Gladney v Tobin

• Jurisdiction: Ireland
• Judge: Mr Justice Maurice Collins
• Judgment Date: 03 March 2020
• Neutral Citation: [2020] IECA 49
• Date: 03 March 2020
• Court: Court of Appeal (Ireland)
• Docket Number: Court of Appeal Record No 2017/291

BANKRUPTCY

IN THE MATTER OF A BANKRUPTCY PETITON BY MICHAEL GLADNEY COLLECTOR GENEERAL OF SARSFIELD HOUSE, FRANCIS STREET, LIMERICK, PETITIONING CREDITOR

AND JOHN TOBIN OF LEVEL 3, CORNMARKET, ROBERT STREET, LIMERICK, DEBTOR

BETWEEN

MICHAEL GLADNEY

PETITIONER/APPLICANT

AND

JOHN TOBIN

APPELLANT/RESPONDENT

[2020] IECA 49

Donnelly J.

Haughton J.

Collins J.

Court of Appeal Record No 2017/291

Court of Appeal Record No 2017/552

THE COURT OF APPEAL

CIVIL

Bankruptcy summons – Extension of time – Bankruptcy Act 1988 s. 11(1)(c) – Appellant seeking to appeal an order of the High Court refusing the appellant’s application to dismiss bankruptcy summons – Whether the judge erred in refusing to extend time for the appellant’s application to dismiss the bankruptcy summons

Facts: The appellant, Mr Tobin (the Debtor), was adjudged bankrupt by order of the High Court (Costello J) made on 13 November 2017 on foot of a petition dated 28 June 2016. The Debtor appealed that order to the Court of Appeal. He also appealed an earlier order of the High Court (Costello J) of 30 May 2017 refusing the appellant’s application to dismiss the bankruptcy summons of 4 April 2016. The application to dismiss the bankruptcy summons was made significantly outside the prescribed time for bringing such applications (which Order 76 Rule 13(2) of the Rules of the Superior Courts provides is 14 days) and in her judgment given on 30 May 2017, the High Court judge concluded that no basis for extending the time in which to bring such application had been demonstrated and refused an extension of time accordingly. However, she went to examine the grounds advanced by the Debtor on their merits and concluded that none of those grounds had been made out and thus held that, even if the Court had been persuaded to extend the time, the application to dismiss the bankruptcy summons should be dismissed. The order made by the Court dismissed the application accordingly. The Debtor’s appeal encompassed both the extension of time issue and also the judge’s findings on the merits. The following issues arose for determination in the appeals before the Court of Appeal. The first issue was whether the judge erred in refusing to extend time for the Debtor’s application to dismiss the bankruptcy summons. The second issue was whether the Debtor had established good grounds for impugning the summons. This in turn raised two issues: (i) whether the summons was bad because the total amount was overstated by the amount (€71,030 plus interest) which the debtor said was due to him from Revenue; (ii) whether the Debtor had a claim against Revenue arising from the alleged delay in issuing the relevant Stamp Duty Certificates. The third issue was whether the petition should have been dismissed by reason of alleged non-compliance with s. 11(1)(c) of the Bankruptcy Act 1988.

Held by Collins J that, in the circumstances, the extension of time issue was effectively a moot. That being so, Collins J did not express any concluded view on that aspect of the High Court’s ruling of 30 May 2017. In Collins J’s opinion, the argument that the act of bankruptcy relied on by Revenue occurred on the date of service of the bankruptcy summons was wholly without merit. Collins J held that the Debtor’s argument flies in the face of the clear and unambiguous provisions of s. 7(1)(g) which make it plain that it is the debtor’s failure to pay the sum “within fourteen days after service of the summons” that constitutes the act of bankruptcy; until that fourteen-day period has expired, there is no act of bankruptcy and, accordingly, the three-month period referred to in s. 11(1)(c) does not start to run. Collins J held that the attack on the bankruptcy summons on the basis that it overstated the amount due by the Debtor failed both as a matter of fact and as a matter of law. Collins J held that what was clear from the evidence before the Court was that the case made by the Debtor on the issue of overpayment/credit/refund was fundamentally lacking in credibility and no real or substantial issue had been established. The second issue was also, in Collins J’s opinion, one where the Debtor simply asserted that an issue arose, without any credible basis for that assertion; no “real and substantial issue”, with any prospect of success at trial, had been demonstrated to arise.

Collins J held that he would dismiss the appeals from the judgments and orders of Costello J in the High Court.

Appeals dismissed.

JUDGMENT of Mr Justice Maurice Collins delivered on 3 March 2020

BACKGROUND

1 The Appellant (“ the Debtor“) was adjudged bankrupt by Order of the High Court (Costello J) made on 13 November 2017 on foot of a Petition dated 28 June 2016. The Debtor appeals that Order to this Court. He also appeals an earlier Order of the High Court (Costello J) of 30 May 2017 refusing the Appellant's application to dismiss the Bankruptcy Summons of 4 April 2016. The application to dismiss the Bankruptcy Summons was made significantly outside the prescribed time for bringing such applications (which Order 76 Rule 13(2) of the Rules of the Superior Courts provides is 14 days) and in her judgement given on 30 May 2017, the High Court Judge concluded that no basis for extending the time in which to bring such application had been demonstrated and refused an extension of time accordingly. However, she went to examine the grounds advanced by the Debtor on their merits and concluded that none of those grounds had been made out and thus held that, even if the Court had been persuaded to extend the time, the application to dismiss the Bankruptcy Summons should be dismissed. The Order made by the Court dismissed the application accordingly. The Debtor's appeal encompasses both the extension of time issue and also the Judge's findings on the merits.

2 The Bankruptcy Summons warned the Debtor that, unless within 14 days after service of the Summons on him (and it was served on him on 18 April 2016), he paid the sum of €405,808.66 to Mr Gladney (who is the Collector General), or secured or compounded for that sum to Mr Gladney's satisfaction, he would have committed an act of bankruptcy for which he might be adjudicated a bankrupt “unless you have within the time aforesaid applied to the Court to dismiss this Summons, on the ground that you are not indebted to the said Michael Gladney in any sum or that you are only indebted to Michael Gladney in a sum of €20,000 or less, or that before service of the Summons, you had obtained the protection of the Court” (emphasis supplied). The Summons went on to tell the Debtor that he was “specially to note” a number of matters, including that if the Debtor was “not indebted to the said Michael Gladney in any sum or are only indebted to Michael Gladney in the sum of .. €20,000 or less, you must apply to the Court to dismiss this summons within fourteen days after the service of this summons on you …” (emphasis supplied).

3 The Bankruptcy Summons was in all material respects precisely in accordance with Order 76, Rule 10 and Form 1 which Rule 10 requires to be used. Section 8(5) of the Bankruptcy Act 1988 (as amended) (“the 1988 Act”) provides for the form of such summonses to be prescribed. The form of Summons also accurately reflected the provisions of Order 76, Rule 13(2) which (as amended in 2013) requires notice to be endorsed on every summons to the effect that if the debtor disputes the debt and desires to dismiss the summons, he must swear an affidavit within 14 days “(a) that he is not so indebted or only so indebted to an amount of €20,000 or less or (b) that before the service of the summons he had obtained the protection of the Court or (c) that he has secured or compounded the debt to the satisfaction of the creditor”(emphasis supplied)

4 The prescribed form also requires Particulars of Demand to be set out “in detail”, reflecting the requirements of Order 76, Rule 12(4). Order 76, Rule 12(4) also provides that no objection shall be allowed to the particulars unless the Court considers that the debtor has been misled by them. Detailed Particulars of Demand were included in the Summons here, setting out the particulars of no less than seven judgments that the Collector General had obtained against the Debtor on various dates between 15 September 2011 and 8 January 2015, giving details of the Judgment amounts, costs payable, accrued Courts Act interest and payments/credits on account, yielding an overall net figure of €405,808.66.

5 The Debtor did not apply to dismiss the Summons within 14 days of its service on him. His application did not issue until 4 November 2016, some 6 months after the expiry of the prescribed period. The Affidavit sworn by him (on 3 November 2016) to ground that application offered no explanation for this failure. That Affidavit is also notable for the absence of any claim that the Debtor was not indebted to the Collector General in any sum or only in the sum of €20,000 or less, though as noted above that appears to be a mandatory requirement of Order 76. In fact, the only substantive point made in the Affidavit was to the effect that, for reasons set out in it (which are discussed in detail below) a sum of €71,030 was “repayable to me by the Revenue Commissioners” and, therefore, (the Debtor went on to say), “I am due a refund of €71,030 together with interest thereon from February 2009.” The debt asserted by the Collector General (including the amounts included for interest and costs, and the credits allowed against payments made) was not otherwise disputed, from which it followed that, even if Mr Tobin's claim to be entitled to a refund from the Revenue was well-founded, he nevertheless had a significant liability to it, significantly in excess of the statutory threshold of €20,000. 1

6 That essential position has not altered in the course of the proceedings and at the hearing of this appeal,...