Michael Gladney v Brendan Walsh

• Jurisdiction: Ireland
• Judge: Humphreys J.
• Judgment Date: 30 September 2021
• Neutral Citation: [2021] IEHC 596
• Court: High Court
• Docket Number: [Petition No. 3612 P]

In the Matter of a Petition of Bankruptcy

Between

Michael Gladney

Petitioner

and

Brendan Walsh

Debtor

[2021] IEHC 596

[Petition No. 3612 P]

THE HIGH COURT

BANKRUPTCY

Bankruptcy – Petition – Summons – Petitioner seeking to adjudicate the debtor bankrupt – Whether a factual defence was established

Facts: A petition in bankruptcy by the Collector General, Mr Gladney, was filed on 26th April, 2017. It alleged a grand total of indebtedness in the sum of €249,135.85, the act of bankruptcy being failure to pay on foot of the bankruptcy summons. The first return date was 8th May, 2017. In total the petition was adjourned on 29 separate occasions and was finally heard on 26th July, 2021. The following substantive defences to the petition were raised by the debtor, Mr Walsh: (i) he did not get notice of the intention to apply for a bankruptcy summons under s. 8(1)(c) of the Bankruptcy Act 1988; (ii) the application for the summons was based on an affidavit of 22nd November, 2016 which included a statement that “no form of execution has issued in respect of the said debt and remains to be proceeded on” and this was incorrect; (iii) incorrect particulars were given; (iv) the sums due or some of them were included in the 2012 proceedings which were never progressed; (v) an overstatement argument; (vi) there was a good defence to the 2014 proceedings, and the debtor never received the motion for liberty to enter final judgment; (vii) the creditor was relying on judgments that were not particularised in the bankruptcy summons; (viii) judgment in the fifth set of proceedings (Circuit Court proceedings Gladney v Walsh [Record No. 37/2016]), was only obtained on the basis of an agreement that it would not be enforced or published if the debtor filed returns and paid tax by periodic payments; (ix) he failed to engage with a personal insolvency practitioner on foot of the alleged agreement; and (x) there was an alternative to bankruptcy which should be considered under s. 14 of the 1988 Act.

Held by the High Court (Humphreys J) that: (i) the notice was sent to the debtor’s residential address; (ii) even discounting the sum of €13,501.52, considerably larger sums were due to the Collector General on foot of the fourth and fifth judgments in 2016; (iii) the total sum alleged to be due was in fact due and thus there is no legitimate defence under this heading as follows from the Supreme Court decision in Murphy v Bank of Ireland [2014] IESC 37; (iv) judgment was subsequently obtained in separate proceedings for such sums; (v) there was no impermissible overstatement given the existence of two subsequent judgments that together were greater than the amount of the alleged overstatement; (vi) the enforcement of the judgment by way of a bankruptcy petition was not a valid basis to decide that there was some fundamental problem with the underlying judgment; (vii) an entitlement to rely on judgments that were not particularised in the bankruptcy summons must follow from Murphy v Bank of Ireland and the authorities relied on in that decision; (viii) the debtor had not filed any returns at the material time and thus would not have had a defence even assuming the existence of such an agreement and even assuming the enforceability of an agreement to pay tax that the debtor was bound to pay in any event pursuant to statute; (ix) the Collector General is an excludable debtor under the Personal Insolvency Act 2012 and so will be subject to an insolvency arrangement only if he decides to opt in; and (x) personal insolvency is rarely going to be a real alternative in a tax debt context without Revenue agreement given the status of the Collector General as an excludable debtor. Humphreys J did not think that there was any factual defence established or even a factual issue on which an adjournment would be appropriate for further investigation or consideration. Insofar as legal issues had been raised, he held that such issues should be determined against the debtor.

Humphreys J held that the petition should be granted. He adjudicated the debtor bankrupt.

Petition granted.

JUDGMENT of Humphreys J. delivered on Thursday the 30th day of September, 2021

1 This petition of bankruptcy by the Collector General involves a slightly more complex than usual procedural background over the past 16 years, involving six sets of underlying proceedings, five judgments and two bankruptcy-related applications (a summons and petition), which I will set out as follows.

2005 — first proceedings

2 The first relevant proceedings were Circuit Court proceedings in the Eastern Circuit, County of Kildare: Harrahill v. Walsh [Record No. 276/2005].

2005 — first judgment

3 The first relevant judgment was granted on 20th July, 2005 in default of appearance in the first set of proceedings. An instalment order was granted in those proceedings on foot of that judgment in October 2005. The relevant amount of the judgment was €13,501.52.

2012 — second proceedings

4 The second set of proceedings was issued in Louth Circuit Court [Record No. 254/2012] and those proceedings are currently in abeyance. No judgment was obtained.

2013 — third proceedings

5 A third set of proceedings was issued in the High Court: Gladney v. Walsh [2013 No. 382 R].

2014 — second judgment

6 Judgment was obtained in the third proceedings on 10th July, 2014 in the amount of €53,162.18 inclusive of interest.

2014 — fourth proceedings

7 A fourth action, the second set of revenue proceedings in the High Court, was issued in 2014: Gladney v. Walsh [2014 No. 328 R].

2015 — third judgment

8 Judgment in the fourth proceedings was obtained on 25th February, 2015 in the amount of €195,973.67 inclusive of interest. However, the Revenue now accept that the €13,501.52 referable to the 2005 proceedings should not have been included in the 2015 judgment.

2016 — fifth proceedings

9 Circuit Court proceedings in the Eastern Circuit entitled Gladney v. Walsh [Record No. 37/2016] were then instituted.

2016 — fourth judgment

10 On 12th May, 2016, judgment for €54,227.39 was obtained in the fifth proceedings.

2016 — sixth proceedings

11 There were then District Court proceedings in the District Court area of Dundalk, District No. 6 [Record No. 396/2016].

2016 — fifth judgment

12 On 9th September, 2016, a judgment in the sixth proceedings was obtained against the debtor in the amount of €16,001.41. Subsequent to this there were further proceedings following the bankruptcy summons, but they do not seem to be legally relevant.

2016 — bankruptcy summons

13 A bankruptcy summons was issued dated 19th December, 2016 and served on 14th January, 2017. An affidavit of service of the summons was filed on 20th April, 2017.

Petition

14 The petition in bankruptcy was filed on 26th April, 2017. It alleges a grand total of indebtedness in the sum of €249,135.85, the act of bankruptcy being failure to pay on foot of the bankruptcy summons. The first return date was 8th May, 2017. In total the petition was adjourned on 29 separate occasions and was finally heard on 26th July, 2021.

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