Bula co-founder loses Supreme Court appeal over bankruptcy

A co-founder of the collapsed Bula mine in Co Meath has lost a Supreme Court appeal aimed at permitting him to challenge a decision adjudicating him bankrupt over non-payment of a €4.8 million legal costs debt.

The High Court granted a petition in March 2018 adjudicating Michael Wymes and another co-founder of Bula, Richard Wood, bankrupt.

The two, with Tom Roche senior, established Bula in 1971 to buy a zinc and lead mine near Navan but it collapsed with substantial debts some years later. The State was a shareholder in the company and a protracted litigation followed.

In July 2003, costs of the litigation were taxed at €3.29 million and the bill, plus interest, amounted to some €4.8 million.

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The Minister for Communications, Energy and Natural Resources set about recovering that money and issued bankruptcy proceedings against Mr Wymes and Mr Wood. Further litigation followed over the bankruptcy summonses.

Ultimately, in March 2018, the High Court's Mr Justice Charles Meenan ruled the Minister was entitled to orders adjudicating both men bankrupt.

Neither man appealed that order but Mr Wymes, representing himself, later went to the High Court seeking to dispute the validity of the adjudication of bankruptcy against him.

He argued, inter alia, that no act of bankruptcy had occurred in the three months preceding the petition and he could not have committed an act of bankruptcy while the validity of the bankruptcy summons had yet to be adjudicated.

After the High Court refused his application in April 2019, he appealed.

in July 2020, the Court of Appeal (CoA) dismissed his appeal. It said the requirement that an act of bankruptcy on which the petition was founded must have occurred within three months before the petition was presented had been met.

Summons issued

The bankruptcy summons issued on February 15th, 2010 and was served on Mr Wymes on March 1st, 2010. The CoA agreed, because he failed to discharge the sum 14 days thereafter, he had committed an act of bankruptcy. The petition had to be served within three months of that and the June 10th, 2010 petition was issued within that period, it held.

Mr Wymes sought a further appeal and the Supreme Court agreed to hear an appeal centred on a legal issue not to date considered by the Irish courts.

The issue, outlined by Ms Justice Marie Baker in the five-judge court's judgment on Thursday, is whether a debtor can commit an act of bankruptcy when they have challenged the summons relied on by the creditor.

Mr Wymes, the judge noted, argued the Bankruptcy Act 1988, as amended, is deficient in not providing for a postponement or enlargement of time for the happening of an act of bankruptcy.

That argument was “difficult to reconcile” with the plain language of the Act which does not say the time limit provided for in section 7(1)(g) is suspended or postponed, or that time does not run for the happening of an act of bankruptcy if a challenge to the summons is issued, she said.

The 1988 Act does not provide that an application to dismiss the summons acts as a stay, she held.

Failure to pay

Under the statutory scheme, the act of bankruptcy is the failure to pay on foot of a summons, she said. There was “no ambiguity” in the section and she agreed with counsel for the Minister nothing in the Act postpones the happening of an act of bankruptcy.

The correct answer to the net question in this appeal is that an act of bankruptcy can occur by failure to satisfy a bankruptcy summons, notwithstanding a challenge brought under section 8(5) of the Act, she concluded. On that basis, she dismissed the appeal.