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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Carthy v. McMullen [2002] IESC 45 (7 June 2002) URL: http://www.bailii.org/ie/cases/IESC/2002/45.html Cite as: [2002] IESC 45

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Carthy v. McMullen [2002] IESC 45 (7th June 2002)

103/02

Murphy J

Hardiman J

Geoghegan J

Applicants/Respondents

Appellant

IN THE MATTER OF AN APPLICATION BY MICHAEL MCMULLEN FOR AN ORDER DISMISSING A BANKRUPTCY SUMMONS ISSUED AGAINST HIM BY THE ABOVE KENT CARTHY & COMPANY OF 48, PARNELL SQUARE,

DUBLIN 1.

Judgment of Mr Justice Francis D Murphy delivered the 7^th day of June, 2002 [Nem Diss.]

______________________________________________________________________

1.       In proceedings bearing record number 1988 6218p between Michael Colin Jeffrey McMullen and Hugh A Carthy, John P Carthy, Pamela Madigan and Rocca Caira, practising as Kent Carthy & Company, the High Court dismissed the claim of the plaintiff (Mr McMullen) and granted to the defendants (Kent Carthy) the costs of those proceedings to be taxed in default of proceedings. The appeal by Mr McMullen against the order and judgment of the High Court was dismissed on the 27th day of January, 1998, and Kent Carthy were awarded their costs of the appeal against Mr McMullen. The High Court costs were subsequently taxed at a sum of £33,611.41 and the costs of the appeal at £15,098.11. On the 9th October, 2000, Giles J Kennedy, solicitor, on behalf of Kent Carthy, served particulars demanding payment of that sum which, together with interest thereon then amounted to £71,433.59. On the 20th October, 2000, Mr Justice McCracken issued a bankruptcy summons in respect of the said sum of £71,433.59. On the 6th day of December, 2000, an application was made by Mr McMullen to dismiss the bankruptcy summons which application came before Mr Justice McKechnie who delivered his judgment thereon on the 20th of March, 2000. By that judgment and the order made pursuant thereto Mr McMullen's application for an order dismissing the bankruptcy summons issued against him was refused. No stay was put on that order. Nor does it seem to me that such a provision would be appropriate but the Court in its order did note:-

"....... The undertaking given by counsel (for Kent Carty) to take no further steps in these proceedings for a period of six weeks from the date hereof."

2.       By notice of appeal dated the 29th day of April, 2002, Mr McMullen has sought an order reversing the order made by the learned trial judge and reversing the same in its entirety and seeking in lieu thereof an order in favour of Mr McMullen "in such a manner to dismiss and stay indefinitely the said summons in bankruptcy pending the completion of the pre-existing complaints to the Court of Human Rights in Strasbourg, the appeals of the two actions seeking the indemnity for the whole amounts the subject matter of the said bankruptcy sums as well as an order for the expenses of resisting the said threats."

3.       However, the application at present before the Court is a notice of motion dated the 8th day of May, 2002, in which Mr McMullen seeks the relief following:-

"A An order staying the dismissal of the application by this appellant for the dismissal or in the alternative staying indefinitely pending the actions as outlined in the attached notice of appeal, which said dismissal is contained in the order of Mr Justice McKechnie dated the 20th of March, 2002 perfected on April 10th 2002.

B The said staying order to have the effect of continuing the undertaking already given by counsel for Kent Carthy, contained in the last sentence of the said order until such time as this appeal be disposed of or in the alternative such time as a decision be returned from the Court of Human Rights in Strasbourg, to whose office copies of this notion are being transmitted with a request for information regarding the dates of procedures before it."

4.       The Bankruptcy Act 1988, s.8 (replacing the Bankruptcy (Ireland) Amendment Act 1872, s.30) insofar as it is material, provides as follows:-

"8(1) A summons (in this Act referred to as a "bankruptcy summons") may be granted by the court to a person, (in this section referred to as "the creditor") who proves that:-

"(a) a debt of £1,500 or more is due to him by the person against whom the summons is sought,

(b) the debt is a liquidated sum, and

(c) a notice in the prescribed form, requiring payment of the debt has been served on the debtor.

(2) .......

(3) The notice requiring payment of the debt shall set out the particulars of the debt due and shall require payment within four days after service thereof on the debtor.

(4) The bankruptcy summons shall be in the prescribed form.

(5) A debtor served with a bankruptcy summons may apply to the court in the prescribed manner and within the prescribed time to dismiss the summons.

(6) The Court -

(a) may dismiss the summons with or without costs, and,

(b) shall dismiss the summons if satisfied that an issue would arise for trial."

5.       The Bankruptcy Act 1988 s.7 identifies a variety of acts which constitute "an act of bankruptcy". In particular that section provides as follows:-

"7(1) An individual (in this Act called a "debtor") commits an act of bankruptcy in each of the following cases:-

...............

(g) if the creditor presenting a petition has served upon the debtor in the prescribed manner a bankruptcy summons, and does not within fourteen days after service of the summons pay the sum referred to in the summons or secure or compound for it to the satisfaction of the creditor."

6.       Presumably the bankruptcy summons was served on Mr McMullen and it is clear that he declined to pay, secure or compound the amount specified therein. Instead he applied to the High Court, as he was entitled to do, under s.8 subsection 6 aforesaid of the Act of 1988 to have the bankruptcy summons dismissed and that application was refused.

7.       His present application to this Court is to have the bankruptcy summons "stayed". However the bankruptcy summons is not itself an operative order of the High Court the effect of which could be postponed in an appropriate case. The summons is either valid or invalid. Its validity has been upheld by the High Court and that position will remain unless and until that order is set aside by this Court.

8.       It seems more probable that what Mr McMullen intended to seek was an order in the nature of an injunction restraining Kent Carthy from taking any action on foot of the bankruptcy summons - and in particular restraining them from relying upon that bankruptcy summons and the failure to pay, secure or compound the amount thereby demanded - as an act of bankruptcy to ground a petition under s.11 of the Bankruptcy Act 1988 for the adjudication of Mr McMullen as a bankrupt. This clear distinction was adverted to in the order of Mr Justice McKechnie where it was noticeable that he granted no stay in relation to the bankruptcy summons but instead noted the undertaking of Kent Carthy to take no further steps in the proceedings for a period of six weeks from the date thereof.

9.       It would be unusual for an appellate court to grant an injunction of the nature required by Mr McMullen in the present case. Certainly it would require the existence of special circumstances which do not exist here. There is nothing in the judgment of the learned trial judge nor in the argument presented in this Court which, so far as I can see, casts a doubt upon the validity of the summons. However, there is a point of even greater concern. There is a time limit on the operative effect of a bankruptcy summons. The Bankruptcy Act 1988 s.11 (1) provides as follows:-

"A creditor shall be entitled to present a petition for adjudication against a debtor if:-

...........

(c) the act of bankruptcy on which the petition is founded has occurred within three months before the presentation of the petition...."

10.       As the act of bankruptcy consists of the failure to pay within two weeks from the service thereof of a bankruptcy summons dated the 20th November, 2000, it would seem that that summons could not ground a petition for adjudication in bankruptcy at this stage.

11.       I can go no further than to say that would seem to be the position. Mr Barron, counsel on behalf of Kent Carthy, very properly accepted that on the wording of the legislation he could not rely on the existing petition as an act of bankruptcy by Mr McMullen. He did assert that on the reading of the Act as a whole a more purposeful interpretation of the provision might be found. Unfortunately Mr McMullen was not legally represented so the Court did not have the benefit of legal argument on this issue. In the circumstances it would be difficult to go any further than saying at the present stage that it would appear extremely unlikely that Kent Carthy could take any further steps based on the existing bankruptcy summons and of course to that extent the application is moot and unnecessary. On the other hand there is nothing to prevent Kent Carthy seeking and, if obtained, serving a new bankruptcy summons on which presumably they could then proceed to seek the adjudication of Mr McMullen as a bankrupt. If on the other hand Kent Carthy are satisfied that they are entitled to rely on the existing bankruptcy summons no doubt Mr McMullen and any legal advisors appearing on his behalf would be free to argue that the act of bankruptcy constituted by that summons is not available to ground a petition under s.11 of the 1988 Act.

12.       In summary it seems to me that the relief actually sought by Mr McMullen could not, and the relief which he effectively requires, should not be granted. In any event the likelihood of Kent Carthy presenting a petition based on the existing bankruptcy summons is probably remote. Certainly there would appear to be good grounds for disputing a petition based on that summons.

13.       I would dismiss the application.