High Court of Ireland Decisions

1. The issue for determination on this application is whether the Court should make an order for the substitution for service of notice of the Petition by public advertisement.

2. As I understand it there is no precedent for substituted service of a petition by way of public advertisement in a bankruptcy matter. Notwithstanding this, it was urged by Mr. Ferriter, Counsel for the Petitioner, that, having regard to the procedural changes wrought by the Bankruptcy Act, 1988, which came into operation on 1st January 1989, there is no reason in law or in fairness why an order for substituted service by way of public advertisement of a petition in a bankruptcy matter should not be made.

3. There is provision in section 8 for a debtor on whom a bankruptcy summons has been served making application to have the summons dismissed.

4. The mode of service of a bankruptcy summons is dealt with in Order 76 of the Rules of the Superior Courts, 1986, the current Order 76 having been inserted following the coming into operation of the Act of 1988 by the Rules of the Superior Courts (No.3) 1989 (S.I. No. 79 of 1989). Rule 11 of Order 76 provides for the grant of a bankruptcy summons on foot of an ex parte application. Rule 14(1), which deals with service of the bankruptcy summmons when granted, provides as follows:-

5. The form of advertisement prescribed, Form No. 8, is headed "The High Court Bankruptcy" and is directed to the named debtor and refers to the bankruptcy summons issued against him by the named creditor. It gives notice that, a bankruptcy summons having been granted against the debtor by the Court, the Court has ordered that the publication of the notice in the named newspaper shall be deemed to be service of the summons on the expiration of a certain number of days after such publication. It also gives notice that a copy of the summons may be inspected at the Examiner's Office.

6. Subsection (2) of section 14 of the Act of 1988 provides that a copy of the adjudication order shall be served on the debtor, either personally or by leaving it at his residence or place of business in the State. Rule 38 of Order 76 provides that, in the case of adjudication by a creditor, a copy of the order of adjudication in Form No. 15 shall be served on the bankrupt by the Bankruptcy Inspector or any of his assistants. Form No. 15 contains the text of the order of adjudication on the front and directs attention, in the case of a creditor's petition, to a notice endorsed thereon, which notifies the bankrupt of the time allowed for showing cause to the Court against the validity of the order of bankruptcy - three days from the date of service of the copy of the order, unless the Court shall think fit to extend such time in accordance with section 16 of the Act of 1988.

7. In summary, the current bankruptcy regime based on the Act of 1988 and the current order 76 provides as follows:-O

8. The major procedural changes in the initiation of bankruptcy proceedings introduced consequent on the enactment of the Act of 1988 were the designation of what was hitherto known as a debtor's summons as a bankruptcy summons and the requirement that a bankruptcy petition by a creditor be served on the debtor. It is interesting to note that, while the former change was recommended in the Bankruptcy Law Committee Report (Prl. 2714), the latter was not. The view of the Committee on the change from "debtors summons" to "bankruptcy summons" was that bankruptcy is such a severe form of procedure that a debtor should not be left in any doubt that failure to meet the requirements of such a summons would lead to bankruptcy (see paragraph 2.10.6). In recommending that the petition method should be retained, the Committee commented that in bankruptcy proceedings it is essential to ensure that speedy action is taken to collect a bankrupt's assets and that no undue delay occurs which will facilitate fraudulent dealings with a bankrupt's property, so that an application without unnecessary formalities or delay which is implicit in approach by way of petition to the Court is a particularly suitable method both of procedure for adjudication and for attaining these results (see paragraph 2.6.1 and paragraph 2.6.3 from which it is clear that the Committee envisaged an application by way of petition continuing to be made ex parte).

9. It is also interesting to note that since the introduction of the debtor's summons procedure by the Bankruptcy (Ireland) Amendment Act, 1872 there has been provision for notice of the granting of a summons by public advertisement. Order 22 of the General Orders, 1872 gave the court the option, if satisfied by affidavit that the debtor was keeping out of the way to avoid service, of ordering that notice of the granting of the summons in the prescribed form be gazetted, and that the publication of such notice in the Gazette should be deemed to be service on the debtor on the seventh day after such publication. By 1905 the rule in relation to the mode of service of a debtor's summons in broad terms had assumed the form in which it was to remain for the rest of the 20th century and, in particular, rule 19 of Order LXXXVIII of the Rules of the Supreme Court, 1905 provided that the court might make such order "for the substitution for service of notice by letter, public advertisement, or otherwise, as may be just."

10. Prior to the coming into operation of the Act of 1988 both applications for debtors summonses and orders of adjudication by creditors were made ex parte and, consequently, there were no statutory provisions or rules governing service of such applications. The statutory provisions and rules governing service of debtor's/bankruptcy summonses and orders of adjudication have remained substantially unchanged since the 19th century. I have already referred to the rules in force from time to time in relation to service of debtor's summonses and the current rule for service of a bankruptcy summons. In relation to service of the order of adjudication, section 129 of the Irish Bankrupt and Insolvent Act, 1857 and Order 46 of the General Orders of 1872 prescribed that service should be effected by a messenger of the court, unless otherwise ordered, and be made personally, or by leaving it at the last known place of abode or place of business of the bankrupt, which in broad terms is substantially the same as the mode currently prescribed.

11. While Mr. Ferriter submitted that in this case the court has jurisdiction to order that notice of the petition be given by public advertisement and that it is appropriate to make such an order in this case in which the act of bankruptcy relied on by the petitioner is failure to pay to the petitioner the sum demanded in a bankruptcy a summons issued by this Court on 5th July, 1999 within 14 days of the service of the bankruptcy summons in accordance with the terms of an order for substituted service made on 5th July, 1999, as the petitioner's application was of necessity and properly made ex parte there was no legitimus contradictor on the hearing of the application. It is perhaps arguable that the service of a court process, such as a bankruptcy summons or an order of adjudication, is to be treated differently to the service of an initiating document, such as a petition. It is perhaps arguable that, as regards service, a petition in which the act of bankruptcy relied on is failure to comply with a bankruptcy summons within the prescribed period is to be treated differently to a petition in which another case which gives rise to an act of bankruptcy is relied on, for instance, that the debtor in the State or elsewhere made a fraudulent conveyance, gift, delivery or transfer of his property or any part thereof.

12. Notwithstanding those reservations, I have come to the conclusion that in a case such as this, in which the act of bankruptcy relied on is failure to comply with a bankruptcy summons issued by the court, the court has jurisdiction under rule 25 of Order 76 to order that notice of the petition be given by public advertisement. However, I am of the view that this mode of service should only be resorted to if other modes, such as those outlined in rule 14 (1) of Order 76, have not proved feasible. In a situation, as here, where there is a judgment of this Court in favour of the petitioning creditor for a substantial sum, a bankruptcy summons was issued and served, the act of bankruptcy relied on by the petitioning creditor is non-compliance with the bankruptcy summons and two orders for substituted service of this Court, one permitting service on the debtor's daughter at residential premises believed to be the last known place of residence of the debtor and the other permitting service on an adult employee of a professional firm at the business premises of that firm believed to be the last known place of business of the debtor, have not resulted in effective service, balancing the respective interests of the petitioning creditor and the debtor it is just to permit notice of the petition by public advertisement. The notice should be in a form adapted from Form 8.

13. I will make an order for the giving of notice of the Petition by public advertisement in the form of the notice submitted by Mr. Ferriter, which I consider to be appropriate.