Patrick Murphy v Governor and Company of Bank of Ireland and Others
| Jurisdiction | Ireland |
| Judge | Mr. Justice William M. McKechnie,Ms. Justice Dunne |
| Judgment Date | 07 March 2014 |
| Neutral Citation | [2014] IESC 37 |
| Court | Supreme Court |
| Docket Number | [S.C. No. 191 of 2011] |
| Date | 07 March 2014 |
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[2014] IESC 37
McKechnie J.
MacMenamin J.
Dunne J.
McMenamin J.
THE SUPREME COURT
Bankruptcy – Adjudication– Overstatement – Appellant seeking his adjudication as a bankrupt annulled– Whether the appellant"s failure to comply with the payment demands can be regarded as an act of bankruptcy
Facts: The respondent/petitioning creditor, Bank of Ireland, obtained a judgment in 2010 for the sum of €9,025,720.70 against the appellant/bankrupt, Mr Murphy. The Bank served on the appellant a Notice of Demand as a prelude to a Bankruptcy Summons. The Notice demanded the payment together with €160 to represent the cost order. No payment was received and in 2011 the appellant swore Affidavits seeking to have the Summons dismissed. Following an unsuccessful application for adjournment, the High Court made an order adjudging the appellant a bankrupt. The appellant showed cause against the validity of the adjudication under s.16 of the Bankruptcy Act 1987. The High Court dismissed the application and Mr Murphy appealed to the Supreme Court, submitting that his adjudication as a bankrupt should be annulled on the basis that the sum specified in the Summons was incorrect and thus was not due; as such the failure to comply with the payment demands could not be regarded as an act of bankruptcy upon which valid adjudication could be based. The appellant asserted that the Bank had received a number of small sums in the intervening period in respect of which he was entitled to credit on the loan agreement. He submitted, relying upon In the matter of Gerard Sherlock, a Bankrupt [1995] 2 I.L.R.M. 493, that had these amounts been deducted from the debt, the subsequent demands would have been overstated. The respondent Bank claimed that interest accrued automatically on the debt by virtue of s.26 of the Debtors (Ireland) Act 1840; the bankrupt"s true indebtedness exceeded the debt amount hence the demands were not excessive.
Held by Dunne J that, having considered the provisions of the 1987 Act and relying upon In re Collier ex parte Dan Rylands Limited [1891] 64 L.T. 742, due to the serious consequences of bankruptcy, there must be a strict compliance with the statutory provisions. He held that the debtor should know the amount he is required to pay to avoid committing an act of bankruptcy and should not be misled as to the requirements being made of him, considering In the Matter of a debtor And in the Matter of the Bankruptcy Acts. Michael B. O'Maoileoin v. The Official Assignee [1989] I.R. 647. Dunne J held that the Bank would be entitled to issue execution against the appellant in the amount of the judgment together with interest thereon and costs, and entitled to execute for a sum far in excess of that actually claimed in the Summons. Dunne J considered the approach of the High Court to be correct and that the sum demanded was not in excess of that actually due; there was nothing in the Summons which could have confused or misled the appellant as to what he was required to do in order to avoid committing an act of bankruptcy. Therefore had the appellant paid the sum sought on the Summons, he would not have committed an act of bankruptcy.
Dunne J held that the approach of the trial judge was correct. The Supreme Court dismissed Mr Murphy"s appeal, with McKechnie J dissenting.
Appeal dismissed.
HB, IN RE 89 LT 592 20 TLR 32 1904 1 KB 94
SKELTON EX PARTE COATES, IN RE 36 LT 806 1877 5 CH D 979
DEBTOR (No 478 OF 1908), IN RE 99 LT 458 24 TLR 778 1908 2 KB 684
SHERLOCK (A BANKRUPT), IN RE 1995 2 ILRM 493 1995/12/3310
O MAOILEOIN v OFFICIAL ASSIGNEE 1989 IR 647 1989/3/644
MIN FOR COMMUNICATIONS & O'C (M) v W (M) & W (R) 2010 3 IR 1 2009/44/10960 2009 IEHC 413
ALLIED IRISH BANKS PLC v YATES UNREP DUNNE 21.8.2012 2012/2/379 2012 IEHC 360
KLEINWORT BENSON AUSTRALIA LTD v CROWL 1988 79 ALR 161 1988 165 CLR 71 1988 HCA 34
BANKRUPTCY ACT 1966 S41(5) (AUS)
BANKRUPTCY ACT 1966 S41(6) (AUS)
BANKRUPTCY ACT 1966 S306(1) (AUS)
BANKRUPTCY ACT 1966 S8(1) (AUS)
BANKRUPTCY ACT 1966 S8(3) (AUS)
COLLIER EX PARTE DAN RYLANDS LTD, IN RE 1891 64 LT 742
BANKRUPTCY (IRELAND) AMENDMENT ACT 1872 S21
CIVIL LAW (MISCELLANEOUS PROVISIONS) ACT 2011
COURTS & CIVIL LAW (MISCELLANEOUS PROVISIONS) ACT 2013
RSC O.76 r10
RSC O.76 r12(4)
DEBTORS (IRELAND) ACT 1840 S26
COURTS ACT 1981 S19
COURTS ACT 1981 S20
O'MAOILEOIN v OFFICIAL ASSIGNEE 1989 IR 647 1989/3/644
F (P) v D (K) & ORS UNREP DUNNE 1.3.2010 2010/19/4692 2010 IEHC 63
ST KEVINS CO v FLYNN UNREP SUPREME 27.1.1995 (NO TRANSCRIPT AVAILABLE)
BANKRUPTCY ACT 1988 S11(1)(B)
BANKRUPTCY ACT 1988 S8(5)
BANKRUPTCY ACT 1988 S8(6)
OCS EX PARTE (A DEBTOR), IN RE 91 LT 224 1904 2 KB 161
BANKRUPTCY ACT 1883 S143
BANKRUPTCY ACT 1883 S4(1)(G)
BANKRUPTCY ACT 1966 S41(2)(A)(I) (AUS)
BANKRUPTCY ACT 1883 S143(1)
BOND EX PARTE CAPITAL & COUNTRIES BANK LTD, IN RE 1911 2 KB 988
BANKRUPTCY ACT 1988 S8(4)
BANKRUPTCY ACT 1988 S7(1)(G)
LOFINMAKIN & AMONUSI v MIN FOR JUSTICE & ORS UNREP SUPREME 20.11.2013 2013/30/8930 2013 IESC 49
BANKRUPTCY ACT 1988 S8(1)(B)
Judgment of Ms. Justice Dunne delivered on the 7th day of March, 2014
Judgment delivered the 7th day of March, 2014 by Mr. Justice William M. McKechnie.
Judgment delivered by McKechnie J & Dunne J
The applicant/appellant ("the Appellant") herein was adjudicated bankrupt on the 24 th January, 2011 by the High Court (McGovern J.). An application for a stay on the order of adjudication was heard and refused on the 26 th January, 2011.
On the 31 st January, 2011, an application was made to extend time to show cause to the Court against the adjudication, time was extended and the application to show cause was heard on the 6 th April, 2011 and in its judgment of the 12 th April, 2011, the High Court (McGovern J.) rejected the application to show cause against the validity of the adjudication.
On the 17 th May, 2010, the High Court made an order by consent in favour of the petitioning creditors/respondent ("the Bank") in the sum of €9.025,720.70 inclusive of interest together with six day costs.
Particulars of demand and notice requiring payment ("Particulars of Demand") dated the 21 st October, 2010 was served on the Appellant in which the Bank set out its demand for payment on foot of the Bank's judgment against the Appellant in the sum of €9,025,880.70 being the amount of the judgment debt referred to above together with €160 for six day costs. The figure of €9,025,880.70 was stated to be the sum which "amounts to your total indebtedness" and that the "total amount remains outstanding". The Appellant was called upon to pay that sum but did not do so.
A bankruptcy summons was issued on the 29 th November, 2010. It called on the Appellant to pay the sum of €9,025,880.70 being the sum claimed by the Bank in the Particulars of Demand.
The essence of the case made on behalf of the Appellant is that the sum sought by the Bank in the Particulars of Demand is incorrect and that the sum in the bankruptcy summons is also incorrect in that the sum said to be due is in excess of the amount actually owed; on that basis it was contended that the bankruptcy summons was defective and that a failure to pay the amount claimed in the bankruptcy summons did not constitute a valid act of bankruptcy. The Bank has contended that the sum actually owed by the Appellant is far in excess of that claimed in the bankruptcy summons and that consequently any error, if any, in relation to credit for payments made does not invalidate the bankruptcy summons. Thus, this is a very unusual case in that the Appellant contends that the adjudication should be annulled on the grounds that the sum sought in the Bankruptcy Summons is excessive while the Bank maintains that the sum sought is far less than the sum actually due by the Appellant.
In order to understand the issue raised by the Appellant it is necessary to look at certain figures referred to in the affidavits sworn in the course of the proceedings.
The Appellant, in an affidavit of the 29 th January, 2011, grounding the application to show cause against the adjudication made the point that between the 17 th May, 2010. when judgment was entered and the 29 th November 2010, the date of the bankruptcy summons, the latest date on which the Appellant had received bank statements, sums totalling €4,425 had been lodged to his current account by way of rent from a tenant of one of his properties and that sum had then been debited from his current account by the Bank on foot of its powers of set-off and applied in reduction of the amount due on foot of account No. 72939674. A further sum of €400 paid in on the 30 th November, 2010 was treated in the same way by the Bank.
The point made on behalf of the Appellant was that the Bank did not give him credit for the payments made in the sum of €4,425 either in the Particulars of Demand, the bankruptcy summons or the affidavit of Janet Seacy sworn herein on the 2 nd November, 2010 in...
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