Supreme Court rejects former solicitor’s appeal against bankruptcy

The Supreme Court has dismissed a former solicitor’s appeal over being adjudged bankrupt arising from a summons issued by the Revenue Commissioners after it got judgments for some €405,808 against him.

While dismissing John Tobin’s appeal the five-judge Court held that an overstatement of the amount of debt allegedly due must result in the dismissal of a bankruptcy summons, where a debtor can show that the overstatement is a real and substantial issue.

The bankruptcy summons must be dismissed even where the undisputed portion in the summons is above the legislative threshold of €20,000, the court unanimously held

The court was comprised of the Chief Justice Mr Justice Donal O’Donnell, Mr Justice John MacMenamin, Ms Justice Elizabeth Dunne, Mr Justice Peter Charleton and Mr Justice Gerard Hogan.

Giving the court’s decision, Mr Justice Dunne said there was no basis for allowing the appeal.

Mr Tobin, with an address at Cornmarket, Robert Street, Limerick, appealed a High Court refusal to dismiss a 2016 bankruptcy summons served under the 1988 Bankruptcy Act by Revenue on him and, also appealed the High Court’s subsequent decision adjudicating him bankrupt.

The summons warned, unless Mr Tobin paid some €405,808 to Revenue’s Collector General (CG) within 14 days, he would have committed an act of bankruptcy for which he might be adjudicated bankrupt unless he had a court order to dismiss the summons on the ground he had no debt to the CG, or had a debt of €20,000 or less.

Incorrect sum

It set out particulars of seven judgments Revenue had obtained against Mr Tobin between September 2011 and January 2015, totaling some €405,808 net.

Mr Tobin had not applied within the prescribed 14 days to have the summons dismissed but, in November 2016, some six months later, he applied to dismiss it.

He claimed the sum sought by Revenue was incorrect because he was due a refund from it of €71,030, plus interest, from February 2009, for reasons including alleged “overpayment” of stamp duty made from his own resources to Revenue on behalf of a client.

The Court of Appeal in 2020 dismissed his appeal against those decisions.

The Supreme Court decided to hear his appeal on issues it deemed were of public importance including if the summons should be dismissed due to an overstatement of the debt or whether a delay in challenging the summons was fatal to raising the issue of an alleged overstatement of debt claimed.

In her judgement, Ms Justice Dunne said Mr Tobin had claimed that he was due a credit refund for monies he said were paid by him on behalf of his client.

The judge said that there was no basis upon which this payment could “in any shape of form” entitle him to claim a refund or credit from Revenue.

No issue arose from the hearings before the lower courts that would require the bankruptcy summons to be dismissed, the judge said.

Ms Justice Dunne added that his application to dismiss the summons was also out of time, and there was no basis to extend the time to allow him make such an application.

In relation to the legal points raised in the appeal, the judge said that past decisions in bankruptcy cases show strict compliance with the bankruptcy code.

Under the 1988 Act, Ms Justice Dunne said, an act of bankruptcy occurs when a debtor fails to repay in full a sum contained in a bankruptcy summons.

That Act, she said, is clear where it states that an act of bankruptcy cannot be committed by a failure to pay a sum demanded in excess of what is actually due.

To interpret the legislation in any other way,would disregard the express wording of the law, she said.

Ms Justice Dunne noted the significant reform Ireland’s bankruptcy code has undergone in recent years,which has seen the period of time a person remains in bankruptcy severely reduced.

Echoing concerns raised by the Court of Appeal regarding bankruptcy summons the judge said aspects of the code may not be suitable for the modern commercial world, adding that any further reform is a matter for the legislature.