Re Bankruptcy Summons by Marketspreads Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 15 January 2014
• Neutral Citation: [2014] IEHC 14
• Court: High Court
• Date: 15 January 2014

Marketspreads Ltd v O'Neill & Rice

No Redaction needed

BANKRUPTCY

IN THE MATTER OF A BANKRUPTCY SUMMONS BY MARKETSPREADS LIMITED

AND

BRIAN O'NEILL

AND

IN THE MATTER OF A BANKRUPTCY SUMMONS BY MARKETSPEADS LIMITED

AND

FERGUS RICE

[2014] IEHC 14

5502S

5503S

THE HIGH COURT

Bankruptcy law - Practice & procedure - Share Purchase Agreement - Rectification - Arguable - Prospect of success - Bankruptcy Act 1988.

Facts: The applicants sought to have the bankruptcy summons served on them set aside. They had sought reliefs including the rectification of the Share Purchase Agreement between the plaintiffs and the defendant, its rescission and or damages. The Court considered the provisions of s. 8 Bankruptcy Act 1988 and whether there was an agreement to accept a shareholding in full and final settlement of their respective liability on foot of the judgments.

Held by Dunne J. in refusing the application to dismiss the bankruptcy summons. There was a valid and binding judgment and the Court was not satisfied that the point raised gave rise to a real and substantial issue that was arguable with some prospect of success. The contentions as to the Agreement were contradicted by its clear and unambiguous terms.

BANKRUPTCY ACT 1988 S8

BANKRUPTCY ACT 1988 S8(6)

BANKRUPTCY ACT 1988 S8(6)(B)

ST KEVINS CO v A DEBTOR UNREP SUPREME 27.1.1995 (EX TEMPORE)

O'HIGGINS CHALLENGING A BANKRUPTCY SUMMONS - A NEW WAY OUT FOR DEBTORS 1995 2(7) CLP 173

MIN FOR COMMUNICATIONS & O'C (M) v W (M) & W (R) 2010 3 IR 1 2009/44/10960 2009 IEHC 413

SHERLOCK (A BANKRUPT), IN RE 1995 2 ILRM 493 1995/12/3310

COLLIER, IN RE 1891 64 LT 742

O MAOILEOIN v OFFICIAL ASSIGNEE 1989 IR 647 1989/3/644

DEBTOR (NO 478 OF 1908), IN RE 1908 2 KB 684

ALLIED IRISH BANKS PLC v YATES UNREP DUNNE 21.8.2012 2012/2/379 2012 IEHC 360

HARRISRANGE LTD v DUNCAN 2003 4 IR 1 2002/12/2982

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 3ED 2012 PARA 26.52

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 3ED 2012 PARA 26.54

GE CAPITAL WOODCHESTER LTD & ANOR v AKTIV KAPITAL ASSET INVESTMENT LTD & ANOR UNREP CLARKE 19.11.2009 2009/22/5542 2009 IEHC 512

DELANY & MCGRATH CIVIL PROCEDURE IN THE SUPERIOR COURTS 3ED 2012 PARA 26.53

1 Judgment of Ms. Justice Dunne delivered on 15th day of January 2014

2 The applicants herein ("Mr. O'Neill" and "Mr. Rice") seek to have the bankruptcy summonses served upon them set aside. The respondent to the applications is SFS Markets Limited, formerly known as Marketspreads Limited (and hereinafter referred to as "Marketspreads") and has petitioned for the bankruptcy of the applicants. The applications were listed and heard together as they arise out of related judgments.

Background

3 Marketspreads obtained judgments against Mr. O'Neill and Mr. Rice on the 28 ^th March, 2012 in separate proceedings. The amount of the judgment in each case was €1,686,883.66 together with interest thereon pursuant to statute from the 12 ^th April, 2012. The judgments were consent judgments and each judgment was subject to a stay on execution for two weeks.

4 The judgments remain extant and have not been appealed. Following the commencement of the bankruptcy proceedings, a plenary summons bearing the record number 2013 No. 3999P was issued on the 22 ^nd April, 2013 on behalf of Mr. Rice and Mr. O'Neill against SFS Markets Limited. Before setting out the reliefs sought in those proceedings, I should add that it appears that the judgment debt of Mr. O'Neill and Mr. Rice was reduced by a sum of €400,000, being the consideration for the purchase of their shareholding in OR Spreadbetting Limited, the holding company of Marketspreads, on foot of a Share Purchase Agreement of the 17 ^th April, 2012. As a result of the Share Purchase Agreement ("SPA") the balance of €1,286,883.66 on foot of the judgments together with interest thereon is the sum said to be due and owing by each of them in the bankruptcy summonses.

5 The plenary summons issued on behalf of Mr. Rice and Mr. O'Neill seeks, inter alia, the following relief:

6 (1) rectification of the Share Purchase Agreement dated 17 ^th April, 2012 as between the plaintiffs, Hanvon Limited and the defendant;

7 (2) if necessary, rescission of the said agreement;

8 (3) damages for breach of an agreement;

9 (4) a declaration that no sum is due by the plaintiffs to the defendant under the order of this Honourable Court dated 28 ^th March, 2013 under the record number 2011 number 5207 ([2012 No. 20 COM]);

10 (5) an order marking the judgment entered on foot of the said order of this Honourable Court dated 28 ^th March, 2013 as satisfied;

11 (6) in the alternative, an order setting aside the said order of this Honourable Court dated 28 ^th March, 2013;

12 (7) ....

13 One observation to be made in relation to the general endorsement of claim on the plenary summons is that it makes reference to one of the judgments obtained by Marketspreads, namely, that against Mr. Rice but it makes no reference to the proceedings bearing the record number 2011 No. 5206 ([2012 No. 19 COM]), the proceedings in which judgment was entered against Mr. O'Neill. No doubt that is an oversight.

14 It is somewhat surprising that an order is sought setting aside the judgment, presumably intended to be in respect of each of the plaintiffs in those proceedings, in circumstances where no appeal has been brought against the judgments and where there is no basis set out on the plenary summons that might give rise to an order setting aside the judgments. It is further surprising to see such relief being sought in circumstances where this Court was told at the hearing of the application to dismiss the bankruptcy summonses herein that Mr. O'Neill and Mr. Rice were not seeking to look behind the judgments. I will return to this issue later.

15 Marketspreads Limited changed its name subsequent to obtaining judgment against Mr. O'Neill and Mr. Rice from Marketspreads Limited to SFS Markets Limited but for ease of reference I will continue to refer to it as Marketspreads.

Exchange of affidavits

16 Mr. O'Neill and Mr. Rice swore affidavits grounding their application to have the bankruptcy summonses dismissed. Mr. O'Neill in his affidavit made the point that prior to the judgment being obtained, he discussed the situation with Mr. Ray Curran, described as the then chairman of Marketspreads, (Mr. Curran disputed this description), and said that he was told that if he consented to the judgment and then sold his shareholding in OR Spreadbetting Limited, this would satisfy the judgment. Mr. O'Neill placed a value on his shares of just over €2m approximately as of the last transaction date in November 2010 and Mr. Rice valued his shares at approximately €1.8m at the same time. Mr. O'Neill stated that the amount of the judgment was excessive and he challenged the amount for which he and Mr. Rice were liable.

17 He then referred to the Share Purchase Agreement of the 17 ^th April, 2012 which was executed subsequent to the judgment. Initially, the SPA was to be completed a few days after the judgment was entered into but there was a delay in having the SPA signed. In the meantime, Marketspreads had been suspended by the Central Bank on the 6 ^th April, 2012.

18 Mr. O'Neill stated that he was told by Mr. Curran on 16 ^th April, 2012 that the shares had to be sold immediately for a sum of €400,000 and that Mr. Curran told Mr. O'Neill and Mr. Rice that they would have to agree a consideration of €400,000 for the shares. This was on the basis that it was necessary to deal with the matter urgently in order to have the Central Bank suspension of Marketspreads lifted. As part of that arrangement it was stated that it was agreed "the balance would not be pursued". The alternative was that if the sale of the shares of Mr. O'Neill and Mr. Rice was not concluded, then Marketspreads would remain suspended permanently.

19 On the 17 ^th April, 2012, Mr. Curran, Mr. O'Neill and Mr. Rice attended at PGL Accountants to sign the agreement. There was a complaint as to the lack of opportunity to obtain legal advice on the SPA but Mr. O'Neill and Mr. Rice were reassured that, despite the wording of the SPA, they would not be pursued for the outstanding balance of the judgements. A further complaint was made that Mr. O'Neill and Mr. Rice did not receive a copy of the SPA at that time. Mr. O'Neill and Mr. Rice have both contended that it was a condition of the Central Bank for lifting the suspension of Marketspreads that Mr. O'Neill and Mr. Rice be removed as shareholders.

20 Finally, both have indicated that they would not have agreed to redeem their entire shareholding for the sum of €400,000 three weeks after consenting to judgment if they were leaving themselves open to being pursued for a sum of €1.2m approximately.

21 Mr. Ray Curran in his affidavit of the 18 ^th April, 2013 disagreed with the averments of Mr. O'Neill and in a second affidavit of the same date disagreed with Mr. Rice's averments in his application to have the bankruptcy summons dismissed. He noted that they both consented to the judgments on the 28 ^th March, 2012 in an agreed sum although there had been some prior discussion as to the amount for which judgment would be entered.

22 He pointed out that contrary to the averments by Mr. O'Neill and Mr. Rice he was never chairman of OR Spreadbetting Limited or Marketspreads. He never agreed to accept the shares of Mr. O'Neill and Mr. Rice in OR in full settlement of the amounts due by them to Marketspreads. He further stated that he was not "empowered to agree" any such agreement. The basis of the agreement was as set out in the SPA.

23 Mr. Curran pointed out that the case being made now by Mr. O'Neill and Mr. Rice as to the effect of the sale of the shares is...