The High Court has dismissed a bankruptcy summons issued by Allied Irish Banks against Ivan Yates over approximately €3.69 million claimed under a guarantee of Celtic Bookmakers Limited's debts.
AIB issued the summons on 14 May 2012 after demanding payment under a guarantee signed by Yates in April 2010. Celtic Bookmakers was by then in liquidation. Yates challenged the summons on several grounds, including that the amount demanded was overstated.
The main dispute concerned two categories of charges. Yates claimed that at least €162,000 had been wrongly paid in receivership fees after he said the receiver's costs had been represented as not exceeding €100,000. That alleged agreement was disputed by both the receiver and AIB.
Yates also said he had been told that interest on the company's debts would effectively be frozen during the receivership and that later interest entries were merely bookkeeping charges which would not be pursued. He claimed about €240,000 had nevertheless accrued. AIB denied any agreement to suspend interest.
The bank relied on a clause in Yates's guarantee stating that a certificate from a bank officer as to the amount owed would be conclusive evidence. Ms Justice Dunne accepted that parties can agree such clauses, but held that they must be strictly construed. An issue arose because the certificate produced appeared to be issued by AIB as a corporate entity rather than by an identified bank officer as the guarantee required.
The judge also held that a conclusive-evidence clause could not necessarily prevent arguments about legal issues, equitable set-off or significant errors in the certified amount.
Because bankruptcy has serious consequences, the amount demanded must be accurate. The court found that Yates had raised genuine issues with some prospect of success which required separate litigation. Under the Bankruptcy Act, that meant the summons had to be dismissed.