Minister for Communications, Energy and Natural Resource v Wood

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 26 July 2017
• Neutral Citation: [2017] IESC 58
• Docket Number: [Appeal Nos. 173 and 174/2010]
• Court: Supreme Court
• Date: 26 July 2017

BETWEEN

MINISTER FOR COMMUNICATIONS, ENERGY AND NATURAL RESOURCES

AND

MICHAEL O'CONNELL

RESPONDENTS

V.

RICHARD WOOD

AND

MICHAEL WYMES

APPELLANTS

[2017] IESC 58

Dunne J.

Denham C.J.

Dunne J.

Charleton J.

[Appeal Nos. 173 and 174/2010]

THE SUPREME COURT

Costs – Taxation – Bankruptcy – Appellant seeking the dismissal of bankruptcy summonses – What was the relevant six year period of time over which the interest on costs was calculated

Facts: The first respondent, the Minister for Communications, Energy and Natural Resources (the creditor in this case), obtained an order in February 1997 for costs in the High Court against the appellants, Mr Wood and Mr Wymes (the debtors). The order for costs provided that in default of agreement costs would be taxed and ascertained. The process of taxation was long and drawn-out and ultimately a final certificate of taxation in respect of the High Court order issued on the 31st July, 2003. On the 9th February, 2009, bankruptcy summonses were issued in respect of the sums then said to be due and an application was then made pursuant to s. 8(5) of the Bankruptcy Act 1988 by Mr Wood and Mr Wymes to dismiss those bankruptcy summonses pursuant to the provisions of s. 8(6)(b) of the 1988 Act. Following the hearing of that application, an order was made in the High Court (McGovern J) dismissing those bankruptcy summonses ([2010] 3 IR 1). Subsequently bankruptcy summonses were issued on the 15th February, 2010. The issue that remained to be considered related to the calculation of interest and more particularly what was the relevant six year period of time over which the interest on costs was calculated. The appellants appealed unsuccessfully from the order of McGovern J refusing to dismiss bankruptcy summonses. Further submissions were provided to the Supreme Court in relation to the outstanding issue, following directions from the Chief Justice. The first argument put forward by Mr Wymes was that the six year period should be calculated by reference to the date upon which the interest began to accrue.

Held by Dunne J that if the argument of Mr Wymes in that regard was correct, then the amount claimed would have been overstated, thus entitling Mr Wymes to have the bankruptcy summons dismissed. Equally, Dunne J noted that if the Minister was compelled or required to have regard only to the period of six years comprised in the first particulars of demand, then the amount claimed for interest would have been overstated and Mr Wymes would have been entitled to have the bankruptcy summons dismissed. However, Dunne J was satisfied that the Minister was entitled to look for six years interest on the judgment debt backdated from the date of the particulars of demand and that being so the amount claimed was not overstated.

Dunne J held that she would dismiss the appeal.

Appeal dismissed.

Judgment of Ms. Justice Dunne delivered the 26th day of July 2017

1 This judgment is in addition to the judgment previously delivered in this matter on the 9th day of March, 2017 and deals with a point not dealt with in the previous judgment and which remained outstanding.

2 As is apparent from the previous judgment in this matter the appellants appealed unsuccessfully from the order of the High Court (McGovern J.) refusing to dismiss bankruptcy summonses pursuant to s. 8(6)(b) of the Bankruptcy Act 1988 (‘the Act of 1988’) against Mr. Wood and Mr. Wymes on the 6th May, 2010 in respect of a number of issues. Further submissions were provided to the Court in relation to the outstanding issue, following directions from the Chief Justice, which concerns the relevant six year period of time over which interest on costs was calculated and the question as to the correct rate of interest having regard to what is, in fact, the relevant period of six years over which interest was claimed.

3 As has previously been explained, the creditor in this case, the Minister for Communications, Energy and Natural Resources (‘the Minister’) obtained an order in February 1997 for costs in the High Court against the debtors, Mr. Wood and Mr. Wymes. The order for costs provided that in default of agreement costs would be taxed and ascertained. The process of taxation was long and drawn-out and ultimately a final certificate of taxation in respect of the High Court order issued on the 31st July, 2003. Until that time the amount of costs due by Mr. Wood and Mr. Wymes was unascertained. It goes without saying that until such time as the final amount due for costs was ascertained by the issue of the final certificate of taxation, the Minister was unable to recover same.

4 Ultimately on the 9th February, 2009, bankruptcy summonses were issued in respect of the sums then said to be due and an application was then made pursuant to s. 8(5) of the Act of 1988 by Mr. Wood and Mr. Wymes to dismiss those bankruptcy summonses pursuant to the provisions of s. 8(6)(b) of the Act of 1988. Following the hearing of that application, an order was made in the High Court (McGovern J.) dismissing those bankruptcy summonses (see Minister for Communications v. M.W. and R.W. [2010] 3 I.R. 1).

5 Subsequently the bankruptcy summonses, the subject of these proceedings, were issued on the 15th February, 2010.

6 As is clear the issue that remains to be considered relates to the calculation of interest and more particularly what is the relevant six year period of time over which the interest on costs was calculated. In that regard it would be helpful to refer briefly to the particulars of demand dated the 25th September 2009 in which it was stated as follows:

‘Certificate of taxed costs dated 31st July 2003 issued pursuant to the Order of High Court dated the 24th February 1997 in the amount of €3,297,493.33 together with interest thereon calculated at the rate of 8% per annum in respect only of and limited to a period of six years, in the total amount as to interest of €1,584,242.26 making a total as to principal sum and interest of €4,881,735.59.’

7 It is not disputed that different rates of interest were applicable in the period starting with the time when the judgment and order was pronounced by the High Court on the 24th February, 1997 and up to the date when the bankruptcy summons was issued on the 15th February, 2010. If the relevant period in respect of the sum due for interest was a period during which a lower rate of interest was applicable then, the amount claimed for interest would be overstated and the application made by Mr. Wymes for the dismissal of the bankruptcy summons should be granted.

The relevant statutory provisions

8 It is necessary to refer to a number of statutory provisions that are of importance in considering the issues that arise herein.

9 Section 26 of the Debtors (Ireland) Act 1840 (‘the Act of 1840’) provides as follows:

‘Every judgment debt due upon any judgment not confessed or recovered for any penal sum for securing principal and interest shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judgment, or from the time of the commencement of this Act in cases of judgments then entered up and not carrying interest until the same shall be satisfied; and such interest may be levied under a writ of execution on such judgment.’

10 Section 27 then goes on to provide that:

‘All decrees and orders of the Court of Chancery, and all rules of any of the superior courts of common law, and all orders of the lord chancellor or master of the rolls, or of the Court of Commissioners of Bankruptcy, and all orders of the lord chancellor in matters of lunacy, whereby any sum of money, or any costs, charges, or expenses, shall be payable to any person, shall have the effect of judgments in the superior courts of common law, and the persons to whom any such monies or costs, charges, or expences shall be payable shall be deemed judgment creditors within the meaning of this Act; and all powers hereby given to the judges of the superior courts of common law with respect to matters depending in the same courts shall and may be exercised by the courts of Chancery … with respect to matters therein depending, and by the lord chancellor, master of the rolls, and Court of Commissioners of Bankruptcy respectively in matters of bankruptcy, and by the lord chancellor in matters of lunacy; and all remedies hereby given to judgment creditors are in like manner given to persons to whom any monies or costs, charges, or expences are by such orders or rules respectively directed to be paid; …’

11 By virtue of the provisions of s. 20 of the Courts Act 1981 the Minister for Justice may vary the rate of interest specified in s. 26 of the Debtors (Ireland) Act 1840 and by ministerial order the Courts Act 1981 (Interest on Judgment Debts) Order 1989 ( S.I. No. 12/1989), an interest rate of 8% on costs was provided, effective as of the 23rd January, 1989.

12 The position in relation to interest on costs was varied by the provisions of s. 30(1) of the Court and Court Officers Act 2002 which then read as follows:

‘Subject to section...