Promontoria (Arrow) Ltd v Richard Dineen

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 14 May 2021
• Neutral Citation: [2021] IECA 145
• Date: 14 May 2021
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Record No.: 2019/526

In the Matter of the Bankruptcy Act 1988 (As Amended)

In the Matter of a Petition of Bankruptcy by Promontoria (Arrow) Limited Against Richard Dineen

Between/

Promontoria (Arrow) Limited

Petitioner/Respondent

and

Richard Dineen

Appellant

[2021] IECA 145

Baker J.

Noonan J.

Faherty J.

Appeal Record No.: 2019/526

Bankruptcy Summons No. 5942

THE COURT OF APPEAL

Bankruptcy – Debt – Liquidated sum – Appellant appealing against the order by which he was adjudicated bankrupt – Whether the sum grounding the bankruptcy petition was a liquidated sum

Facts: The appellant, Mr Dineen, was a property developer with large borrowings from Anglo-Irish Bank PLC acquired by the respondent, Promontoria (Arrow) Ltd (Promontoria), by Global Deed of Transfer on 11 December 2015. Promontoria issued a bankruptcy summons on 23 October 2017 seeking payment of €20,025,170, said then to be due in principal and interest on the loan accounts. Mr Dineen applied to have the summons dismissed on the basis of inadequacies in the service and proof of Promontoria’s title. This was refused by Costello J on 16 July 2018 ([2018] IEHC 430). Mr Dineen’s appeal from that order of Costello J was withdrawn. Thereafter a bankruptcy petition was presented by Promontoria on 15 October 2018 disclosing an indebtedness in the sum of €19,917,364.17, the same figure set out in the affidavit of debt, but less than the amount in the bankruptcy summons, as credits were allowed of sums realised from the sale of a number of secured properties in the interim. The amount of debt had further reduced by 25 November 2019, the date of the hearing of the petition. Mr Dineen opposed the petition. He appealed to the Court of Appeal against the order of Pilkington J made on 25 November 2019 by which he was adjudicated bankrupt on the petition of the respondent. Mr Dineen rested his argument on one ground of appeal: that the sum grounding the petition was not a “liquidated sum” as required by s. 11(1)(b) of the Bankruptcy Act 1988 (as amended). As part of this argument, Mr Dineen said that the High Court was obliged to, but had not, determined the exact sum owing before making the adjudication. Promontoria contended that the amount owing was a liquidated sum as it was readily ascertainable, and could be calculated by simple arithmetic.

Held by Baker J that she was not persuaded by the proposition that the amount of debt stated in the petition was not a liquidated sum as is required by s. 11(1)(b) of the 1988 Act. Baker J held that the debt disclosed in the petition by which the appellant was said to be indebted to the petitioner was a liquidated sum, one capable of being and actually calculated and arising as a result of a contractual debt. Baker J held that there is nothing in the statutory provisions that requires the judge hearing a petition for adjudication to himself or herself calculate the debt, and the statutory test is met once the judge is satisfied that an act of bankruptcy has occurred by reason of failure to pay a liquidated sum, and provided that sum is in excess of €20,000. Baker J noted that circumstances will often arise when at the date of presentation or hearing of a petition the amount of debt will be reduced by the realisation of security or the payment by the debtor of some of the debt. In Baker J’s view, this is not merely something which often arises in practice; it is envisaged by the provisions of the 1988 Act which allow a petitioning creditor to rely on his or her security in the bankruptcy, and thereafter an obligation must be said to arise to account should any of the secured assets be realised. Baker J held that the amount stated in the petition in this case was liquidated in that sense, and no error of calculation or identification of the amount due actually occurred. Baker J held that the amount due was fully and accurately ascertained and ascertainable at the date of adjudication.

Baker J held that she would dismiss the appeal. As the respondent had been entirely successful in the appeal, it was Baker J’s provisional view that it was entitled to the costs thereof, and of the withdrawn appeal from the order of Costello J.

Appeal dismissed.

JUDGMENT of Ms. Justice Baker delivered on the 14 ^th day of May, 2021

1 . This is the appeal of Richard Dineen of the order of Pilkington J. made on 25 November 2019 by which he was adjudicated bankrupt on the petition of the respondent. The sole question in the appeal is whether the amount grounding the petition was a liquidated sum as required by s. 11(1)(b) of the Act of 1988.

Background

2 . The appellant was a property developer with large borrowings from Anglo-Irish Bank PLC acquired by Promontoria (Arrow) Limited (“Promontoria”) by Global Deed of Transfer on 11 December 2015.

3 . Promontoria issued a bankruptcy summons on 23 October 2017 seeking payment of €20,025,170.00, said then to be due in principal and interest on the loan accounts. Mr Dineen applied to have the summons dismissed on the basis of inadequacies in the service and proof of Promontoria's title. This was refused by Costello J. for reasons set out in her written judgment of 16 July 2018 ( [2018] IEHC 430). Mr Dineen's appeal from that order of Costello J. has now been withdrawn.

4 . Thereafter a bankruptcy petition was presented by Promontoria on 15 October 2018 disclosing an indebtedness in the sum of €19,917,364.17, the same figure set out in the affidavit of debt, but less than the amount in the bankruptcy summons, as credits were allowed of sums realised from the sale of a number of secured properties in the interim.

5 . The amount of debt had further reduced by 25 November 2019, the date of the hearing of the petition.

6 . Mr Dineen opposed the bankruptcy petition.

The appeal

7 . Mr Dineen lodged a notice of appeal that identified a number of grounds, but rests his argument now on one ground of appeal: that the sum grounding the petition was not a “liquidated sum” as required by s. 11(1)(b) of the Bankruptcy Act 1988 (as amended) (the “Act of 1988”).

8 . As part of this argument, Mr Dineen says that the High Court was obliged to, but had not, determined the exact sum owing before making the adjudication.

9 . Promontoria contend that the amount owing was a liquidated sum as it was readily ascertainable, and can be calculated by simple arithmetic.

Mootness

10 . Section 85 of the Act of 1988 provides for discharge from bankruptcy by operation of law after one year, and before dealing with the substantive point raised in the appeal, I pause to observe that the respondent does not argue that this appeal is moot notwithstanding that Mr Dineen had by the date of the hearing of the appeal emerged from bankruptcy by effluxion of time.

11 . This is a welcome approach as bankruptcy is a matter of status and certain consequences arise by reason of an adjudication which can have long term effects on a person even after discharge. By way of example, under s. 55(1)(a) of the Charities Act 2009 a discharged bankrupt may not be appointed trustee of a charity; and pursuant to s. 5(4)(a)(i) of the Powers of Attorney Act 1996 a discharged bankrupt may not be appointed attorney with enduring power.

12 . I would endorse the approach of Haughton J. in Carney v. Ennis Property Finance DAC [2020] IECA 281 that an appeal would not be meaningless, at para. 21 he states:

“Bankruptcy is a question of personal status, and there is a stigma attached, although this may be less significant now that the bankruptcy period has reduced from twelve years to one year, and the process of going through bankruptcy is relatively straightforward. However the fact that a person is adjudicated bankrupt may have long term implications, particularly if they have occasion to seek credit after they have been discharged from bankruptcy.”

The Act

13 . Section 11(1), as amended, sets out the cumulative conditions to be met by a creditor presenting a petition for adjudication:

“A creditor shall be entitled to present a petition for adjudication against a debtor if—

• (a) the debt owing by the debtor to the petitioning creditor (or, if two or more creditors join in presenting the petition, the aggregate amount of debts owing to them) amounts to more than € 20,000,

• (b) the debt is a liquidated sum,

• (c) the act of bankruptcy on which the petition is founded has occurred within three months before the presentation of the petition, and

• (d) the debtor (whether a citizen or not) is domiciled in the State or, within 3 years before the date of the presentation of the petition, has ordinarily resided or had a dwelling-house or place of business in the State or has carried on business in the State personally or by means of an agent or manager, or is or within the said period has been a member of a partnership which has carried on business in the State by means of a partner, agent or manager.” (emphasis added)

14 . The requirement that the debt be a “liquidated sum” in s. 11(1)(b) is engaged in this appeal.

15 . The term “liquidated sum” is not defined in the Act of 1988, but it also appears in s. 8(1)(b) which sets out the conditions under which a bankruptcy summons may be granted.

“A summons (in this Act referred to as a ‘bankruptcy summons’) may be granted by the court to a person (in this section referred to as ‘the creditor’) who proves that —

[…]

(b) the debt is a liquidated sum, and […]”

16 . The statutory provisions require the creditor to set out in the petition particulars of any security held and whether that security is to be given up for the benefit of the bankruptcy generally and consequential provisions to deal with unsecured debt if an estimate of the value of security intended to be relied on is given in the petition.

17 . The Rules of the Superior Courts (“RSC”) provide for the content of the petition to be verified by affidavit. O. 76, r. 19 RSC provides...