The Supreme Court has allowed an appeal by Patrick Murphy after finding that the Bank of Ireland’s bankruptcy demands were overstated by payments credited against the judgment debt.
The judgment, delivered by Mr Justice William McKechnie on 7 March 2014, concerned Mr Murphy’s challenge to his adjudication as bankrupt. The Bank had obtained a consent judgment against him for €9,025,720.70, plus €160 in costs. It later demanded €9,025,880.70 in a notice of demand and a bankruptcy summons.
Between the judgment and the relevant demand dates, the Bank credited payments totalling €3,025 by 21 October 2010 and €4,025 by 29 November 2010 to Mr Murphy’s loan account. The judgment says those credits reduced the principal. The Bank argued that statutory interest had accrued and that, even after the credits, the total debt exceeded the amounts demanded.
The High Court dismissed Mr Murphy’s application to show cause against the bankruptcy adjudication. It considered that the debt, including accrued interest, exceeded the sums demanded. On appeal, the Supreme Court held that this approach conflated the total debt with the particular sum the Bank had chosen to demand for the bankruptcy process.
The Supreme Court said a creditor must specify the sum relied on in the bankruptcy summons, and default must be assessed against that sum. Because the Bank had chosen not to include statutory interest in its demands, the Court held that interest could not be brought in to offset the credits for the purpose of deciding whether the demands were excessive. Once those credits were accounted for, the demands exceeded the amount relied on.
The Court allowed the appeal. The judgment’s concluding passage does not state a separate order annulling the adjudication or set out any further directions, so the precise consequential order cannot be established from this source alone.