The High Court has dismissed three separate bankruptcy summonses seeking €50,000 each from an anonymised applicant after finding that the judgments on which the demands were based were open to an arguable challenge.
The proceedings arose from a property development project in Co Tipperary involving P.F., the three respondents and another participant. The parties entered arrangements concerning the purchase and development of land, but financial difficulties later emerged.
In August 2007, P.F. and another participant agreed to purchase the respondents’ interests in the partnership, a company and a house connected with the development. P.F. maintained that the agreement depended on Ulster Bank consenting to the arrangement and that this consent was never obtained. The respondents disputed his position.
Each respondent later obtained a €50,000 judgment against P.F. on 11 August 2008. They said the judgments had been entered by consent following communications between the parties’ solicitors.
P.F. denied authorising any consent judgment. He said he only became aware of the judgments after enforcement notices were served in September 2008 and subsequently brought separate proceedings seeking to have them set aside.
Ms Justice Dunne stressed that the bankruptcy court was not deciding which side was ultimately correct. Under section 8(6)(b) of the Bankruptcy Act 1988, a bankruptcy summons must be dismissed once the court is satisfied that a genuine issue arises for trial outside the bankruptcy process.
The judge found that P.F.’s claim that the consent judgments had been entered without his knowledge or authority was arguable and had some prospect of success.
As each bankruptcy demand depended on those judgments, all three summonses had to be dismissed. The court warned, however, that P.F. should pursue his separate set-aside proceedings promptly and that further bankruptcy summonses could follow if he failed to do so within a reasonable period.