THE SUPREME COURT
[Appeal Nos. 173 and 174/2010]
Denham C.J.
Dunne J.
Charleton J.
BETWEEN
MINISTER FOR COMMUNICATIONS, ENERGY AND NATURAL RESOURCES AND MICHAEL O'CONNELL
RESPONDENTS
V.
RICHARD WOOD AND MICHAEL WYMES
APPELLANTS
Judgment of Ms. Justice Dunne delivered the 26th day of July 2017
This judgment is in addition to the judgment previously delivered in this matter on the 9th day of March, 2017 and deals with a point not dealt with in the previous judgment and which remained outstanding.
As is apparent from the previous judgment in this matter the appellants appealed unsuccessfully from the order of the High Court (McGovern J.) refusing to dismiss bankruptcy summonses pursuant to s. 8(6)(b) of the Bankruptcy Act 1988 (“the Act of 1988”) against Mr. Wood and Mr. Wymes on the 6th May, 2010 in respect of a number of issues. Further submissions were provided to the Court in relation to the outstanding issue, following directions from the Chief Justice, which concerns the relevant six year period of time over which interest on costs was calculated and the question as to the correct rate of interest having regard to what is, in fact, the relevant period of six years over which interest was claimed.
As has previously been explained, the creditor in this case, the Minister for Communications, Energy and Natural Resources (“the Minister”) obtained an order in February 1997 for costs in the High Court against the debtors, Mr. Wood and Mr. Wymes. The order for costs provided that in default of agreement costs would be taxed and ascertained. The process of taxation was long and drawn-out and ultimately a final certificate of taxation in respect of the High Court order issued on the 31st July, 2003. Until that time the amount of costs due by Mr. Wood and Mr. Wymes was unascertained. It goes without saying that until such time as the final amount due for costs was ascertained by the issue of the final certificate of taxation, the Minister was unable to recover same.
Ultimately on the 9th February, 2009, bankruptcy summonses were issued in respect of the sums then said to be due and an application was then made pursuant to s. 8(5) of the Act of 1988 by Mr. Wood and Mr. Wymes to dismiss those bankruptcy summonses pursuant to the provisions of s. 8(6)(b) of the Act of 1988. Following the hearing of that application, an order was made in the High Court (McGovern J.) dismissing those bankruptcy summonses (see Minister for Communications v. M.W. and R.W. [2010] 3 IR 1).
Subsequently the bankruptcy summonses, the subject of these proceedings, were issued on the 15th February, 2010.
As is clear the issue that remains to be considered relates to the calculation of interest and more particularly what is the relevant six year period of time over which the interest on costs was calculated. In that regard it would be helpful to refer briefly to the particulars of demand dated the 25th September 2009 in which it was stated as follows:
"Certificate of taxed costs dated 31st July 2003 issued pursuant to the Order of High Court dated the 24th February 1997 in the amount of €3,297,493.33 together with interest thereon calculated at the rate of 8% per annum in respect only of and limited to a period of six years, in the total amount as to interest of €1,584,242.26 making a total as to principal sum and interest of €4,881,735.59."
It is not disputed that different rates of interest were applicable in the period starting with the time when the judgment and order was pronounced by the High Court on the 24th February, 1997 and up to the date when the bankruptcy summons was issued on the 15th February, 2010. If the relevant period in respect of the sum due for interest was a period during which a lower rate of interest was applicable then, the amount claimed for interest would be overstated and the application made by Mr. Wymes for the dismissal of the bankruptcy summons should be granted.
The relevant statutory provisions
It is necessary to refer to a number of statutory provisions that are of importance in considering the issues that arise herein.
Section 26 of the Debtors (Ireland) Act 1840 (“the Act of 1840”) provides as follows:
"Every judgment debt due upon any judgment not confessed or recovered for any penal sum for securing principal and interest shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judgment, or from the time of the commencement of this Act in cases of judgments then entered up and not carrying interest until the same shall be satisfied; and such interest may be levied under a writ of execution on such judgment."
Section 27 then goes on to provide that:
"All decrees and orders of the Court of Chancery, and all rules of any of the superior courts of common law, and all orders of the lord chancellor or master of the rolls, or of the Court of Commissioners of Bankruptcy, and all orders of the lord chancellor in matters of lunacy, whereby any sum of money, or any costs, charges, or expenses, shall be payable to any person, shall have the effect of judgments in the superior courts of common law, and the persons to whom any such monies or costs, charges, or expences shall be payable shall be deemed judgment creditors within the meaning of this Act; and all powers hereby given to the judges of the superior courts of common law with respect to matters depending in the same courts shall and may be exercised by the courts of Chancery . . . with respect to matters therein depending, and by the lord chancellor, master of the rolls, and Court of Commissioners of Bankruptcy respectively in matters of bankruptcy, and by the lord chancellor in matters of lunacy; and all remedies hereby given to judgment creditors are in like manner given to persons to whom any monies or costs, charges, or expences are by such orders or rules respectively directed to be paid; . . ."
By virtue of the provisions of s. 20 of the Courts Act 1981 the Minister for Justice may vary the rate of interest specified in s. 26 of the Debtors (Ireland) Act 1840 and by ministerial order the Courts Act 1981 (Interest on Judgment Debts) Order 1989 (S.I. No. 12/1989), an interest rate of 8% on costs was provided, effective as of the 23rd January, 1989.
The position in relation to interest on costs was varied by the provisions of s. 30(1) of the Court and Court Officers Act 2002 which then read as follows:
"Subject to section 23 of the Act of 1981, interest on the amount of the costs, charges or expenses awarded to a party in proceedings in a court to which section 27 of the Debtors (Ireland) Act, 1840, applies pursuant to a judgment, order or decree of the court shall be payable -
(a) subject to subsection (3), at the rate of 2 per cent per annum from the date of such judgment, order or decree until -
(b) at the rate for the time being standing specified in section 26 of the Debtors (Ireland) Act, 1840 , from the appropriate date aforesaid until that amount is paid."
Section 30 was subsequently amended by the substitution of a new subs.(1) by s. 41 of the Civil Liability and Courts Act 2004 which came into effect on 20th September, 2004. Following the amendment s. 30(1) of the Act of 2002 reads as follows:
Finally, it is relevant to refer to the provisions of s. 11(6) of the Statute of Limitations 1957 which provides as follows:
"(a) An action shall not be brought upon a judgment after the expiration of twelve years from the date on which the judgment became enforceable.
(b) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due."
Submissions
It has been contended by Mr. Wymes that having regard to the statutory provisions in relation to the rate of interest that the sum claimed by the Minister herein is overstated. In the course of written submissions it was submitted that the relevant period for the calculation of interest is six years from the date of the judgment which was the 24th February, 1997. On that basis it was contended that the rate of interest from the 24th February, 1997 to the 9th April, 2002 (s. 30 of the Courts and Court Officers Act 2002 having been commenced the following day, 10th April, 2002) was 8%. Thereafter it is contended that the rate of interest continued at the rate of 2% between the 10th April, 2002 and the 23rd February, 2003, the end of a six year period from the date of judgment. Accordingly it is contended that a 2% rate of interest applied between April 2002 and up to the 23rd February, 2003. Alternatively, it is said that the 2% rate continued until the 31st July, 2003, the date of the certificate of taxation.
Mr. Wymes has argued that the liability for interest arose as and from the date of the judgment and that as such the calculation of interest should effectively be backdated to the date of judgment and in those circumstances the period of six years involved was a period during which a 2% interest rate applied for part of the period and that the sum sought by the Minister herein is therefore overstated in that the Minister has sought the sum of interest calculated on the basis of 8% over the full six year period.
In support of his argument, Mr. Wymes relies on the decision of this Court in the case of Clarke v. Commissioner of An Garda Síochána [2002] 1 I.R. 207. That was a case stated from the Circuit Court to the Supreme Court in the following terms:
"When costs have been taxed on a party and party basis is the party responsible for discharging those costs liable to discharge a sum in respect of interest on those costs, between the date upon which the costs order was made and the date of payment in circumstances where the interest sought does not relate to a sum of money in relation to which the party to whom costs are to be paid is out of pocket nor in relation to which an agreement exists between the said party and his solicitor regarding the payment of interest on such costs?"
It was held by the Supreme Court answering the case stated in the affirmative that costs constitute a liability of the unsuccessful party from the moment of the decree or judgment and while costs were not payable until quantified, the debt related back to the date of judgment, with interest running from that date. The Supreme Court also held that interest on costs, just as interest on the amount of the judgment, was to be collected by operation of the machinery of execution of judgments.
Thus, it was argued by Mr. Wymes (bearing in mind the provisions of s. 11(6)(b) limiting the amount of interest that may be recovered to a six year period) that as interest on costs, even though the costs had not been quantified, related back to the date of judgment, a 2% rate of interest was applicable between the 10th April, 2002 and the 31st July, 2003 by virtue of the provisions of s. 30 of the Act of 2002 when the final certificate of taxation was issued. Mr. Wymes in support of his arguments referred to the first set of bankruptcy proceedings which were dealt with by McGovern J. in the High Court and were the subject of the judgment previously referred to in the case of Minister for Communications v. M.W. and R.W. [2010] 3 IR 1 and in particular noted the observation in the course of the judgment as follows (at para. 13):
"Interest is claimed at the rate of 8% per annum from the 25th March, 1998, (being the date on which costs were first ascertained) to the 9th April, 2002, at the rate of 2% per annum from the 10th April, 2002, to the 31st July, 2003, and at the rate of 8% per annum from the 1st August, 2003, until payment."
Mr. Wymes contrasted the position in relation to interest in those proceedings when interest was calculated by reference to the 2% rate for the relevant period with the position taken by the Minister in the calculation of interest in the bankruptcy summons at issue in these proceedings.
As an alternative proposition, Mr. Wymes has argued that if interest is payable for a six year period going back from the date of demand, the appropriate date of demand to be considered is the 20th January, 2009, the date upon which the Minister first served particulars of demand including the sum due for interest as set out by McGovern J. in the passage referred to above. Employing that date, the period of six years goes back to the 20th January, 2003 which falls within the period during which a 2% interest rate would have been applicable. Mr. Wymes has argued that the "roll back" date cannot be a moveable feast being either the 20th January, 2009 in respect of the first bankruptcy summons or the 25th September, 2009 being the date of the present particulars of demand relied on by the Minister.
Accordingly, Mr. Wymes has maintained that the amount sought by way of interest has been overstated either because the relevant period of six years is the period commencing on the date of judgment and ending six years later or alternatively the six year period calculated by rolling back from the first date of demand.
Counsel on behalf of the Minister, in his submissions, referred to the procedure involved in issuing a bankruptcy summons. In that regard he pointed out that s. 8(1) of the Act of 1988 requires a notice in the prescribed form, requiring payment of the debt to have been served on the debtor. Section 8(3) requires that such 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". Form No. 4 of Appendix O of the Rules of the Superior Courts prescribes the form of the particulars of the demand and notice requiring payment prior to the issue of a bankruptcy summons. The affidavit for the application for a bankruptcy summons is then set out in Form No. 5 of Appendix O of the RSC and requires the deponent of the affidavit to state that an account in writing of the particulars of demand and notice requiring payment has been given to the debtor and that "payment of the same has been on more than one occasion required of him". It was submitted that the contention of Mr. Wymes that the date to which interest must be calculated is the date of the first demand necessarily implies that interest ceases to accrue and becomes statute-barred after an ineffective bankruptcy demand. Counsel submitted that there was no authority for such a proposition. Accordingly, the Minister relies on the second Particulars of demand and if correct in that approach, the period of six years calculated by rolling back from the date thereof is a period during which the rate of interest was 8% at all times and the amount set out in the particulars of demand is not overstated.
Decision
A number of factors require to be considered in deciding whether there is any merit to the argument made by Mr. Wymes as to what is the correct period of six years to be considered in calculating interest pursuant to the Courts Act. Two propositions have been put forward by Mr. Wymes. The first being that the period to be considered is the six year period commencing with the date of judgment, in this particular instance being the 24th February, 1997. The alternative suggested by Mr. Wymes is that the period should be calculated from the date of the first particulars of demand in relation to the bankruptcy summons previously issued against Mr. Wymes and Mr. Wood, namely the 20th January, 2009.
There is no doubt whatsoever that the liability to pay interest on a judgment arises from the date of the judgment itself even though in the case of costs the amount upon which interest is to be calculated has not yet been determined. That that is so is clear from the provisions of s. 26 of the Act of 1840 itself and as confirmed in the decision in the case of Clarke v. Commissioner of An Garda Síochána referred to above. Thus, there is no confusion or doubt as to when the question of liability arises. Equally it is clear from the provisions of s. 26 of the Act of 1840 that liability continues until the judgment debt is satisfied. That is expressly provided for in s. 26 of the Act of 1840. A judgment including an order for costs can be enforced as provided for in the provisions of s. 11(6)(a) of the Statute of Limitations 1957 for a period of twelve years. Section 11(6)(b) goes on to provide a limit on what can be recovered by way of interest only in respect of the judgment debt. Thus, while the judgment itself remains enforceable for a twelve year period, interest is only recoverable for a period of six years. There is nothing in the provisions of s. 11(6)(b) as to any restriction on the period of six years in respect of which interest on the judgment debt can be recovered. Thus, by way of example, there is nothing in the section which provides for a limit on the recovery of interest after the expiration of six years from the date on which the judgment became enforceable. On the contrary the phrase used is "after the expiration of six years from the date on which the interest became due". The legislature in s. 11(6)(b) has provided for the payment of interest for a period of six years only. Section 11(6)(b) makes reference to arrears of interest. The interest payable on the judgment debt is only recoverable after it has accrued. In other words, although a liability may commence from the date of judgment in respect of interest, the interest cannot be recovered until it has actually accrued due. Therefore, as each increment of interest accrues on a daily basis, it is recoverable. There is nothing in the section that provides for any specific period. If the arguments of Mr. Wymes were correct, then it seems to me that if the process of completing taxation took more than six years from the date of judgment given that the amount of costs had not been measured it would be impossible for a judgment creditor to take any action to enforce their claim for interest on foot of the judgment debt. That clearly is not provided for in Section 11(6)(b). The fact that Section 11(6)(b) uses the term "arrears of interest" leads me to the conclusion that in calculating the six year period over which interest can be enforced, the judgment creditor fixes the six year period by calculating backwards from the date of demand the amount due for interest. That being so, I am satisfied that the judgment debtor, in this case the Minister, is entitled to calculate and look for interest on the basis of the six years prior to the service of the particulars of demand. Therefore, the position is that the liability to pay interest on costs arises from the date of the judgment or order for costs and the amount of interest recoverable is for a six year period only. As only six years interest is recoverable in the course of the 12 year period, the sum recoverable must be calculated by reference to the particulars of demand. Any sum accrued due for interest more than six years prior to the particulars of demand would be statute barred.
That being so, the only remaining question is whether the six year period has to be calculated by reference to the first or second particulars of demand. The particulars of demand in respect of the first set of bankruptcy summonses between these parties was served on the 20th January, 2009. The bankruptcy summons in question was dismissed, as previously explained by the High Court, for the reasons set out in the judgment in Minister for Communications v. M.W. and R.W. referred to above. It is quite clear from the Act of 1988 and the Rules of Court made thereunder that more than one demand can be made. In those circumstances, the Minister, having been unsuccessful in his first attempt to pursue the debt by way of a bankruptcy summons, was entitled to start the process again and in those circumstances, a new particulars of demand setting out the amount then due, including interest, had to be served, giving the debtor an opportunity to pay the sum demanded as required by Section 8(3) of the Act of 1988. That being so the relevant period of 6 years dates back from the date of the particulars of demand. The amount claimed by way of interest is therefore not overstated.
Conclusions
As previously noted, the first argument put forward by Mr. Wymes was that the six year period should be calculated by reference to the date upon which the interest began to accrue. If the argument of Mr. Wymes in that regard was correct, then the amount claimed would have been overstated, thus entitling Mr. Wymes to have the bankruptcy summons dismissed. Equally, if the Minister was compelled or required to have regard only to the period of six years comprised in the first particulars of demand, then the amount claimed for interest would have been overstated and Mr. Wymes would have been entitled to have the bankruptcy summons dismissed. However, for the reasons I have explained, I am satisfied that the Minister is entitled to look for six years interest on the judgment debt backdated from the date of the particulars of demand and that being so the amount claimed herein is not overstated. Accordingly I would dismiss the appeal.
