The High Court has set aside an order renewing a summons in a liquidator’s claim that accountants’ alleged negligence over VAT and other tax matters caused a loss to Revenue of about €2 million.
Mr Justice Coffey ruled on May 8, 2018, that the liquidator had not established a good reason for failing to serve the summons within the time allowed. The decision concerned an application by the defendants under Order 8, rule 2 to set aside an earlier renewal order made by Mr Justice Humphreys on June 26, 2017.
Congil Construction Ltd, which is in liquidation, alleges that the accountants allowed VAT and other tax irregularities to occur, causing the claimed loss. The defendants had acted as auditors and provided financial and taxation advice to the company from March 2004 until its liquidator was appointed in April 2010. They denied providing monthly bookkeeping or completing VAT and PAYE/PRSI returns. The court said the proceedings before it concerned only the tax-irregularity complaint, not a separate allegation about the valuation of work in progress.
The liquidator obtained leave to issue the summons in January 2015 and later obtained leave to serve it on December 14, 2015. It then had until January 18, 2016, to serve the summons. The liquidator said his solicitor confirmed on January 14 that service would be carried out, and later told him it had been completed on January 19. The summons was therefore served one day late. The solicitor did not provide an affidavit explaining the delay.
In seeking to uphold the renewal, the liquidator relied on having only about five weeks to serve the summons, his contact with the solicitor shortly before the deadline, and the solicitor’s failure to serve it in time. The judge found that the short period alone was not a good reason, as there was no evidence of an impediment to service. The solicitor’s assurance that he would serve the summons did not explain the delay.
The judge concluded that the failure likely arose either because the solicitor did not carry out instructions or mistakenly believed service could be made on January 19. Without an explanation from the solicitor, the court found no good reason to renew the summons. Mr Justice Coffey set aside the June 2017 renewal order. The ruling addressed the renewal application only; it did not determine the underlying negligence allegations.