Minister for Communications v Wood

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 09 March 2017
• Neutral Citation: [2017] IESC 16
• Court: Supreme Court
• Docket Number: [Appeal Nos.: 173 and 174/2010]
• Date: 09 March 2017

BETWEEN

MINISTER FOR COMMUNICATIONS, ENERGY AND NATURAL RESOURCES

AND

MICHAEL O'CONNELL

RESPONDENTS

v.

RICHARD WOOD

AND

MICHAEL WYMES

APPELLANTS

[2017] IESC 16

Dunne J.

Denham C.J.

Dunne J.

Charleton J.

[Appeal Nos.: 173 and 174/2010]

THE SUPREME COURT

Insolvency – Bankruptcy – Summons – Application to dismiss – Refusal – Appeal to Supreme Court – S 8 Bankruptcy Act 1988

Facts: The appellants had been served with bankruptcy summons under s 8 of the Bankruptcy Act 1988. They had applied to the High Court to have the summons dismissed, and the High Court had declined. The matter now came before the Supreme Court.

Held by Ms Justice Dunne the other Justices concurring, that the appeal would be dismissed. The Court was satisfied the appellants had failed to make out any substantive grounds under which the High Court had fallen into error, and they had therefore failed to meet the threshold for a real and substantive arguable issue with some prospect of success. McGrath v. O'Driscoll [2007] 1 ILRM 203 applied.

Judgment of Ms. Justice Dunne delivered the 9th day of March 2017

1 This is an appeal by the appellants, (hereinafter referred to as 'Mr. Wood and Mr. Wymes') from the order of the High Court (McGovern J.) refusing to dismiss bankruptcy summons filed on the 15th March, 2010 pursuant to s. 8(6)(b) of the Bankruptcy Act 1988 (the Act of 1988) against Mr. Wood and Mr. Wymes, which order was made on the 6th May, 2010 following a full hearing of the applications of Mr. Wood and Mr. Wymes on the 29th April, 2010.

2 The applications to dismiss the bankruptcy summons were grounded on two affidavits of Mr. Wymes, two affidavits of Mr. Wood and there were two affidavits on behalf of the Minister for Communications, Energy and Natural Resources and Michael O'Connell (hereinafter referred to together as 'the Minister'). At the hearing before the High Court, Mr. Wood was represented by his solicitor and Mr. Wymes represented himself. Further affidavits were filed by the parties and their solicitors in the course of the proceedings.

3 Mr. Wood and Mr. Wymes in their respective notices of appeal have set out some seventy nine grounds of appeal in respect of the order of the High Court. The application of Mr. Wood and Mr. Wymes to dismiss the bankruptcy summons was the subject of an ex tempore ruling by the learned trial judge on the 29th April, 2010 and thereafter a further ruling was given on the 4th May, 2010 dealing with one matter which had been argued before the learned trial judge but which had not been dealt with by him in the course of his earlier ex tempore judgment.

The law

4 Section 8(6) of the Bankruptcy Act 1988 provides as follows:

'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.'

5 (My emphasis)

6 The leading judgment on the interpretation of s. 8(6)(b) of the Act of 1988 is the decision in the case of Minister for Communications v. M.W. [2010] 3 I.R. 1, a decision of McGovern J. in a previous application brought by Mr. Wood and Mr. Wymes for an order dismissing a previous bankruptcy summons between the same parties. In the court of his judgment McGovern J. stated at page 4 as follows:

'In the matter of a bankruptcy summons by St. Kevin's Company against a Debtor ( Ex tempore, Supreme Court, 27th January, 1995) the Supreme Court expressed the view that the correct interpretation of s. 8(6)(b) of the Act of 1988 was that the High Court should not undertake an investigation into the merits of the case once it was satisfied that an issue arose on the summons. In those circumstances, the Supreme Court stated that it was mandatory for the court to dismiss the summons if it was satisfied that an issue arose between the parties and the issue would have to be litigated separately outside the bankruptcy process.'

7 Sanfey and Houlihan in Bankruptcy Law and Practice in Ireland, 2nd Ed., (Dublin, 2010) at para. 2 – 73 having referred to the judgment of McGovern J. in Minister for Communications v. M.W. noted that the ex tempore judgment in the case of St. Kevin's Company against a Debtor is unavailable but the judgment was the subject of an article in the Commercial Law Practitioner (1995), at page 173, in which the facts and basis of the decision are described. In essence it is clear from the decision of the Supreme Court in that case and from the judgment of McGovern J. following that decision that once an issue arose on the summons it was mandatory for the Court to dismiss the summons if it was satisfied that an issue arose between the parties and the issue would have to be litigated separately outside the bankruptcy process.

8 A number of observations can be made at this point. 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. In Minister for Communications v. M.W. McGovern J. described the test to be applied in deciding whether an issue would arise for trial as follows: '...this is a real and substantial issue and which is, at least, arguable and which has some prospect of success.' (at para. 24). In two subsequent decisions of the High Court, I accepted that this was the appropriate approach to be taken in considering whether an issue would arise for trial. (See Allied Irish Banks plc v Yates [2012] I.E.H.C. 360 at p. 29 and Marketspreads Ltd. v O'Neill and Rice [2014] I.E.H.C. 14 at p. 32.)

9 Thus, in order for an application to dismiss a bankruptcy summons to succeed, 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.

10 There is some assistance to a Court in considering whether the issue raised is a real and substantial issue to be found by comparing an application to dismiss a bankruptcy summons and the test as to what amounts to an arguable defence on foot of an application for summary judgment. In that context, Hardiman J. in Aer Rianta Cpt. V. Ryanair Limited [2001] 4 I.R. 607 asked (p. 623):

'Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?'

11 The principles applicable to applications for summary judgment were drawn together in the case of Harrisrange Limited v. Duncan [2003] 4 I.R. 1 at pages 7 to 8, a judgment of the High Court (McKechnie J.). Of course, the analogy between an application for summary judgment and an application to dismiss a bankruptcy summons is not perfect but there are some similarities. Thus, the threshold for leave to defend against an application for summary judgment and on an application to dismiss a bankruptcy summons is a low threshold. One must consider whether there is a real and substantive issue raised by the applicant. If the issue relied on is one of fact that has to be litigated outside the bankruptcy proceedings then clearly, in accordance with the authorities already referred to, the bankruptcy summons has to be dismissed. 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 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.

12 In looking at the situation overall one must of course consider whether what is deposed to on affidavit by the applicant is credible. To paraphrase what was said by McKechnie J. in Harrisrange once again, an application to dismiss a bankruptcy summons should not be granted unless it is very clear that no issue arises. It has been said in relation to applications for leave to defend a summary summons that mere assertion is insufficient to entitle a party to be given liberty to defend. This was described by Clarke J. in McGrath v. O'Driscoll [2007] 1 I.L.R.M. 203 where he said as follows (at p. 210):

'So far as factual issues are concerned it is clear, therefore, that a mere assertion of a defence is insufficient but any evidence of fact which would, if true, arguably give rise to a defence will, in the ordinary way, be sufficient to require that leave to defend be given so that that issue of fact can be resolved.'

13 On an application to dismiss a bankruptcy summons, I would adopt that approach so that 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.

Judgment of the High Court

14 Before considering the application of those principles to the appeal of Mr. Wood and Mr. Wymes, I should refer to the judgment of the High Court in relation to this matter.

15 McGovern J. in the course of his ex tempore judgment in this matter, delivered on 29th April, 2010,...