Issues to be litigated outside of bankruptcy
High court judgment: Allied Irish Banks -v- Ivan Yates
Neutral Citation IEHC 360
Judgment was delivered on August 21st, 2012, by Ms Justice Dunne
A bankruptcy summons was dismissed because the debtor had raised issues concerning the amount due which have to be litigated outside the bankruptcy process and which are real and substantial and have some prospect of success.
The bank issued a bankruptcy summons on May 14th, 2012 in respect of the sum of €3,692,852.13, arising from loans to Celtic Bookmakers, now in liquidation. It was served on the debtor, Ivan Yates, on June 14th.
He sought to have it dismissed on a number of grounds. When the case came before the court these included that he did not owe the full sum stated, as it did not take account of an alleged over-payment to the receiver of at least €162,000 and certain interest and charges, amounting to €240,000 he was assured he would not be liable for. The bank disputed these contentions.
Other grounds included that the bank did not seek payment on more than one occasion prior to applying for the summons, that it did not lodge with the proper office bills, notes, guarantees and other necessary documents and failed to serve on the debtor a true copy of the affidavit on foot of which the summons was issued.
Counsel to the bank said that, in relation to the allegedly excessive sum, a challenge to the summons could only be made if no sum whatsoever was due.
“Such an inference flies in the face of the long- and well-established authorities,” Ms Justice Dunne said.
Having quoted the English case, Re. Debtor, ex parte a debtor , she said: “It is clear beyond doubt that if the amount claimed on foot of a bankruptcy summons is in excess of that which is actually due, then in those circumstances there is no obligation to pay the amount claimed on foot of the bankruptcy summons and a failure to pay on foot of that summons will not constitute an act of bankruptcy.”
The question then arose of the status of the debt certificate, containing a “conclusive evidence” clause, which was relied upon by the applicant bank in relation to the amount said to be due.
The debtor said it was undated, while the amount was said to be due on April 6th, 2012, the certificate was never made available prior to the issuing of the summons in May, it was unsealed and no officer of the bank was named on it or averred on affidavit as having prepared it. It was therefore contrary to public policy and invalid, he contended.