Re A Petition for Adjudication of Bankruptcy by Leading Edge Project Management [in Voluntary Liquidation] Against Liam Campion

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice O'Higgins
• Judgment Date: 19 December 2024
• Neutral Citation: [2024] IEHC 757
• Docket Number: [Record No. 5212/P]

Bankruptcy

In the Matter of a Petition for Adjudication of Bankruptcy by Leading Edge Project Management (In Voluntary Liquidation) Against Liam Campion

[2024] IEHC 757

[Record No. 5212/P]

THE HIGH COURT

Bankruptcy – Debt – Statute-barred – Petitioner seeking to adjudicate the respondent a bankrupt – Whether the application contravened s. 11 of the Statute of Limitations Act 1957

Facts: The petitioner, Leading Edge Project Management (a creditor), applied to the High Court to adjudicate the respondent, Mr Campion, a bankrupt pursuant to a petition dated 29 August 2022. The act of bankruptcy relied upon by the petitioner was the failure by the respondent to pay the sum of €30,500 on foot of a bankruptcy summons dated 18 May 2022. The respondent contended that he was not insolvent and had sufficient funds to discharge the debt. He lodged the amount in question to the account of his solicitor. The respondent did not seriously dispute that there was a debt due by him to the petitioner. The Circuit Court (Judge Linnane) granted judgment in favour of the petitioner against the respondent for the sum in question on 1 December 2008. The respondent contested the application on two grounds. Firstly, he said that the Circuit Court judgment was more than twelve years old and therefore, under the Rules of the Circuit Court, was unenforceable. Secondly, he said that the bankruptcy application contravened s. 11(6)(a) of the Statute of Limitations Act 1957. He said that the bankruptcy application constituted an “action on a judgment” within the meaning of that section and was statute-barred.

Held by O’Higgins J that there were potentially four issues for determination: (i) Where a judgment has become unenforceable under the Circuit Court Rules, does that preclude a creditor from proceeding with a bankruptcy application under s. 11 of the 1988 Act, on the ground of the debtor’s failure to pay a bankruptcy summons? (ii) Is a bankruptcy petition an “action upon a judgment” within the meaning of s. 11(6)(a) of the 1957 Act, so as to preclude a bankruptcy application being made after the expiration of twelve years from the date on which the judgment becomes enforceable? (iii) If a bankruptcy petition does constitute an “action upon a judgment”, did the respondent “acknowledge” the debt for the purpose of ss. 56 and 58 of the 1957 Act, such that time stopped running? (iv) If the court rejects the respondent’s arguments, is the court obliged to adjudicate the respondent a bankrupt or may the respondent, at that point, discharge the debt the subject matter of the application? O’Higgins J held that even where a judgment has become unenforceable under the Circuit Court Rules, a creditor is not precluded from proceeding with a bankruptcy application under s. 11 of the 1988 Act, on the ground of the debtor’s failure to pay a bankruptcy summons.

O’Higgins J held that, since he decided to hold over for further legal argument the separate issue concerning whether a bankruptcy petition constitutes an “action upon a judgment” for the purposes of s. 11(6)(a) of the 1957 Act, he should also hold over the remaining two issues concerning whether the clock should be regarded as having stopped for the purposes of the Statute of Limitations, and whether it was open to the respondent, even if his arguments against the petition failed, to discharge the debt so as to avoid being adjudicated a bankrupt.

Issues held over.

Appearances:

For the petitioner: Paul Brady BL instructed by Ivor Fitzpatrick & Co. Solicitors.

For the respondent: Gary McCarthy SC instructed by Tom Casey Solicitors.

JUDGMENT of Mr Justice O'Higgins delivered on the 19 ^th day of December 2024 .

1 . This is a creditor's application to adjudicate the respondent, Liam Campion, a bankrupt pursuant to a petition dated 29 ^th August 2022. The act of bankruptcy relied upon by the petitioner is the failure by the respondent to pay the sum of €30,500 on foot of a bankruptcy summons dated 18 ^th May 2022.

2 . The respondent contends that he is not insolvent and has sufficient funds to discharge the debt. He has lodged the amount in question to the account of his solicitor. The respondent does not seriously dispute that there is a debt due by him to the petitioner. The Circuit Court (Judge Linnane) granted judgment in favour of the petitioner against the respondent for the sum in question on 1 ^st December 2008.

3 . The respondent contests the application on two grounds: firstly, he says the Circuit Court judgment is more than twelve years old and therefore, under the Rules of the Circuit Court, is unenforceable. Secondly, he says the bankruptcy application contravenes s. 11(6)(a) of the Statute of Limitations Act 1957. He says the bankruptcy application constitutes an “action on a judgment” within the meaning of that section and is therefore statute-barred.

Issues for determination

4 . It seems to me there are potentially four issues for determination:

(i) Where a judgment has become unenforceable under the Circuit Court Rules, does that preclude a creditor from proceeding with a bankruptcy application under s. 11 of the Bankruptcy Act 1988, on the ground of the debtor's failure to pay a bankruptcy summons?

(ii) Is a bankruptcy petition an “action upon a judgment” within the meaning of s. 11(6)(a) of the Statute of Limitations Act 1957, so as to preclude a bankruptcy application being made after the expiration of twelve years from the date on which the judgment becomes enforceable?

(iii) If a bankruptcy petition does constitute an “action upon a judgment”, did the respondent “acknowledge” the debt for the purpose of ss. 56 and 58 of the Statute of Limitations Act 1957, such that time stopped running?

(iv) If the court rejects the respondent's arguments, is the court obliged to adjudicate the respondent a bankrupt or may the respondent, at that point, discharge the debt the subject matter of the application?

According to the parties, there is no decision in this jurisdiction determining the first two legal issues above.

Procedural background

5 . On 7 ^th March 2022, a bankruptcy summons was issued against the respondent to answer a debt to the petitioner in the sum of €30,500 on foot of a judgment obtained by the petitioner in the Circuit Court on 1 ^st December 2008. Since the sum demanded was not paid, the petitioner issued a petition and notice of motion seeking the adjudication of the respondent as a bankrupt.

6 . By notice of motion dated 10 ^th February 2023, the respondent applied for the bankruptcy summons to be dismissed. On 20 ^th July 2023, Sanfey J. refused that application (see Re Campion [2023] IEHC 435). The respondent argued before Sanfey J. that there was an issue for trial within the meaning of s. 8(b) of the Bankruptcy Act 1988 as amended, and that this warranted the dismissal of the summons. The respondent submitted that the issue of the bankruptcy summons constituted an action upon a judgment which was statute-barred pursuant to s. 11(6)(a) of the Statute of Limitations Act 1957 as the summons was issued more than twelve years after the date the judgment was granted.

7 . The application before Sanfey J. was made by the respondent to enlarge time for the purposes of bringing an application to have the bankruptcy summons dismissed. Sanfey J. held that time could not be enlarged and refused the respondent's application. In view of that finding, Sanfey J. found it unnecessary to decide the substantive legal issue concerning the judgment being statute-barred. The legal issue was therefore left over to the hearing of the bankruptcy petition.

8 . As part of the application for the issuance of a bankruptcy summons, John Healy swore a verifying affidavit and an affidavit of debt on behalf of the petitioner on 29 ^th August 2022. In those affidavits, the petitioner, through the deponent Mr Healy, averred to certain facts, namely that:

(i) there was a total debt/ liquidated sum owed to the petitioner in the sum of €30,500 arising from a judgment which has not been discharged;

(ii) three months prior to the presentation of the petition, an act of bankruptcy was committed on account of the failure by the respondent to pay, secure or compound the sum claimed in the Bankruptcy Summons dated 7 ^th March 2021 within 14 days from 18 ^th May 2022, being the date of service thereof and;

(iii) the respondent has his centre of main interest in the State such that Regulation (EC) No. 2015/848 applies, and that the respondent conducts the administration of his interests in the State and is domiciled and has his permanent residence in the State.

9 . None of these facts are seriously disputed by the respondent. I use that formula of words because there is a notional denial by the respondent that the debt is due in an affidavit he swore for the purpose of the application before Sanfey J. to enlarge time. In that affidavit sworn on 10 ^th February 2023, Mr Campion averred that he was “not indebted” to the petitioner in any sum amounting to more than €20,000. However, it seems to me that averment was more by way of a legal argument than a factual plea. The detailed affidavits sworn on behalf of the petitioner regarding the debt have not been contradicted or specifically addressed. Nowhere in any affidavit is there a claim that the debt has been discharged. Instead, the only grounds of defence advanced by the respondent are the first two legal issues identified above.

Relevant provisions of the Bankruptcy Act 1988, as amended

10 . Section 7 (1) of the Bankruptcy Act 1988, as amended, identifies the means by which a debtor can be said to commit an act of bankruptcy:

“(1) An individual (in this Act called a “debtor”) commits an act of bankruptcy in each of the following cases—

…

(g) if the creditor presenting a petition has served upon the debtor in the prescribed manner a bankruptcy summons, and he does not within fourteen days...