in our letter dated 27 February 2007…"

In fact it would appear that the debtor never proposed to discharge the liability set out in the petitioner's solicitors' letter of 27 th February, 2007, and has always disputed the liability sought of €113,576.36. It would appear that neither firm of solicitors appreciated the fact that the parties were not ad idem because they each proceeded on the basis that their offer had been accepted. In these proceedings each party referred to this exchange of correspondence as the 2007 Agreement, though in fact there was no agreement between the parties.


10. It is not disputed that the debtor made a number of payments from June, 2007 until June, 2010. In his replying affidavit of 3 rd December, 2014, the debtor exhibits 26 receipts (dated from 13 th June, 2007, to 16 th August, 2010) from the petitioner in respect of these payments which total €135,689.00. Each of these receipts shows clearly how the payment was treated by the petitioner. Every single one of them was credited towards interest and the receipts clearly show the periods in respect of which the interest was credited. It is absolutely clear from documents furnished by the debtor that the petitioner set these receipts off against interest claimed against liabilities from as far back as May, 1987. Specifically, the payments were credited against the interest liabilities he had not agreed to repay in his solicitors' counter offer of 14 th March, 2007. At no stage did the petitioner claim that the amounts were being misapplied or that an agreement had been reached whereby the petitioner had waived his right to recover the interest sought as set out in the letter dated 27 th February, 2007.


11. The petitioner stated that the debtor had agreed to pay the full sum claimed in the letter of 27 th February, 2007, but that he had failed to comply with the terms of the Agreement in that certain of the promised payments were dishonoured and certain other payments were not made within the timeframe agreed and that he ceased payments in respect of the balance of his outstanding liabilities on or about 21 st July, 2010. This left a shortfall...

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4 cases
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    • 3 March 2020 would have been open to the Debtor to raise arguments at the Petition stage directed to the validity of the Summons: Gladney v POM [2015] IEHC 718, at para 19. Here the Debtor sought to do so but was met with the objection that those arguments had already been considered by the Court. If......
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