By Ciaran Vale
The High Court has dismissed bankruptcy summonses seeking €5.89 million from two men after finding an arguable legal issue over the amount of interest included in the debt.
M.W. and R.W. applied to have the summonses dismissed. The Minister for Communications, Energy and Natural Resources and M. O'C. claimed they were owed €5,893,749.83, including interest, arising from a High Court costs order made in February 1997.
The underlying costs had been taxed at €3,297,493.33. Interest calculated to January 20, 2009 added a further €2,596,256.50. The bankruptcy summonses were issued with High Court permission on February 9, 2009 and served later that month.
The applicants raised several objections. They argued that the costs order remained the subject of a Supreme Court appeal, that sufficient demands for payment had not been made, and that the registration of judgment mortgages amounted to execution of the debt.
Mr Justice Brian McGovern rejected those arguments. He held that the High Court order remained enforceable because no stay had been granted. He also found that payment had been demanded and that registering a judgment mortgage was not, by itself, execution.
However, the applicants also relied on section 11(6)(b) of the Statute of Limitations 1957. They argued that arrears of interest on a judgment debt could not be recovered after six years and that the bankruptcy summons therefore overstated the amount due.
McGovern J found that this raised a real and substantial issue with some prospect of success. Under section 8(6)(b) of the Bankruptcy Act 1988, the court was required to dismiss a bankruptcy summons where an issue arose for trial.
The judge said he reached that conclusion with misgivings because the applicants were clearly very substantially indebted on the taxed costs. Nonetheless, strict compliance with bankruptcy requirements was necessary because of the serious consequences of adjudication.
The summonses were therefore dismissed, leaving the dispute over recoverable interest to be determined separately.