The High Court has refused a debtor’s application to dismiss a bankruptcy petition, ruling that the petitioner had not demanded more than the amount lawfully owed, even if part of the interest calculation was wrong.
M. G. presented the petition on 22 May 2014, seeking the adjudication of K. M. as bankrupt. The petition relied on the debtor’s failure to pay following personal service of a bankruptcy summons on 15 April 2014. The claimed debt arose from two High Court judgments and was stated as €425,689.21, calculated to 15 October 2013, plus continuing interest.
The debtor did not dispute the sums in his replying affidavit. At the hearing, however, his counsel argued that the claim included €159.60 in interest on costs that was not legally chargeable. The debtor submitted that the statutory demand and bankruptcy summons were therefore defective and that the petition should be dismissed.
The petitioner argued that the claim had never exceeded the debt actually due. Although the demand included the disputed €159.60, the petitioner said a further €777.90 in interest on the judgment sums had accrued by the date the demand was sent. The court accepted that the debtor could make the legal argument despite not disputing the debt in his affidavit, but found that the demand had remained below the amount lawfully owed.
The judge distinguished cases in which a bankruptcy demand included a sum that was not due and therefore exceeded the true debt. Relying on the Supreme Court’s decision in Murphy v. Bank of Ireland, the court held that an error in a demand did not invalidate the bankruptcy process where the amount sought was still less than the amount due.
The court also considered whether interest could be charged on the costs. It found that the first judgment’s costs had been measured by the Master of the High Court and that the relevant enforcement order expressly provided for interest on them. The costs attached to the second judgment were fixed under the Rules of the Superior Courts and formed part of the judgment sum. The court concluded that section 30 of the Courts and Courts Officers Act 2002, as amended, did not make agreement or taxation the only basis on which interest could run on costs.
The court refused the debtor’s application to dismiss the petition. It did not, in this judgment, adjudicate the debtor bankrupt; it determined only the application to dismiss the petition.