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Cite as: [2020] IECA 49

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Donnelly J

Haughton J

Collins J

THE COURT OF APPEAL

CIVIL

Neutral Citation Number: [2020] IECA 49

Court of Appeal Record No 2017/291

Court of Appeal Record No 2017/552

BANKRUPTCY

IN THE MATTER OF A BANKRUPTCY PETITON BY MICHAEL GLADNEY COLLECTOR

GENEERAL OF SARSFIELD HOUSE, FRANCIS STREET, LIMERICK, PETITIONING

CREDITOR

AND JOHN TOBIN OF LEVEL 3, CORNMARKET,

ROBERT STREET, LIMERICK, DEBTOR

BETWEEN

MICHAEL GLADNEY

AND

JOHN TOBIN

PETITIONER/APPLICANT

APPELLANT/RESPONDENT

JUDGMENT of Mr Justice Maurice Collins delivered on 3 March 2020

BACKGROUND

1. The Appellant (“the Debtor”) was adjudged bankrupt by Order of the High Court (Costello

J) made on 13 November 2017 on foot of a Petition dated 28 June 2016. The Debtor

appeals that Order to this Court. He also appeals an earlier Order of the High Court

(Costello J) of 30 May 2017 refusing the Appellant’s application to dismiss the Bankruptcy

Summons of 4 April 2016. The application to dismiss the Bankruptcy Summons was made

significantly outside the prescribed time for bringing such applications (which Order 76

Rule 13(2) of the Rules of the Superior Courts provides is 14 days) and in her judgement

given on 30 May 2017, the High Court Judge concluded that no basis for extending the

time in which to bring such application had been demonstrated and refused an extension

of time accordingly. However, she went to examine the grounds advanced by the Debtor

on their merits and concluded that none of those grounds had been made out and thus

held that, even if the Court had been persuaded to extend the time, the application to

dismiss the Bankruptcy Summons should be dismissed. The Order made by the Court

dismissed the application accordingly. The Debtor’s appeal encompasses both the

extension of time issue and also the Judge’s findings on the merits.

2. The Bankruptcy Summons warned the Debtor that, unless within 14 days after service of

the Summons on him (and it was served on him on 18 April 2016), he paid the sum of

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€405,808.66 to Mr Gladney (who is the Collector General), or secured or compounded for

that sum to Mr Gladney’s satisfaction, he would have committed an act of bankruptcy for

which he might be adjudicated a bankrupt “unless you have within the time aforesaid

applied to the Court to dismiss this Summons, on the ground that you are not

indebted to the said Michael Gladney in any sum or that you are only indebted to

Michael Gladney in a sum of €20,000 or less, or that before service of the Summons,

you had obtained the protection of the Court” (emphasis supplied). The Summons went

on to tell the Debtor that he was “specially to note” a number of matters, including that if

the Debtor was “not indebted to the said Michael Gladney in any sum or are only

indebted to Michael Gladney in the sum of .. €20,000 or less, you must apply to the

Court to dismiss this summons within fourteen days after the service of this summons on

you…” (emphasis supplied).

3. The Bankruptcy Summons was in all material respects precisely in accordance with Order

76, Rule 10 and Form 1 which Rule 10 requires to be used. Section 8(5) of the

Bankruptcy Act 1988 (as amended) (“the 1988 Act”) provides for the form of such

summonses to be prescribed. The form of Summons also accurately reflected the

provisions of Order 76, Rule 13(2) which (as amended in 2013) requires notice to be

endorsed on every summons to the effect that if the debtor disputes the debt and desires

to dismiss the summons, he must swear an affidavit within 14 days “(a) that he is not so

indebted or only so indebted to an amount of €20,000 or less or (b) that before the

service of the summons he had obtained the protection of the Court or (c) that he has

secured or compounded the debt to the satisfaction of the creditor”(emphasis supplied)

4. The prescribed form also requires Particulars of Demand to be set out “in detail”,

reflecting the requirements of Order 76, Rule 12(4). Order 76, Rule 12(4) also provides

that no objection shall be allowed to the particulars unless the Court considers that the

debtor has been misled by them. Detailed Particulars of Demand were included in the

Summons here, setting out the particulars of no less than seven judgments that the

Collector General had obtained against the Debtor on various dates between 15

September 2011 and 8 January 2015, giving details of the Judgment amounts, costs

payable, accrued Courts Act interest and payments/credits on account, yielding an overall

net figure of €405,808.66.

5. The Debtor did not apply to dismiss the Summons within 14 days of its service on him.

His application did not issue until 4 November 2016, some 6 months after the expiry of

the prescribed period. The Affidavit sworn by him (on 3 November 2016) to ground that

application offered no explanation for this failure. That Affidavit is also notable for the

absence of any claim that the Debtor was not indebted to the Collector General in any

sum or only in the sum of €20,000 or less, though as noted above that appears to be a

mandatory requirement of Order 76. In fact, the only substantive point made in the

Affidavit was to the effect that, for reasons set out in it (which are discussed in detail

below) a sum of €71,030 was “repayable to me by the Revenue Commissioners” and,

therefore, (the Debtor went on to say), “I am due a refund of €71,030 together with

interest thereon from February 2009.” The debt asserted by the Collector General

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(including the amounts included for interest and costs, and the credits allowed against

payments made) was not otherwise disputed, from which it followed that, even if Mr

Tobin’s claim to be entitled to a refund from the Revenue was well-founded, he

nevertheless had a significant liability to it, significantly in excess of the statutory

threshold of €20,000. 1

6. That essential position has not altered in the course of the proceedings and at the hearing

of this appeal, Counsel for the Debtor, John O’ Donnell SC, very properly acknowledged

that a significant sum - in the order of €330,000 - was in any event due by his client to

Revenue.

7. The Debtor nonetheless says that the jurisprudence establishes that he is entitled to

impugn the Bankruptcy Summons and/or resist his adjudication as a bankrupt by

establishing (or, more correctly, showing that there is an issue) that the amount

demanded of him was incorrect to any degree. The extent of the error is, the Debtor says,

immaterial. That submission is addressed further below. However, I would observe that, if

it be correct, it appears to follow that the provisions of Order 76 identified above, and the

form of summons that it prescribes for use by creditors (which was the form of summons

used by Revenue here) – premised as they are on an understanding that a summons can

be challenged only by showing that no debt, or no debt satisfying the statutory minimum,

is due – do not reflect the correct legal position.

8. In any event, after an exchange of affidavits, the Debtor’s application to dismiss the

Bankruptcy Summons (and for an order extending the time to bring that application)

came on for hearing before the High Court on 29 May 2017. The Judge reserved her

decision overnight and gave her Ruling on 30 May. She noted that while the Debtor had

sworn three affidavits, none addressed the issue of delay or provided any basis why the

Court should extend time. She also noted that when the Petition had first been before the

Court in October 2016 (some six months after service of the Summons on the Debtor) no

issue had been raised as to the validity of the demand or the non-allowance of any credit.

In the circumstances, the Judge considered that none of the three limbs of the test set

out in Eire Continental Trading Co v Clonmel Foods Ltd [1955] IR 170 2 had been satisfied

and accordingly refused the application to extend time.

9. Nevertheless, the Judge went on to consider the application to dismiss on its merits. The

evidence of the Debtor (a former solicitor who was at the relevant time practising as

such) was to the effect that he had paid a total amount of €96,850 from his own

resources in (partial) discharge of a Stamp Duty liability of one of his clients (“the

1 Section 8(1)(a) of the 1988 Act (as amended) requires proof of a debt of more than €20,000 before a bankruptcy

summons may be granted and a similar threshold is stipulated for the presentation of a petition by section 11(1)(a) of the

1988 Act. That threshold is a significant increase on the previously applicable threshold of €1,900.

2 In a recent decision, the Supreme Court has discussed in detail the status and appropriate application of the criteria in

Eire Continental, emphasising that they are guidelines which should not be regarded as prescriptive or applied over rigidly

but also emphasising the sound rationale that underpins them: Seniors Money Mortgages (Ireland) DAC v Gately

[2020] IESC 3.

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Client”).3 That payment was made because the Stamp Duty liability arose on a

transaction (the purchase of property – to which I shall refer as “the H Lands” - by the

Client) where the Debtor, as the solicitor acting for the Client, had given an undertaking

to a financial institution to lodge the title documents with it on completion. Without a

Stamp Duty Certificate (which would not be provided by Revenue unless the Stamp Duty

payable, along with any applicable interest and penalties, was first discharged), the Client

could not be registered as owner in the Land Registry and in turn the Debtor would not be

in a position to comply with that undertaking: para 8 of the Affidavit of Mr Tobin sworn on

26 January 2017.

10. To complicate the position further, the Debtor had given a further undertaking, once

again on behalf of the Client, to another financial institution in connection with the

purchase of other property, to which I shall refer as “the O’ C Lands”. Again, the Debtor

had not been put in funds to pay the Stamp Duty arising on that transaction and, as a

result, there was a substantial Stamp Duty liability (significantly greater than the liability

arising in relation to the H Lands) owing to Revenue in respect of this transaction also.

11. The Debtor’s evidence was that in 2011/2012 the Client brought to his attention the fact

that he (the Client) was due significant amounts from the Department of Agriculture in

respect of forest grants and premiums. These payments related to various lands,

including (it appears) the H Lands and the O’ C Lands. The Debtor says that he had to

certify title to those lands before the grants could be paid and says that agreement was

reached between the Department, the Revenue and himself that the Department would

pay to Revenue such sums as would discharge the Client’s remaining Stamp Duty

liabilities, thus enabling the issue of appropriate Stamp Duty Certificates by Revenue

which in turn would enable the Debtor to register the transactions and deliver title to the

respective funding institutions in compliance with the undertakings he had given to them.

In this context, it is relevant to note that the Debtor has never suggested that Revenue

agreed (or could have lawfully agreed) to attach (attachment being the statutory

mechanism by which these payments could be made) more than was due in tax by the

Debtor’s client, in order to repay to the Debtor the sum paid by him in 2009.

12. The Debtor next says that there was an overpayment of Stamp Duty in relation to the H

Lands. That overpayment was quantified by the Debtor as €66,030.00 as of May 2012

(para 11 of the Affidavit of Mr Tobin sworn on 26 January 2017). The Debtor made a

further payment of €5,000 to the Revenue in April 2015 and that appears to be the basis

on which he contends that the over-payment was in fact €71,030 (para 19). It is that

sum which the Debtor asserted before the High Court was due to him by way of credit or

refund and, on that basis, the Debtor contended that the amount set out in the Particulars

of Demand and in the Bankruptcy Summons over-stated his liability to Revenue because

it made no allowance for that credit or for interest on it (para 28). The Debtor also

complained of the delay in the issuing of Stamp Duty Certificates by Revenue. The

3 The Client is identified in the papers before the Court but, having regard to the fact that he is not a party to these

proceedings, and bearing in mind the obviously confidential character of his tax affairs, I shall not identify the Client in this

judgment

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Certificate in relation to the H Lands had only issued in October 2015 and no Certificate

had issued (or, it appears, has issued since) in relation to the O’ C Lands.

13. In response, a number of affidavits were delivered on behalf of Revenue. In summary,

Revenue’s position (as set out in those affidavits) was to the effect that, while it had

initially indicated that it would be possible to apply monies attached by it in discharge of

the Stamp Duty liabilities of the Debtor’s client, it had subsequently been explained to the

Debtor that that would not be possible because of the fact that the monies in question

had been attached pursuant to statute 4 by reference to income tax and capital gains tax

(CGT) liabilities of the client and not by reference to any Stamp Duty liabilities of the

Client. There is an issue as to whether this was in fact communicated to the Debtor which

cannot be resolved on this appeal. Revenue did not dispute that an amount of €91,850

had been paid by the Debtor or that it had been applied in partial satisfaction of the

Client’s Stamp Duty liabilities, but its position was that, if and insofar as that amount

came from his own funds, it was a matter for the Debtor to pursue with the Client. There

was, as far Revenue was concerned, “no circumstances where the Revenue

Commissioners could refund such payments to Mr Tobin” (Affidavit of Declan Hayes sworn

on 15 March 2017, at para 27). Revenue also observed that the Debtor had not raised

any defence or counterclaim based on any alleged credit or refund in any of the multiple

applications for judgment against him. Revenue explained that the Stamp Duty Certificate

for the H Lands had issued in October 2015 following a further payment made by the

Debtor in April 2015 in relation to outstanding interest/penalties and after attempts to

recover from the taxpayer (the Client). The other Stamp Duty Certificate had not issued

because the liability of the taxpayer (the Client) had not been discharged (para 24).

14. Mr Hayes’ Affidavit exhibited a detailed submission which had been prepared by Counsel

(Mr Power BL) on the Debtor’s behalf and submitted to Revenue in November 2014. The

thrust of that submission was to the effect that the Revenue had represented to the

Debtor that the forestry grant monies payable to his client would be set off against the

Stamp Duty owed by him, the Debtor had relied on that representation by providing

undertakings to the Department of Agriculture regarding the Client’s title but Revenue

had in fact allocated the monies attached by it against income tax and CGT liabilities of

the Client rather than (as it had agreed) against his Stamp Duty liabilities. The

submission argued that the statutory power of attachment given by section 1002 TCA did

not fetter the allocation of monies received to tax referred to in the attachment notice. It

also referred to various possible bases of claim against the Revenue. The submission did

not, it should be noted, make any reference to or assert any claim to any credit or refund

on the part of the Debtor, whether in the amount of €71,030 or otherwise.5

15. Mr Hayes also exhibited Revenue’s response to this submission, a detailed letter of 3

March 2015. There is one aspect of that letter to which I shall refer further below. In

4 The relevant provision being section 1002 of the Taxes Consolidation Act 1997 (the “TCA”).

5 On the contrary, the submission stated (at page 4) that a Notice of Assessment in respect of stamp duty issued dated 23

January 2012 “which assessed a balance due in the amount of €71,030.” A breakdown of that figure is given in a footnote

from which it is apparent that the amount of €71,030 was due to Revenue after allowance for the €91,850 that had been

paid by the Debtor in 2009

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broad terms, the letter joined issue with virtually all aspects of the submission and denied

that Revenue had any responsibility for the difficulties in which the Debtor found himself

(the submission referred to the fact that he was facing a risk of being struck off as a

solicitor) or any liability to him.

16. The High Court Judge considered the evidence and arguments. She referred to section

8(6) of the 1988 Act (which provides that the Court “shall dismiss the summons if

satisfied that an issue would arise for trial”) and to a number of authorities including the

decision of the High Court (McGovern J) in Minster for Communications, Energy and

Natural Resources v MW [2009] IEHC 413; [2010] 3 IR 1, the decision of that Court

(Dunne J) in Marketspreads Ltd v O’ Neill [2014] IEHC 14 and her own judgment in ACC

Loan Management v CM [2015] IEHC 96. These decisions were authority for the

proposition that an issue had to be “real and substantial” and not one which was

unarguable or had no prospect of success in order to engage the Court’s jurisdiction under

section 8(6). 6

17. Analysing what had been advanced before her as the issue arising for trial said to require

the dismissal of the Bankruptcy Summons, the Judge noted that it was common case that

the Debtor was not the chargeable person for Stamp Duty purposes. She also noted that

she had invited Counsel for the Debtor to explain how his client could be entitled to a

refund or credit from the Revenue even if there had been an overpayment of tax, given

that he was not the chargeable person but no basis for that proposition had been

identified. Taking the Debtor’s case at its height, and therefore accepting for the purpose

of her analysis that the grants should have been allocated to the Stamp Duty liabilities,

that did not assist the Debtor because it did not follow that he was entitled to any refund

from Revenue. If the Debtor had no case for a refund of the alleged overpayment, it

followed that he could not show that the sums claimed in the Bankruptcy Summon were

more than the amount actually due by him to Revenue. 7

18. The Judge proceeded to consider and reject a contention that the Debtor had been

confused. In the Judge’s view, the Debtor had clearly understood the position, noting the

submission to which I have already referred, as well as a letter written by the Debtor in

March 2015 which made no reference to any refund but clearly proceeded on the basis

that the Debtor was liable to pay the outstanding judgements.

19. Finally, the Judge explained that she did not consider that any issue for trial arose in

relation to the alleged delay on the part of Revenue in issuing the Stamp Duty Certificate.

20. The Revenue then proceeded with its Petition and it was heard on 13 November 2017. It

appears from the Judge’s Ruling on the Petition that at least some of the issues that the

Debtor sought to advance repeated arguments that had been made in the application to

dismiss the Summons. Counsel for the Petitioner objected to this as a collateral attack on

the Court’s earlier Ruling (which at that point was the subject of appeal to this Court).

6 Transcript of the Ruling of 30 May 2019, page 6.

7 Ibid, at page 7

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That objection was upheld by the Judge who noted that, where no application to dismiss

was brought, a debtor could raise arguments as to the validity of the summons at the

adjudication stage, 8 but that the position was otherwise where (as was the case here)

the debtor had availed of the opportunity to bring an application to dismiss. The Judge

did, nonetheless, address what appears to have been a new point made by the Debtor in

support of his contention that the Revenue owed him a credit/refund. Her Ruling records

an argument to the effect that the Debtor was entitled to subrogate to the Revenue

Commissioner’s claim against the Debtor’s former Client and to set off what his former

Client might owe the Revenue against his obligations to the Revenue. So stated, it is very

difficult to understand the import of that argument but in any event the Judge considered

that it was dealt with by her finding that the claim was for the chargeable person to

make, i.e. the Debtor’s Client and not the Debtor. A version of this subrogation argument

was advanced in this Court also and will be addressed below.

21. In addition to the arguments as to the validity of the Bankruptcy Summons, the Debtor

advanced a separate argument to the effect that the Revenue had failed to comply with

the provisions of section 11(1)(c) of the 1988 Act. Section 11(1) identifies certain

conditions for the presentation of a petition and the effect of section 11(1)(c) is to require

that “the act of bankruptcy on which the petition is founded has occurred within three

months before the presentation of the petition.” Before the High Court (and again before

this Court) it was argued on behalf of the Debtor that the Petition of the Revenue was

founded on an act of bankruptcy that occurred on 18 April 2016 (the date of service of

the Bankruptcy Summons) and that the Petition (which was presented on 21 July 2016)

therefore was not presented within the period stipulated in section 11(1)(c).

22. The Judge rejected this argument. In her view, it was clear from section 7(1)(g) of the

1988 Act that it was the failure to pay the sum referred to in the Bankruptcy Summons

within 14 days of service that constituted the relevant act of bankruptcy. Therefore, the

act of bankruptcy occurred on 2 May 2017 and not at any point prior to that date and it

followed that the Petition had been presented in compliance with section 11(1)(c). The

Judge then proceeded to adjudicate the Debtor a bankrupt.

23. As I have already noted, both the Orders of 30 May 2017 and 13 November 2017 were

appealed to this Court by the Debtor (the latter appeal requiring an extension of time

granted by this Court on 26 February 2018). On 26 February 2018 this Court stayed the

Order of 13 November 2017 and on 25 June 2018 that stay was varied in terms which are

not material for present purposes.

THE ISSUES ON APPEAL

24. Having regard to the Debtor’s grounds of appeal and written and oral submissions, it

appears to me that the following issues arise for determination in the appeals before us:

•

Whether the Judge erred in refusing to extend time for the Debtor’s

application to dismiss the Bankruptcy Summons.

8 Though not identified specifically, the Judge appears to have had in mind her own judgment in Gladney v P O’M

[2015] IEHC 718, at para 19.

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•

Whether the Debtor has established good grounds for impugning the

Summons. This in turn involves raises two issues. The principal issue is

whether the Summons is bad because the total amount is overstated by the

amount (€71,030 plus interest) which the Debtor says is due to him from

Revenue. No other error or invalidity was alleged in the Summons. 9 The

second issue is whether the Debtor has a claim against Revenue arising from

the alleged delay in issuing the relevant Stamp Duty Certificates. It is fair to

say that the first of these arguments was the primary focus of the Debtor’s

submissions to this Court.

•

The third issue is whether the Petition should have been dismissed by reason

of alleged non-compliance with section 11(1)(c) of the 1988 Act.

DISCUSSION

The Extension of Time Issue

25. As was indicated in the course of the hearing, it appears to me that this Court must

review the merits of the Judge’s Rulings, including her findings on the issue of the validity

of the Bankruptcy Summons. It is common case that, absent any application to dismiss

the Summons, it would have been open to the Debtor to raise arguments at the Petition

stage directed to the validity of the Summons: Gladney v POM [2015] IEHC 718, at para

19. Here the Debtor sought to do so but was met with the objection that those arguments

had already been considered by the Court. If the Judge had simply refused the application

for an extension of time, without going on to address the merits of the arguments being

advanced by the Debtor, no such objection would have arisen and the Judge would have

had addressed the substantive arguments in adjudicating on the Petition. The Debtor

would then have been entitled to appeal against the Judge’s resolution of those

arguments. The Judge’s decision on the merits of the arguments made on the application

to dismiss the Bankruptcy Summons cannot be regarded as mere obiter dicta and, in

these circumstances, it appears to me that the Debtor cannot be deprived of his

entitlement to have the High Court’s decision on the merits of his challenge to the

Summons reviewed by this Court. This was fairly accepted by Mr Hayden SC for Revenue.

26. In these particular circumstances, it appears to me that the extension of time issue is

effectively a moot. That being so, I do not express any concluded view on that aspect of

the High Court’s Ruling of 30 May 2017. I do note that in Gladney v POM the High Court

(Costello J) expressed the view that it was not appropriate to apply the Eire Continental

criteria to an application to extend time to apply to dismiss a bankruptcy summons.

Costello J was of the view that the discretion to extend was a general one, in which the

fact that the debtor was in any event free to raise validity arguments as a defence at

9 In the course of submissions Mr O’ Donnell helpfully clarified that the Debtor was not contending that there had been a

failure to give due credit for a payment of €12,000 made by him in March 2015, as the Debtor had appeared to suggest at

para 4 of his Affidavit of 21 April 2107..

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adjudication stage was an important factor. 10 Whatever the correct approach may be, it

is not at all obvious to me that the Judge made any error in declining an extension of

time. In any event, having done so, it would have been open to the Judge to stop there

and, in that event, the Debtor would have been at liberty to advance his arguments by

way of defence to the Petition. The High Court having gone on to address those

arguments on their merits - no doubt with a view to avoiding any possible injustice or

perceived unfairness to the Debtor - this Court is, in my opinion, obliged to do so also.

The Section 11(1)(c) Issue

27. As a matter of logic, this issue comes after the Bankruptcy Summons issues. However,

the issue is a net one and, in my opinion, its correct resolution is clear. Accordingly, it is

convenient to address it at this stage.

28. In my opinion, the argument that the act of bankruptcy relied on by Revenue here

occurred on the date of service of the Bankruptcy Summons is wholly without merit.

29. The Debtor’s argument flies in the face of the clear and unambiguous provisions of section

7(1)(g) which make it plain that it is the debtor’s failure to pay the sum “within fourteen

days after service of the summons” that constitutes the act of bankruptcy. Until that

fourteen-day period has expired, there is no act of bankruptcy and, accordingly, the

three-month period referred to in section 11(1)(c) does not start to run. There may be

scope for argument as to precisely when that fourteen-day period ends but that issue was

not canvassed before us for the simple reason that nothing turns on it on the facts here.

It does not matter, on the facts here, whether the act of bankruptcy occurred on 1, 2 or 3

May 2017 because the Petition was presented well within three months of each of those

dates.

30. The principle that the Bankruptcy code is penal and that ambiguities ought therefore to be

construed in favour of debtors does not assist the Debtor. In the first place, no ambiguity

in section 7(1)(g) has been identified by the Debtor. Secondly, even if there were any

such ambiguity, the principle of strict construction would require the Court to avoid the

construction urged by the Debtor precisely because it would involve a debtor being

deemed to have committed an act of bankruptcy without having had the opportunity to

pay the sum demanded that the 1988 Act ordains a debtor must be given. On the

Debtor’s argument, a petition could be presented by a creditor seven days after service of

a bankruptcy summons (or indeed on the day following such service) a proposition that is

irreconcilable with the clear language of the relevant provisions of the 1988 Act and

inimical to the interests of debtors in equal measure.

The Bankruptcy Summons Issue

Relevant Legal Framework

10 At paras 20-22

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31. The 1988 Act repealed and replaced a number of Victorian statutes, among them the Irish

Bankrupt and Insolvent Act 1857 and the Bankruptcy (Ireland) Amendment Act 1872

which was the principal statute in this area. The 1988 Act had a rather protracted history,

having been introduced as a Bill in 1982, based to a significant degree on the

recommendations of what is commonly referred to as the Budd Committee which had

been established in 1962 to examine Ireland’s bankruptcy laws and which issued its final

report in 1972.11

32. Despite its prolonged gestation, the 1988 Act did not constitute a radical break from the

statutory regime it replaced. The 1872 Act had (in section 30) provided for the grant of a

debtor’s summons in terms similar (though not identical) to section 8 of the 1988 Act 12

and section 21(6) of the 1872 Act provided that failure to pay the sum set out in such a

summons was an act of bankruptcy in the same way as failure to pay the sum set out in a

bankruptcy summons is by virtue of section 7(1)(g) of the 1988 Act.

33. Section 21(6) of the 1872 Act was considered in O’ Maoileoin v Official Assignee [1989] IR

647, the adjudication having occurred prior to the enactment of the 1988 Act. The debtor

had been adjudicated bankrupt for failure to pay a judgment debt. He sought to have his

adjudication annulled on the basis that, as of the date of the debtor’s summons, a

financial institution had obtained judgment against the petitioning creditor in respect of a

lesser amount and a receiver by way of equitable execution had been appointed to collect

that amount from the judgment that the petitioning creditor had obtained against the

debtor. On this basis, the debtor argued that the petitioning creditor was not entitled to

the full judgment amount and that the debtor’s summons was defective accordingly.

34. It appears from the report that only the debtor participated in the hearing. Neither the

petitioning creditor nor the Official Assignee was represented. Ultimately the debtor failed

because the Court (Hamilton P) took the view that the appointment of a receiver by way

of equitable execution did not amount to a stay in respect of the portion of the debt

payable to the receiver, following In re Bond, ex p Capital and Counties Bank Ltd [1911] 2

KB 988. No such issue arises here and the principal interest of O’ Maoileoin is its

discussion, and apparent endorsement, of a number of decisions of the Courts of England

and Wales, which I shall discuss briefly.

35. In re Skelton ex p Coates (1877) 5 Ch D 979 did not involve any alleged overstatement of

the debt due to the petitioning creditor. Rather, the issue was the failure to allege in the

petition that the debtor had departed from his dwelling house “with intent to defeat or

delay his creditors.” 13 Bacon CJ colourfully observed that the mere assertion that the

11 The Bankruptcy Law Committee Report on the Law and Practice concerning Bankruptcy and the Administration of

Insolvent Estates of Deceased Persons (Prl. 2714). The Report included a draft Bill, draft Rules and draft Forms. Those

aspects of the Order 76 and of Form 1 to which I drew attention at the start of this judgment reflect the recommendations

of the Committee

12 While there are differences between section 30 of the 1872 Act and section 8 of the 1988 Act (including the new

language of section 8(6), reflecting recommendations made by the Budd Committee) it does not appear from the (brief)

discussion in its Report that the Budd Committee regarded such changes as having any radical impact on the basis on

which a bankruptcy summons might be dismissed.

13 That being an act of bankruptcy under the Bankruptcy Act 1869 (as it was in this jurisdiction by virtue of section 21(3)

of the 1872 Act and continues to be by virtue of section 7(1)(d) of the 1988 Act)

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debtor had departed his dwelling house announced nothing as he “may have gone to bury

his wife or his mother, or to a meet of foxhounds.” 14 In his opinion the petition was

irregular because it did not conform to the law and could not be corrected by amendment.

On appeal James LJ stated that to allow the appeal would be “an encouragement to

slovenly procedure”. The defect was, in his view, more than a matter of form: “[t]he Act

says you must tell the debtor what the act of bankruptcy is which you allege against him,

so that he may have an opportunity of contesting it in the first instance.”

36. The defect in In re Skelton was, therefore, a failure to conform with the provisions of the

statute such that the petition failed to set out any act of bankruptcy.

37. While I have not been able to locate the report, no issue concerning an excessive demand

and/or a dispute as to the amount due appears to have arisen in In re Collier ex p Dan

Rylands Ltd (1891) 64 LT 742 either. Rather the issue appears to have been as to

whether a company could be a petitioner and the proofs required in that context. It is

clear from the passage from the judgment of Cave J set in O’ Maoileoin that he

emphasised the penal nature of the bankruptcy regime, from which it followed that “it

was important to see that the necessary preliminaries were complied with.”

38. In Re OCS (A Debtor) [1904] 2 KB 161 the issue was that the bankruptcy notice was

founded on two judgment debts which – so it had been held by the Court of Appeal in In

re Low [1891] 1 QB 147 - was of itself a fatal defect. No issue of that kind is raised here.

In any event, the Court of Appeal in OCS declined to allow an amendment of the notice

because the defect was not, in the view of the Court merely formal and, while it was said

that no injustice would be done by allowing an amendment, the Court was not sure of

that and, in any event, “we ought to be very careful about allowing an amendment of a

bankruptcy notice, which is to some extent a penal proceeding.” 15

39. Overstatement of the debt due was the issue in in Re A Debtor, 478 of 1908 [1908] 2 KB

684. The petitioning creditors had obtained judgment against the debtor. Some payments

had been made against the judgment. A bankruptcy summons was served on the debtor

which included an amount for interest. However, the interest was miscalculated, with the

result that the amount set out in the summons (which was in excess of £948) overstated

the actual liability of the debtor by between £1 and £2. The Court of Appeal held that this

error was fatal. Cozens-Hardy MR considered that, as a matter of principle, it could not be

said that to “claim payment from a man of that which never was due from him” was a

mere formal defect. The defect was substantial. In his view, that conclusion was

supported by authority. 16 Farwell and Kennedy LJJ gave judgments to similar effect.

40. The final case referred to in O’ Maoileoin was another decision of the Court of Appeal of

England and Wales, In Re A Debtor [1938] Ch 694. There the issue was that the

. 14 At page 980

15 Per Vaughan Williams J at page 162.

16 Including a decision – In re Threadwell – where it appears a bankruptcy notice was set aside for failure to give a credit

from the judgement debt. In re Threadwell does not appear to be reported and it is not clear from the discussion of it in Re

A Debtor, 478 of 1908 what were the circumstances in which that credit arose.

Page 12 ⇓

judgment on which the bankruptcy notice was founded was for a debt which, in part, pre-

dated the enactment of the Law Reform (Married Women and Tortfeasors) Act 1935. The

significance of that fact was that, while the Act made a married woman amenable to

bankruptcy, it prohibited enforcement of pre-Act obligations in bankruptcy. The Court (per

Greene MR) considered that the notice was bad, the notice being an enforcement step

(and not, as was argued by the creditor, a step preliminary to enforcement) that had

issued in the face of a statutory prohibition. In the circumstances the notice was a nullity

and the debtor’s failure to pay the amount set out in it could not be regarded as an act of

bankruptcy.

41. According to Hamilton P:

“These cases clearly establish that the bankruptcy code, having regard to the

consequences which flow from an adjudication of bankruptcy, is penal in nature and

that the requirements of the statutes must be complied with strictly; that the

debtor's summons to be served within the provisions of s. 21 of the Bankruptcy

Ireland (Amendment) Act, 1872, must be served in the prescribed manner and the

amount due in accordance with a judgment, when a judgment is relied

upon, must be accurate and that a claim for an amount in excess of the

amount due in accordance with such judgment would render the notice

defective and a subsequent adjudication void.” (at page 654; emphasis

supplied)

42. The next relevant recorded Irish decision is that of the High Court (Murphy J) in In re

Sherlock (a Bankrupt) [1995] 2 ILRM 493. Mr Sherlock sought to show cause against his

adjudication as a bankrupt pursuant to section 16 of the 1988 Act. The relevant facts

were that the petitioning creditor had, subsequent to obtaining judgment against the

debtor (for £167,506.92), received a payment in respect of interest from a garnishee

which was not reflected as a credit in the bankruptcy summons (the credit involved was in

the order of £1,000). Murphy J was in no doubt that the failure to credit the payment was

inadvertent and also observed that “on any computation, the amount due by the bankrupt

far exceeds the minimum sum required to found an order for adjudication.” 17 However,

having referred to O’ Maoileoin and the authorities cited by Hamilton P, Murphy J

concluded that “applying those principles to the present case where I have accepted that

the sum demanded of the debtor exceeded the amount due by more than £1,000, it

follows that the cause shown must be allowed and the adjudication set aside.”

43. Some months before the High Court’s judgment in Sherlock, the Supreme Court gave an

ex tempore decision in an appeal, In the matter of a Bankruptcy Summons by St Kevin’s

Company against a Debtor (Unreported, 22 January 1995). The judgment(s) of the Court

do not appear to survive (and appear to have been delivered ex tempore) but there is a

detailed note on the decision available 18from which it appears that the debtor contended

17 At page 495

18 O’ Higgins, “Challenging a Bankruptcy Summons – A New Way Out for Debtors”, 1995 Commercial Law Practitioner 173-

176

Page 13 ⇓

that, post-judgment, an agreement had been reached under which the debtor’s liabilities

would be compromised by the payment of a much-reduced sum. There was, it seems, no

dispute that such a compromise had been agreed but the Credit Union argued that the

agreement had lapsed due to the debtor’s failure to pay the compromise sum. In

response the debtor said that he had transmitted the money to his solicitors for payment

on to the creditor and that, in any event, the agreement remained operative unless the

Credit Union advised him that it would lapse unless payment was made within a specified

period. The High Court Judge (as it happens, Murphy J) preferred the arguments of the

Credit Union and declined to dismiss the summons. The Supreme Court reversed on the

basis that there was clearly an issue for trial for the purposes of section 8(6)(b) from

which it followed that the summons had to be dismissed.

44. While the author of the note offers a comment to the effect that the decision might

prompt the legislature to amend the 1988 Act so as to take account of “the loophole

which subsection 8(6)(b) undoubtedly affords”, it is clear from the note that there was a

substantial issue between the parties which required to be determined. Furthermore –

and this appears to me to be an important point – the debtor’s defence went to the

entirety of the judgment debt. It appears not to have been the case – as it was in

Sherlock – that there was an undisputed debt “far exceed[ing] the minimum sum required

to found an order for adjudication.”

45. There are a number of subsequent Irish decisions to which I will come but it seems

appropriate to pause here, given that those later decisions all proceed on the basis that

the law was settled by the three decisions just referred to.

46. The result in Sherlock appears to me to be rather surprising. The error identified by the

debtor equated to less than 0.6% of the debt claimed by the creditor and the remainder

of the debt was undisputed. Thus, it was not in dispute that the debtor owed an amount

that exceeded the then statutory minimum of £1,500 by a multiple of more than 100. It is

not obvious to me from reading the judgment of the High Court in Sherlock why that

undisputed fact appeared to be considered as wholly irrelevant to the question of whether

the adjudication should be set aside. Instead, the Court appears to have proceeded on

the basis that the authorities cited by Hamilton P in O’ Maoileoin and, in particular, the

judgment of Cozens Hardy MR in In re A Debtor dictated that the debtor must necessarily

succeed. Notably, the conclusion of the Court was not explained by reference to any

specific provision of the 1988 Act and no reference is made in the judgment to section

8(4). Equally, no reference is made in Sherlock to the terms of the relevant Rules and

there is no discussion of whether, even if the approach articulated by Hamilton P in O’

Maoileoin was the appropriate approach to the 1872 Act, a different approach to the 1988

Act might be warranted.

47. I confess that I do not find the reasoning of Cozens Hardy MR in 1908 either attractive or

convincing in 2020. Accepting for the purpose of this analysis the premise that the

bankruptcy code is to be characterised as penal– and it may be thought that there is

some scope for debate about that in light of the ongoing reform of the bankruptcy regime

Page 14 ⇓

beginning with the enactment of the 1988 Act and continuing with further significant

change in recent years including the reduction of the basic period of bankruptcy from 12

years to 3 years and now to 1 year – it is not obvious to me how it flows from that

premise that any error in the amount set out in a bankruptcy summons must necessarily

and without qualification be deemed fatal to it and/or to any subsequent adjudication.

Notably, such an approach is not (as I understand the position) actually taken in the

context of criminal law. For instance, the misstatement in an indictment of a monetary

amount allegedly stolen, or of the value of goods allegedly stolen, will not necessarily

result in the dismissal of the indictment. On the contrary, such an error can be cured by

an amendment to the indictment, at least in the absence of some unavoidable prejudice.

19 Equally, a tax demand will not necessarily be set aside on the basis that it misstates

the amount of tax due.

48. To this it may be said that a debtor is prejudiced by being made subject to pay a sum

that is not in fact due and statements to that effect are to be found in the passages I

have set out above. But, as was observed by the Court of Appeal of England and Wales in

In re a Debtor (No 1 of 1987) [1989] 1 WLR 271, and the subsequent decision of the

Chancery Division (Hoffman J) in In re A Debtor (No 490-SD-1991) [1992] 1 WLR 507

(both cited by Revenue in this appeal), it is always open to a debtor to pay the

undisputed portion of the debt and then to dispute any additional alleged liability.

Furthermore, while the position might arguably be different if there is genuine uncertainty

as what is due, in Sherlock (and in In re A Debtor (1908)) the debtor was in a position to

calculate with precision the portion of the claimed amount that was undoubtedly due but,

it appears, made no attempt to discharge that amount.

49. No doubt, where the correct amount due is less than the statutory threshold or where (as

in In the matter of a Bankruptcy Summons by St Kevin’s Company against a Debtor) the

entire debt is disputed (on sufficient grounds) or there is a dispute about such part of the

stated debt as would (or might) bring it below the statutory threshold, the rationale for

dismissing the summons is clear. Where, however, any error or dispute would not bring

the debt below the statutory threshold, it is not obvious to me why the presentation or

further prosecution of bankruptcy proceedings should effectively be barred. Notably, that

does not appear to be the approach that appears to be taken in the context of winding-up

petitions on the company side: see Truck and Machinery Sales Ltd v Marubeni Komatsu

Ltd [1996] 1 IR 12, at 24-25.20

50. In any event, there are a significant number of decisions post-dating the decision in

Sherlock, many of them referred in in the written and oral submissions on this appeal, in

which this issue has been considered. In Minister for Communications, Energy and Natural

Resources v MW [2009] IEHC 413, [2010] 3 IR 1, the applicants claimed that the

19 See the discussion in Walsh on Criminal Procedure (2nd ed; 2016) at para 18-100 and following

20 The intended petition in Truck and Machinery Sales Ltd was not based on a section 214(a) 21 day demand (now section

570(a) of the Companies Act 2014) so, to that extent, the position was not on all fours with a challenge to the validity of a

bankruptcy summons based on an error in the debt demanded and/or a dispute about part of that debt but the logic of the

judgment of Keane J would appear equally applicable where a corporate debtor seeks to dispute a part of the sum

. demanded by such a notice where the undisputed portion is in excess of the statutory threshold

Page 15 ⇓

respondents were indebted to them in a substantial amount in respect of costs and

interest arising from the Bula/Tara litigation. Several arguments were advanced by the

respondents, including that part of the amount claimed in respect of interest was statute-

barred. Having examined the authorities, including O’ Maoileoin, St Kevin’s Company

against a Debtor and Sherlock, the High Court (McGovern J) found that “a real and

substantial issue and one which is, at least arguable and which has some prospect of

success” 21 had been established by reference to the limitation argument and held that,

having regard to section 8(6)(b) of the 1988 Act and following the decision of the

Supreme Court in St Kevin’s Company against a Debtor, he had to dismiss the summons.

He did so “with some disquiet and misgivings” given that it was evident that the

respondents were very significantly indebted to the applicants. 22

51. The threshold test articulated by McGovern J in Minister for Communications v MW was

applied by the High Court (Dunne J) in Allied Irish Banks v Yates [2012] IEHC 360.

Notably, Dunne J rejected an argument made by the bank that the summons could only

be dismissed if in fact there was no sum due or a sum less than the statutory threshold

(then €1,900) and that, given that there was no dispute that a sum in excess of that

amount was due, the application had to be dismissed. In support of that argument, the

bank referred to the wording of the bankruptcy summons. While the High Court allowed

that the wording was open to such an inference (that any dispute had to go to the

entirety of the debt or such of it as would being the debt below the statutory threshold),

in its view such an inference “flies in the face of the long and well-established authorities

to which reference has already been made” which included O’ Maoileoin and Sherlock as

well as the decisions cited in O’ Maoileoin , in particular Re A Debtor [1908] 2 KB 684. 23

On the evidence, Dunne J held that a number of issues had been raised concerning the

correctness or otherwise of the petitioner’s calculation of the amount due by the debtor

which were “real and substantial and have some prospect of success” and which would

have to be litigated separately outside the bankruptcy process. Accordingly, the

bankruptcy summons was dismissed.

52. In Marketspreads Limited v O’ Neill and Rice [2014] IEHC 14 the High Court (again,

Dunne J) rejected an argument made on behalf of the debtor that the “real and

substantial issue” test was overly demanding from the debtor’s point of view and was not

consistent with the decision of the Supreme Court in St Kevin’s Company against a

Debtor. Noting that there was no written judgment in that case, Dunne J nonetheless

stated that it was clear that the Court was of the view that there should not be an

investigation into the merits of the case once it was clear that an issue arose. However,

“an unreal or illusory issue” should not result in the dismissal of a bankruptcy summons.

24 The Judge expressed the view that the approach adopted in cases where summary

judgment was sought was of assistance in considering the test identified by McGovern J

21 At para 24.

. 22 Para 25

23 At pages 10-11. No express reference is made in this context to the actual terms of Order 76 itself

24 At page 23

Page 16 ⇓

(in Minister for Communications v MW). Dunne J then looked at the various arguments

advanced by the debtors and concluded that none reached the real and substantial

threshold and so the applications to dismiss the bankruptcy summonses failed.

53. There is then an important decision of the Supreme Court, Murphy v Bank of Ireland

[2014] IESC 37, [2014] 1 IR 642. In Murphy, the debtor argued that the amount set out

in the bankruptcy summons exceeded what was actually due because it failed to give

credit for payments made (by a tenant of the debtor to the debtor which the bank then

credited to his loan account) in the period between judgment and the issuing of the

bankruptcy summons. The judgment obtained by the bank was in an amount in excess of

€9 million, whereas the payments made amounted to €4,025. The fact of those payments

and the fact that they had not been credited against the judgment amount set out in the

demand and in the bankruptcy summons was not in dispute. However, the bank

contended that the amount stipulated in the summons (and previously demanded by it)

did not, in fact, exceed what was due by Mr Murphy because the summons amount did

not include Courts Act interest on the judgment amount. Again, it was not in dispute that

the applicable Courts Act interest far exceeded the amounts paid by the debtor.

54. In the High Court decision in Murphy [2011] IEHC 541, McGovern J refused to set aside

the adjudication on the basis that, even allowing for the missing credits, the debt due by

the debtor exceeded considerably the amount set out in the demand and in the summons.

There was, therefore, no issue of an excessive demand having been made and authorities

such as O’ Maoileain were not on point. On appeal, the Supreme Court upheld that

decision by a 2:1 majority, with Dunne J giving the majority judgment (MacMenamin J

agreeing) and McKechnie J dissenting.

55. In her judgment, Dunne J reviewed the authorities in detail. Ultimately, she agreed with

the approach taken by the High Court. The key factor, in her opinion, was that the sum

actually due to the bank was significantly in excess of what was demanded so that the

demand was not excessive. Her reasoning is evident from the penultimate paragraph of

the judgment, which is in the following terms:

“[101] It has been noted time and again that the consequences of adjudication in

bankruptcy are penal in nature and for that reason strict compliance with the

Bankruptcy code is necessary before an individual can be adjudicated a Bankrupt.

The requirement of strict compliance is to protect debtors from being adjudicated in

respect of a sum that is not due but it is difficult to see how the requirement for

strict compliance could be relied on to annul an adjudication in Bankruptcy because

of an apparent failure to give credit for a payment made in reduction of the overall

sum due when the sum actually due is greater than the sum demanded on the

Bankruptcy Summons. As I have said, the purpose of the requirement of strict

compliance is to ensure that an individual is not adjudicated bankrupt in respect of

a sum which is not due. It is difficult to see how that requirement could be used for

the benefit of a debtor and to the detriment of a creditor in circumstances where

Page 17 ⇓

the debtor was not asked to pay more than was due but, in fact, was asked for less

than was due.”

56. McKechnie J took a different view. In his opinion, once the creditor specified the sum

being demanded, it was by reference to that sum only that any issue of default falls to be

assessed. The sum demanded “must be due and owing and immediately payable” 25 If the

amount demanded exceeded the amount due (after allowance for any and all just

credits), it was an excessive demand unjustified by law. Neither the margin of excess nor

the fact (if fact it be) that the excessive demand was due to inadvertence or other

understandable reason was irrelevant. 26 In the case before the court, the demand was

for the judgment amount – not for that amount plus Courts Act interest. It followed, in

McKechnie J’s opinion, that the amount set out in the demand and in the summons was

excessive because it failed to allow a credit for the payments made after judgment was

obtained.

57. There does not appear to have been any dispute in Murphy that, in the event that the

amount set out in a bankruptcy summons exceeds the amount actually due by the debtor,

the summons would be invalid. In any event, that was clearly the view taken by

McKechnie: see the principles summarised at paragraph 54 of his judgment. Though

Dunne J did not express her views in quite the same way as McKechnie J. did, it is clear

from her judgment that she also proceeded on the basis that, if in fact there had been an

excessive demand, the bankruptcy summons would have been bad and the adjudication

of the debtor would have had to be set aside.

58. Before leaving Murphy, I would observe in passing that the recent authorities from

England and Wales that Revenue relied on in this Court do not appear to have been cited

to the Supreme Court. It also appears from the judgments that the Court was not asked

to review or reconsider the earlier Irish authorities.

59. The final decision I shall refer to is another decision of the Supreme Court, Minister for

Communications, Energy and Natural Resources v Wood & Wymes [2017] IESC 58. 27

This involved the same parties as the decision of McGovern J in Minister for

Communications, Energy and Natural Resources v MW [2009] IEHC 413, [2010] 3 IR 1

and involved appeals by Messrs Wood and Wymes from the refusal by McGovern J to

dismiss later bankruptcy summonses arising from the same orders for costs. Dunne J

gave a judgment setting her reasons for dismissing the appeals, with Denham CJ and

Charleton J agreeing with that judgment. That judgment gives further guidance as to the

threshold test to be applied where there is said to be an issue as to the amount due by

the debtor such as to warrant the dismissal of a bankruptcy summons by reference to

section 8(6)(b) of the 1988 Act.

25 Para 54(v)

26 Para 54(vi) & (vii)

27 A number of other High Court decisions were cited to us, including ACC Loan Management v Murphy [2015] IEHC 96,

MG v KM [2015] IEHC 43 and Gladney v POM [2015] IEHC 718, all decisions of Costello J. It is not necessary to refer to

those decisions in this context

Page 18 ⇓

60. Approving again (this time as a Supreme Court judge) the test articulated by McGovern J

in Minister for Communications, Energy and Natural Resources v MW, Dunne J

emphasised “that the issue must be a real and substantial issue” that “should not be

fanciful or unreal”. It may be an issue of fact or law. If an issue of fact, “it must have

some credibility”. 28 If an issue of law, where the issue was one as to which there was no

doubt, that could not justify dismissing the summons. As she had done in her judgment in

the High Court in Marketspreads Limited v O’ Neill and Rice, Dunne J expressed the view

that the principles applicable to applications for summary judgment were of assistance. In

looking at the situation overall “one must of course consider whether what is deposed to

on affidavit by the applicant is credible.” 29 Referring to the decision of the High Court in

McGrath v O’ Driscoll [2007] ILRM 203, Dunne J stated that she would adopt the

approach adopted by Clarke J there “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.” 30 Dunne J then went on to closely examine

the various arguments made by the appellants before concluding that none satisfied the

threshold of “real and substantial issue” and dismissing the appeals.

61. The Revenue’s written submissions invite this Court to “use the opportunity presented by

the facts in this case to review the position in Irish Law where a debtor/respondent to a

bankruptcy summons claims an entitlement to a credit which would have the effect of

reducing the sum to a sum less than the sum claimed in the Bankruptcy Summons” with

the Court being invited to take the view that, where there has been no attempt to

discharge “the undisputed element of a demand” – though presumably only in those

cases where that “undisputed element” exceeds the statutory threshold - a court should

adjudicate the debtor bankrupt on that basis. In other words, the Court is invited to take

the approach that appears now to be taken in England and Wales. 31

62. A significant difficulty with that invitation is that the explicit premise on which it is

extended – namely that this Court is being asked to “review the established jurisprudence

of the High Court” – is very questionable. In light of the decisions of the Supreme Court in

Murphy v Bank of Ireland and Minister for Communications, Energy and Natural Resources

v Wood & Wymes, it appears to me that there is a strong argument that if the

“established jurisprudence” in this area is to be reviewed, such an exercise can only be

undertaken by the Supreme Court. In any event, even if it were open to this Court to

review the “established jurisprudence” as suggested, it appears to me that the Court

would require far more detailed argument than it has heard in this appeal before it could

properly do so.

28 At page 4

29 At page 5

30 Also at page 5

31 Para 4.13 of Revenue’s written submissions. See also para 4.10.

Page 19 ⇓

63. In these circumstances, I propose to assess the arguments made by the Debtor here on

the basis of the approach set out by the Supreme Court in Minister for Communications,

Energy and Natural Resources v Wood & Wymes and thus to consider whether the Debtor

has demonstrated that there is a “a real and substantial issue and one which is, at least

arguable and which has some prospect of success” to the effect that the sum set out in

the Bankruptcy Summons here (and previously set out in the Demand made of the

Debtor) in facts exceeds the sum “due and owing and immediately payable” by him. That

was, of course, the test applied by the Judge.

The Alleged Failure to Make Allowance for a €71,030 “overpayment” of Stamp Duty

64. The essential facts relating to this alleged “overpayment” have already been set out.

There are two aspects – one of fact and one of law. The issue of fact is whether there was

any such “overpayment”. The issue of law is whether, even if there was any such

“overpayment”, the Debtor (rather than the Client) was entitled to a credit for it.

65. Before addressing these issues in more detail, it will be recalled that the amount set out

in the Bankruptcy Summons - €405,808.02 - was based on seven separate judgments

entered against the Debtor on various dates between September 2011 and January 2015.

If – as is now suggested by the Debtor – a “refund” of €71,030 was due to him as and

from February 2009 – before even the first of the actions against him brought by Revenue

- his failure to assert an entitlement to that refund and/or a consequent entitlement to a

set-off or credit in that amount against Revenue’s claims against him appears

inexplicable. The explanation offered – to the effect that the claims against the Debtor

were summary in nature and thus no set-off could easily be asserted – is, in my opinion,

wholly implausible. It is also inexplicable why, in the detailed submission made by counsel

to Revenue on his behalf in November 2014, no reference was made to any refund being

then due to the Debtor.

66. As to whether there was any “overpayment” of the Client’s tax liabilities, the first point to

make is that there is no evidence before the Court as to the precise extent of those

liabilities. There is evidence of the extent of his liabilities in respect of Stamp Duty arising

from two specific transactions – the purchase by him of the H Lands and the O’ C Lands.

That may or may not be the extent of his liabilities in respect of Stamp Duty. What is

clear, however, is that, unfortunately, the Client had significant other liabilities to

Revenue over and above his liabilities arising from the purchase of the H Lands and the O’

C Lands. These liabilities related to income tax and CGT. While significant sums appear to

have been attached in respect of those liabilities, the evidence does not enable the Court

to form any view as to whether undischarged income tax and CGT liabilities remain on the

part of the Client.

67. A second – and related – point is that the evidence before the Court clearly suggests that

there is an undischarged and significant liability for Stamp Duty in relation to the O’ C

Lands. In so stating, I do not overlook the point the Debtor makes to the effect that the

Revenue agreed that this liability would be discharged from the monies due to the Client

from the Department of Agriculture and also represented to him that this had in fact been

Page 20 ⇓

done. However, the evidence of Mr Hayes to the effect that the attached monies were, as

a matter of fact, wholly applied (and, in the view of Revenue, had to be applied) to the

discharge/reduction of the Client’s income tax and CGT liabilities, (and not to his Stamp

Duty liabilities), does not appear to be challenged and it is difficult to see any basis on

which it could be challenged.

68. Accordingly, the evidence before the Court clearly indicates that, far from the Client

having overpaid his tax liabilities or being due a refund from Revenue, he has a significant

residual Stamp Duty liability arising from the purchase of the O’ C Lands. 32 In any event,

even if some or all of the monies attached by Revenue had been applied in discharge of

the Client’s Stamp Duty liabilities, his income tax and CGT liabilities would have been left

unreduced pro tanto. Either way, the evidence before the Court is wholly at odds with any

suggestion that the Client had overpaid his tax liabilities and was due a refund and with

any suggestion that the Debtor might have had any reason to believe that to be the case.

69. I turn now to the specific documents relied upon by the Debtor. The first is a letter from

Revenue to the Debtor of 27 March 2009 to the Debtor which indicated that Revenue was

prepared to mitigate the penalty payable in relation to the Stamp Duty on the H Lands

from €76,030 to €49,957.07. On that basis, the letter then calculated what was due after

applying what is referred to in the letter as a “deposit” of €91,850 – which was the sum

that had been paid by the Debtor as of that date. That amount – the balance due after

crediting the amount paid by the Debtor – is €44,957.07.

70. Next there are two Revenue letters dated 18 May 2012, one dealing with the H Lands and

the other dealing with the O’ C Lands. Both letters were signed by the same Revenue

officer, to whom I shall refer as ID. As to the former, the letter states that whereas the

duty had been paid, only €5,000 had been paid toward interest of €49,000. It notes that

a total of €91,850 (the amount paid by the Debtor) had been received. The letter goes on

to state that the outstanding liability, including late penalty and interest, was now

“frozen” at €71,030 (€76,030 minus the €5,000 credited against interest/penalties).

These figures were consistent with the figures set out in the letter of 27 March 2009, the

difference between the balance stated in the earlier letter and the “outstanding liability”

set out in the later letter being related to the mitigation of the penalty. 33 The letter of 18

May 2012 concludes by stating (in bold type) that “[o]n instruction from John A Tobin I

agreed to transfer €71,030 to [this account] from payments already received from the

Forest Service, Dep of Agriculture Food & the Marine”. In other words, the letter is

indicating that the “outstanding liability” would be discharged from the Forestry Service

payments.

71. The other letter of 18 May 2012 discloses a total Stamp Duty liability of €317,080

(inclusive of interest and late surcharge) then owing in relation to the purchase of the O’

C Lands. Again, the letter concludes by reciting the writer’s agreement, on the instruction

32 Which, in his affidavit of 26 January 2017, the Debtor quantifies €185,400 plus interest and charges, totalling

€317,080.00

33 The submission made to Revenue in November 2014 to which I have previously referred states that a Notice of

Assessment assessing a balance due of €71,030 issued in January 2012. That Notice is not before the Court

Page 21 ⇓

of the Debtor, to transfer €317,080 to the relevant Stamp Duty account from payments

already received from the Forestry Service.

72. As already noted, there is a dispute as to whether and/or when Revenue informed the

Debtor that it was not possible to apply the attached monies to the Client’s Stamp Duty

Liabilities. Pat Molan – at the relevant time a Principal Officer in Revenue – avers that he

communicated this to the Debtor on or about 9 March 2012 but that is disputed by Mr

Tobin. That issue cannot be – and does not need to be - determined on this appeal.

73. The Debtor paid a further amount of €5,000 towards the Client’s Stamp Duty liability in

respect of the H Lands in the course of 2015. 34 This payment is of some significance

because, if it was the case that the Debtor considered at that stage that not merely had

the liability been fully discharged, but that in fact a significant refund was due (whether to

the Client or to the Debtor), then obviously there would have been no basis for making

any additional payment at that stage. It is also significant that, as the High Court Judge

observed, in a letter written to Revenue shortly before this payment was made – on 27

March 2015 – the Debtor made no suggestion that any credit/refund was due to him or,

more generally, that he had any answer to the various judgments that had been obtained

against him by that point.

74. Reliance is then placed by the Debtor on his averment (in para 5 b) of his affidavit of 28

June 2017) that, in or about October 2015, at a meeting with Revenue in Limerick “it was

acknowledged to me that I was entitled to a tax credit in relation to the Stamp Duty

which had been overpaid and that the credit in this regard would be arranged.” However,

the affidavit does not identify who made this acknowledgement on the part of Revenue or

explain the context in which it arose or how, at that stage, it was considered that there

had been an “overpayment” of Stamp Duty.

75. I next come to the document most heavily relied on by the Debtor, a further email from

ID sent in January 2017 (i.e. some considerable time after the presentation of the

Petition). Before discussing the content of that email, I should note that, in December

2015, the Debtor had been written to by a different officer of Revenue, a Ms Hendrick,

and advised that all future correspondence to or contact with Revenue’s Limerick District

should be directed through her. In any event, ID’s email of January 2017 referred to the

payments made by the Debtor (a total of €96,850) and then stated that:

“Prior to May 2012 an amount of €71,030 was transferred from the Department of

Agriculture & Forestry grants of [the Client] and requested to be applied to

Stamp Duty.

Effectively a total of €167,880 was paid & earmarked for Stamp Duty,

notwithstanding that the agreed liability was €96,850.00 The Stamp Duty

Certificate, which ultimately issue in September 2015, confirms that amount.

34 It appears that a draft in this amount was tendered by the Debtor by way of a “without prejudice” offer in April 2015

and accepted by Revenue in September 2015, following which the Stamp Duty Certificate issued

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In the circumstances therefore it would appear on the face of it that John Tobin is

due a credit of €71,030.00.” (emphasis supplied)

76. The precise circumstances in which this document came to be written are unclear, but it is

reasonable to assume that it was procured by the Debtor. In any event, the Debtor was

well aware that the suggestion that a “credit” was due to him was untrue. While

apparently endeavouring to give the impression that the amount of €71,030 had in fact

been applied against the Client’s Stamp Duty liabilities (in which context I note the

highlighted text above), the email stops short of actually stating that it was and the

Debtor in any event knew that it had not been – the whole thrust of the submission made

on his behalf to the Revenue in November 2014 was that the Revenue should have so

applied the attached monies but had wrongfully failed to do so. 35 Secondly, the Debtor

was well aware that the “agreed liability” had not been €96,850. Revenue’s letter of 27

March 2009 had indicated a total liability (after mitigation of penalty) of €136,807.7 and

ID’s letter of 18 May 2012 had indicated an even higher total liability of €162,880

(€91,850 + €71,030). If €71,030 had been available to be applied to the Stamp Duty

liability in relation to the H Lands in May 2012, it would have simply discharged the

“outstanding liability” in that amount and there would have been no question of an

overpayment. In fact – as certainly the Debtor knew and as ID must surely have been

aware also – it was precisely because nothing more could be recovered from or on behalf

of the Client that Revenue had ultimately (and, the evidence suggests, reluctantly)

accepted a further payment from the Debtor of €5,000 in 2015 as discharging the Client’s

remaining liability in respect of the H Lands.

77. I should next record that on 16 February 2017 - 3 weeks after ID’s email - Revenue’s

District Manager, Tom Murphy, wrote to the Debtor with reference to that email.36 Having

referred to the December 2015 letter from Ms Hendrick (already referred to above) Mr

Murphy went on to state that “[ID] issued that email without reference to Ms Hendrick,

myself or any other officer currently dealing with the case and, as such, [ID] did not and

does not have the authority to deal with this case on behalf of Revenue.” This statement

by Mr Murphy was, it appears, not contradicted or challenged at any stage by the Debtor,

either in contemporaneous correspondence or on affidavit subsequently. The letter then

went on to explain why it was not the case that any credit was due to the Debtor,

explaining (as had been explained previously to the Debtor) that all sums received by

Revenue on foot of the Notices of Attachment issued by it had been brought to account

against outstanding liabilities of the Client in respect of income tax and CGT and were not

available for off-set against any other tax liabilities. As I have said, that does not appear

to be disputed as a matter of fact.

78. While the Debtor asserts that a credit/refund was due to him, that assertion is, in my

opinion, wholly lacking in credibility for the reasons I have indicated and does not derive

35 For completeness, I should record that a comprehensive response to this submission was issued by Revenue in March

2015

36 This letter was not before the Judge. It was exhibited in an affidavit sworn by Mr Murphy on the Revenue’s behalf in

March 2018, apparently in response to a query raised by this Court in the context of the Debtor’s application to extend time

for appeal. It is not clear why this letter – which is obviously significant was not made available to the High Court Judge

Page 23 ⇓

any credible support from the documents relied on by the Debtor, including the email of

January 2017. There was no overpayment of the Client’s liabilities and the Debtor was at

all times fully aware of that fact. If there was no overpayment, then no question of any

refund or credit – whether in favour of Client or Debtor – could possibly arise.

79. It follows that, as a matter of fact, the Debtor has not established any “real and

substantial issue” that the amount set out in the Bankruptcy Summons overstated the

Debtor’s liability by failing to allow him a credit in the amount of €71,030 in respect of

any supposed overpayment of Stamp Duty.

80. Even if the position were otherwise, and assuming that (contrary to the finding just

made) the Debtor had established some credible basis for contending that there had been

an overpayment of Stamp Duty, a further hurdle would then confront the Debtor here,

namely how such an overpayment might plausibly give rise to an entitlement to a refund

or credit on the part of the Debtor, rather than the Client (who was, of course, the

chargeable person at all times).

81. The High Court Judge noted in her judgment that Counsel for the Debtor had not been

able to point to any authority that might support the proposition that the Debtor - not

being the chargeable person - might nonetheless be entitled to receive the benefit of any

refund/credit arising from an overpayment of liability. Equally, no argument was

advanced in this Court to the effect that the Debtor could have any statutory or other

entitlement to receive any refund/credit, in circumstances where he was not the

chargeable person.

82. What was argued before this Court was that, on the particular facts here, the Debtor

would have been subrogated to the position of Revenue and would have been in a

position to seek a garnishee order directing the payment of the monies to the Debtor.

That, it is said, would have “accommodated a credit and/or a set-off”. 37 The decision of

the Court of Appeal of England and Wales in Orakpo v Manson Investments Ltd [1977] 1

All ER 666 was cited in support of that submission and Orakpo was also relied on by Mr O’

Donnell SC in his oral submissions.

83. The facts in Orakpo were complex. Briefly, the defendants were registered moneylenders

who had lent money to the plaintiff, a property dealer, to enable him to complete a

number of separate property transactions. The transactions were completed but the

plaintiff brought proceedings asserting that the lending transactions were unenforceable

because they did not comply with the relevant provisions of the Moneylenders Act 1927.

By way of counterclaim, the defendants claimed to be entitled, by way of subrogation, to

unpaid vendor’s liens and/or equitable charges (depending on the circumstances of the

particular transaction) in relation to the transactions. The counterclaims failed on the

basis that they were statute-barred, even though the substantive issues were determined

in the defendants’ favour.

37 Debtor’s written submissions filed on 11 May 2018, at para 34

Page 24 ⇓

84. The facts in Orakpo are obviously remote from the facts here but the Debtor relies on the

following holding of the Court (as stated in the headnote):

“Where a person lent money to another ('the borrower') for the purpose of paying

off an existing debt of the borrower to a third party, the doctrine of subrogation did

not operate to make the lender an assignee of the third party's rights; the effect of

the doctrine was that the lender was treated in equity as if he were an assignee of

the third party's rights to the extent necessary to enable him to exercise those

remedies against the borrower which the third party could have exercised but for

the payment to him, and subject to all equities and set-offs which the borrower

might have against the lender. It followed that, for the defendants to be able to

assert against the plaintiff the rights to which they had been subrogated, they did

not have to show a cause of action based on any contract, i.e. on the loan

contracts”.

85. I do not understand how this statement of principle is said to assist the Debtor here. In

brief, what the Court of Appeal held was that where a lender (L) lent money to a borrower

(B) for the purpose of paying off an existing debt of B to a third party lender (TP), L was

treated in equity as if it were the assignee of TP’s rights to the extent necessary to enable

L to exercise those remedies against B which TP could have exercised absent repayment

of TP. Here, there was no loan. Rather, so far as the evidence goes, it appears that the

Debtor unilaterally decided to make a payment against the Stamp Duty liabilities of the

Client arising from the purchase of the H Lands. A more fundamental problem, from the

Debtor’s point of view, is that such a payment at most might enable the Debtor to

exercise the remedies that Revenue had against the Client. It would not, on any view,

give the Debtor a remedy against Revenue or any claim against Revenue (including any

claim to a credit or set-off as against Revenue in respect of the Debtor’s indebtedness to

it). In other words, L steps into the position of TP vis à vis B (subject to any equities

and/or set-offs that B may have against L). It seems to me that a real issue arises as to

how such subrogation might apply where TP is (as here) a statutory body which has a

variety of statutory remedies available to it that may not be available to other persons

but, even if one overlooks that potential difficulty, the fundamental point is that the

doctrine of subrogation would not appear to give the Debtor any remedy or claim against

Revenue. Rather it would give the Debtor a remedy against his Client. For whatever

reason – and no explanation appears to have been provided to the High Court and

certainly none was offered to this Court - the Debtor appears to have elected not to

pursue any claim against the Client.

86. In these circumstances, I do not accept that, in the event that the Debtor could be

subrogated to the position of Revenue, he would have been in a position to seek a

garnishee order directing the payment of monies to him – if by that is meant the payment

of monies to the Debtor by Revenue – or that this would have “accommodated a credit

and/or a set-off” of the kind relied on by the Debtor here. Of course, if monies were

indeed repayable by Revenue to the Client (and I have already expressed the view that

there is no basis whatever in the evidence for considering that such was the position)

Page 25 ⇓

then, in the event that the Debtor obtained judgment against the Client for repayment of

the monies paid by the Debtor to Revenue, it may be that he could have sought to

garnishee that repayment. But that is unrelated to the doctrine of subrogation and no

authority has been opened to this Court to suggest that the availability of garnishee in

such (hypothetical) circumstances could properly be considered to give rise to a claim for

“a credit and/or a set-off” against Revenue in any event.

87. In light of these findings, it is not necessary to consider Revenue’s submission that the

remedy of subrogation (as an equitable remedy) is not available where there is a common

law remedy available to the claimant (as, Revenue says, there was here).

88. Therefore, notwithstanding the fact that additional arguments were advanced to this

Court, I agree with the Judge’s conclusion that, even assuming an overpayment of Stamp

Duty, no basis has been demonstrated for contending that the Debtor would be entitled to

a refund in respect of that assumed overpayment.

89. It follows, in my view, that the attack on the Bankruptcy Summons on the basis that it

overstates the amount due by the Debtor fails both as a matter of fact and as a matter of

law. The Summons did not overstate the amount due and the suggestion that the Debtor

believed that it did is, in my opinion, wholly lacking in credibility. No overpayment had

been made (as the Debtor was fully aware) and there was no basis on which the Debtor

could have considered that he was entitled to any credit/refund. It follows that, regardless

of whether the test is objective, subjective or some hybrid of the two (and it is not

necessary to decide which it is), the Debtor has no plausible claim to have been

“confused” by the demand made by Revenue and then repeated in the Bankruptcy

Summons. Nor, in my opinion, is there any basis for any suggestion that the Debtor was

“misled” by the particulars of demand here. To the contrary, the evidence before the

Court clearly indicates that the material primarily relied on by the Debtor – the email of

January 2017 - only came into existence subsequent to the making of the demand, the

issuing of the Summons and the presentation of the Petition, that its issue was not

authorised by Revenue and – most significantly – that the Debtor was at all times aware

that the suggestion in the email that there had been an overpayment of Stamp Duty, and

the consequential suggestion that the Debtor was due a “refund” of Stamp Duty, had no

foundation whatever.

90. The exact circumstances in which the email of January 2017 came to issue are not

disclosed in the papers before the Court and it would not be appropriate for the Court to

go further than is necessary to dispose of this appeal. What is clear from the evidence

before the Court is that the case made by the Debtor on this issue of

overpayment/credit/refund is fundamentally lacking in credibility for the reasons I have

set out above and no real or substantial issue has been established.

The Revenue’s Alleged Delay in issuing Stamp Duty Certificates

91. The second (and subsidiary) ground relied on by the Debtor as providing a basis for

setting aside the Bankruptcy Summons (and consequently his subsequent adjudication as

Page 26 ⇓

a bankrupt) relates to the alleged delay of Revenue in issuing a Stamp Duty Certificate in

respect of the H Lands and its failure to issue such a Certificate in respect of the O’ C

Lands.

92. The High Court Judge saw nothing in this ground. I agree. In my view, no error on the

part of Revenue has been demonstrated, less still any form of error that might give rise to

an action for damages at the suit of the Debtor.

93. In the first place, insofar as it is said that Stamp Duty Certificates should have issued (in

relation to the O’ C Lands) or should have issued earlier (in the case of the H Lands) on

the basis that the Client’s Stamp Duty liabilities were discharged in 2012, that is not

correct as a matter of fact. The evidence indicates that, as a matter of fact, the liabilities

were not discharged in 2012 and that, whereas Revenue treated the H Lands liability as

having been discharged when it accepted the Debtor’s offer of a further payment of

€5,000 (an offer made in April 2015 and accepted in September 2015 and which resulted

in a Stamp Duty Certificate issuing in October 2015), the liability in relation to the O’ C

Lands remains undischarged.

94. Secondly, insofar as it is said that these liabilities ought to have been discharged in 2012,

and that the Revenue’s failure to do so results in a liability on its part to the Debtor, the

following points appear to me to be relevant:

•

It is evident that, as of November 2014 at the latest (on the Revenue’s case it was much

earlier, in March 2012), the Debtor was aware that Revenue had not, in fact, applied the

monies attached by it from the monies due to the Client by the Department of

Agriculture. That is apparent from the detailed submission made on his behalf in

November 2014. It was open to the Debtor to bring proceedings against Revenue at that

stage (and the November 2014 submission explicitly threatened such proceedings). For

reasons which have not been explained, he did not do so.

•

As and from (at latest) March 2015, when Revenue responded to the

November 2014 submission, the Debtor was on notice that Revenue’s

position was that it was precluded as a matter of law from applying any of

the attached monies against the Client’s Stamp Duty liabilities because the

notices of attachment related to the Client’s income tax and CGT liabilities

and not to any Stamp Duty liabilities of his. No argument was made in the

written or oral submissions of the Debtor in these proceedings to the effect

that Revenue’s position was incorrect as a matter of law.

•

Even if Revenue had agreed to apply the attached monies against the Stamp

Duty liabilities (and there was a significant issue on the affidavit evidence as

to what had been agreed), if (as Revenue contended) it could not lawfully do

so then any such agreement was beyond the powers of Revenue and prima

facie could not be enforced against it, whether by way of claim in contract,

estoppel or legitimate expectation: Wiley v Revenue Commissioners [1994] 2

IR 160. No argument to the contrary was identified by the Debtor.

Page 27 ⇓

•

Equally, the Debtor failed to articulate any basis on which a claim for

negligence or breach of duty might be made by him against Revenue, having

regard to authorities such as Pine Valley Developments v Minister for

Environment [1987] IR 23, Glencar Explorations plc v Mayo County Council

(No 2) [2002] 1 IR 84 and the more recent decision of Cromane Seafoods Ltd

v Minister for Agriculture [2016] IESC 6, [2017] 1 IR 119. That failure is

particularly acute in circumstances where, as the High Court Judge rightly

emphasised, the Debtor was not the chargeable person.

•

As the Judge observed, significant issues arise in relation to timing and

causation which the Debtor has also failed to address.

•

Finally, the Debtor failed to articulate any basis on which any potential claim

against Revenue for (unliquidated) damages might provide a valid basis for

seeking to set aside the Bankruptcy Summons here.

95. In conclusion, this second issue is also, in my opinion, one where the Debtor simply

asserts that an issue arises, without any credible basis for that assertion. No “real and

substantial issue”, with any prospect of success at trial, has been demonstrated to arise.

CONCLUSIONS

96. For the reasons given in this judgment, I would dismiss the appeals from the judgments

and orders of Costello J in the High Court.

97. Though it has no impact on these appeals, in my opinion the question of what it is

necessary and/or sufficient for a debtor to show by way of answer to a petition for

bankruptcy, or as a basis for seeking the dismissal of a bankruptcy summons or the

setting aside of an adjudication of bankruptcy, demands attention. Existing Irish authority

indicates that where a debtor succeeds in establishing an issue (in the sense explained in

Minister for Communications v Wood & Wymes) to the effect that the amount set out in

the bankruptcy summons exceeds – by whatever margin – the debt actually due by the

debtor, it necessarily follows that the summons must be set aside (or, as the case may

be, the petition must be dismissed or a prior adjudication must be set aside). That is so, it

appears, even where the undisputed portion of the debt may be many multiples of the

statutory threshold. As will be evident from the discussion earlier in this judgment, I

share the disquiet and misgivings expressed by McGovern J in the High Court in Minister

for Communications v MW about such an approach. Be that as it may, if that is the

correct approach, it appears to me to follow that the terms of Order 76 require urgent

review. As I noted at the commencement of this judgment, Order 76 (and the forms

provided for it, including most significantly the form of the bankruptcy summons

prescribed for use) appears clearly to be premised on the understanding that, in order to

dismiss a bankruptcy summons, the debtor is obliged to establish more than the

existence of some issue that might go to the amount of the debt at issue and has to show

that he/she is not indebted as claimed (i.e. not at all) “or only so indebted to an amount

of €20,000 or less.” It is on that basis – and only on that basis – that Order 76 provides

Page 28 ⇓

for a debtor to apply for the dismissal of a bankruptcy summons. None of the authorities

referred to earlier has squarely addressed this aspect of Order 76. If the drafters of Order

76 were operating on a mistaken understanding of the law then Order 76 clearly needs to

be revised. If, on the other hand, the drafters of Order 76 correctly understood the law, it

appears to follow that the jurisprudence has taken a wrong turn, requiring correction from

some quarter, whether judicial or legislative.

Result: Dismiss appeals