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1. On 13th January, 1984 Matthew Kelly (the Bankrupt) was adjudicated a bankrupt on the Petition of the Revenue Commissioners (the Applicant). On 8th March, 1984 the Bankrupt swore a Statement of Affairs in the bankruptcy. In the Statement of Affairs, in sub-list (A), the Bankrupt disclosed the following debts due by him in respect of taxes, namely:-

2. On this application, which was initiated by notice of motion dated 1st November, 1999, the Applicant seeks liberty to submit a proof of debt to the Official Assignee in the bankruptcy of the Bankrupt in respect of the sum of £1,925,026.85 together with any further interest which may be payable in respect thereof, notwithstanding that the time limited by the Official Assignee for submission of proofs of debt to him has expired.

3. The affidavit to ground the Applicant's application was sworn by Barry Galvin, the Bureau Legal Officer duly appointed to the Criminal Assets Bureau pursuant to section 9 of the Criminal Assets Bureau Act, 1996 and Mr. Galvin relies on provisions of that Act as entitling him to swear the affidavit on behalf of an officer of the Revenue Commissioners who is empowered to collect pre-bankruptcy debts due by the Bankrupt to the Revenue Commissioners.

4. The Applicant alleges that the following sums are due by the Bankrupt to the Revenue Commissioners in respect of unpaid pre-adjudication tax at the date of the swearing of Mr. Galvin's affidavit:-

5. The Bankrupt concedes that the sums referred to at (a) and (b) above, on which the Applicant's petition was founded, are deemed to be admitted.

6. The sums in respect of which an extension of time to submit proof of debt is sought are the sums mentioned at (c) to (f) above.

7. On behalf of the Bankrupt it was submitted by Mr. Salafia, S.C., that the application for an extension of time should be refused on the ground that the Criminal Assets Bureau had no legal standing to bring the application, that it had no right or authority to be dealing with a "non-criminal matter" and that its involvement is extremely prejudicial to the Bankrupt. This argument is misconceived in that it does not take cognisance of the fact that the Applicant is not the Criminal Assets Bureau but the Revenue Commissioners. I am satisfied that there is statutory authority for the evidence to support the Applicant's application being put before the Court by Mr. Galvin.

8. On the question of delay, two broad propositions were advanced by Mr. Salafia on behalf of the Bankrupt. First, it was suggested that the Court could get guidance as to the appropriate time-frame governing proof of debts from Rule 66 of the Rules of the Superior Courts (No. 3), 1989 (S.I. No. 76 of 1989), which provides for a time limit of 14 days for appealing to the Court to vary or reverse a decision of the Official Assignee allowing or disallowing a claim. Secondly, it was submitted that the Court should apply equitable principles in relation to laches, acquiescence and estoppel in determining whether an extension of time should be granted.

9. In relation to the sums referred to at (c) above, it is common case that these sums were included in a proof of debt dated 31st July, 1997 which was submitted on behalf of the Applicant to the Official Assignee but which, due to an administrative error, was not received by the Official Assignee until 1st August, 1997, that is to say, one day late. Even though there has been considerable delay on the part of the Applicant in bringing this application for an extension of time, I consider that as regards these sums the application for an extension of time should be acceded to. However, the position in relation to the sums referred to at (d) and (e) above is different. On the evidence, it would appear that the first intimation from the Applicant that it intended to prove for these sums in the bankruptcy was the notice of motion which issued on 1st November, 1999. The Bankrupt has put evidence before the Court that through 1998 and 1999 he was considering the means by which he could have himself discharged from bankruptcy. He was in correspondence with both the Insolvency Division of the Applicant and with the Solicitors for the Official Assignee. In particular, by letter dated 27th April, 1998 from the Insolvency Division, he was furnished with particulars of the Applicant's status as creditor, both preferential and non-preferential, and these sums were not claimed as debts. Even in the context of a period of fifteen and a half years having elapsed between the date of adjudication and the final date fixed for submission of proofs of debt, a delay of two and a quarter years in bringing an application for an extension of time is prima facie inordinate and inexcusable. The only excuse put forward by the Applicant for the failure to submit to proofs of debt in respect of the sums referred to at (d) and (e) above by the due date is "administrative error" and no excuse, explanation or justification has been advanced for failure to bring an application for an extension of time for two and a quarter years. In the circumstances, I do not consider it appropriate to exercise the Court's discretion to extend time in favour of the Applicant.

10. The basis on which the Applicant claims to be entitled to prove for the sums referred to at (f) above is that it is entitled to the said sums by virtue of an order of this Court made on 1st July, 1983 by Costello J., as he then was, in a matter entitled "In the Matter of Kelly's Carpetdrome Limited And In the Matter of the Companies Act And in the Matter of an application under Section 297 of the Companies Act, 1963" (Record No. 1981 No. 7508P) and a judgment of the same date delivered by Costello J. The order was made on foot of an application by the Official Liquidator of the Company for a declaration that the Bankrupt and two other persons should be personally liable without any limitation of liability for all of the debts or other liabilities of the Company. In the order the Court declared as follows:-

11. It was further ordered that the Bankrupt and that other person should pay to the Official Liquidator the sum of £1,809,611.96. It is clear from the judgment that that sum represented the sum found by an Appeal Commissioner to be due by the Company as of 11th February, 1983 in respect of corporation tax, V.A.T., P.A.Y.E. and P.R.S.I. and interest. In his affidavit, Mr. Galvin has averred that due to reasons which he is unable to ascertain, the amount of £1,809,811.96 was never proved as a debt in the bankruptcy but he suggests that the reason is probably that until recently there was a substantial deficit in the affairs of the Bankrupt and the Applicant probably believed that there was no useful purpose to be served in attempting to collect those sums. He further averred, however, that it was only recently that the Applicant, through the work of the Criminal Assets Bureau, has become aware that the Bankrupt is in possession of very substantial after-acquired assets and that it is his belief that the Bankrupt contrived by a series of subterfuges to conceal his after-acquired assets and only recently admitted details of the same to the Official Assignee. These averments were not controverted by the Bankrupt in either of the affidavits filed by him.

12. A final order in the winding-up of the Company was made by this Court on 6th July, 1987 by Murphy J. In that order, having recited that Counsel for the Applicant attended before the Court and confirmed that the Applicant had been furnished with all of the information which it required to satisfy itself as to the propriety of the orders sought and had not objected to the orders being made, the Official Liquidator was authorised to make certain payments and disbursements and it was further ordered, inter alia, that Official Liquidator should be discharged and that further proceedings in the winding-up should be stayed. Liberty was given to the Revenue Commissioners to apply. Subsequently, on 10th December, 1987 the Examiner certified that the payments mentioned in the order of 6th July, 1987 had been made and that the distribution of the residue had been vouched and that the affairs of the Company had been completely wound-up.

13. Mr. Salafia submitted that the effect of the order of Costello J. was to create a debt in favour of the Official Liquidator of the Company which inured for the benefit of the general body of the creditors of the Company, not a debt in favour of the Applicant. Moreover, he submitted that as the order pre-dated the adjudication of the Bankrupt and the limitation period was running at the date of adjudication, the entitlement to enforce the judgment is statute barred.

14. Mr. Salafia relied on two decisions of the English courts on similar provisions of company legislation in force in England and Wales in support of his contention that the order of Costello J. made on foot of section 297(1) did not create a debt in favour of the Applicant. Chronologically, the earlier of the two decisions is the decision of Eve J. in In Re William C. Leitch Brothers Limited (No. 2) , [1933] 1 Ch. 261. In an earlier phase of those proceedings a declaration had been made by the Court in the course of the winding-up of a company that an individual, a governing director of the company, had been knowingly a party to carrying on the company's business with intention to defraud creditors between certain dates and fixing his liability at £6,000. The Liquidator sought directions as to the application of a sum of £3,356 recovered by him from the director. The provision under which the declaration had been made was section 275(1) of the Company's Act, 1929, which was in similar terms to section 297(1) in it's original form. In his judgment, Eve J. stated at page 266:-

15. Eve J. concluded that all of the monies recovered by the Liquidator should be dealt with as general assets and applied accordingly.

16. The more recent decision relied on by Mr. Salafia if a decision of Plowman J. in Re Cyona Distributors Ltd., [1966] 1 All E.R. 825. The issue which Plowman J. was confronted with in that case was whether a creditor of an insolvent company which was in liquidation who had initiated proceedings under section 332 of the Company's Act, 1948, with which section 297 corresponded in all material respects, and subsequently, but before the proceedings had been heard, accepted a payment, otherwise and from the Liquidator, of a sum of money which in whole or in part extinguished his debt, was entitled to retain the money so received, or could be compelled by the Liquidator to account to him for it in order to produce a benefit for the general body of creditors. Having referred to the decision of Eve J. in Re Leitch (No. 2) and having quoted, inter alia, the passage from his judgment which I have quoted above, Plowman J. stated as follows at page 830:-

17. Later in his judgment Plowman J. stated that his concurrence with the opinion of Eve J. would leave a creditor/applicant a trustee for the company or its creditors. He went on to consider the situation before him, where no declaration had been made but there was only a claim. Such a claim, he considered, was a chose in action. He went on to say at page 831:

18. It was urged by Mr. Nesbitt, S.C., on behalf of the Applicant that the Court should not follow the English decisions. While it is true that the order of Costello J. is distinguishable from the declaration being enforced in Re Leitch (No. 2), in that Costello J. made a specific finding of fact that the sum of £1,809,611.96, for which he declared the Bankrupt was personally liable, represented a debt due to the Applicant by the Company, nonetheless, it seems to me that the principles applied by Eve J. in the construction of the section under consideration by him and his reasoning are equally applicable to section 297. Moreover, it's seems to me that the order made by Costello J. is wholly consistent with the approach adopted by Eve J. The application before Costello J. was made by the Official Liquidator of the Company. The declaration made by Costello J. was a declaration that the Bankrupt was liable "for all the debts or other liabilities of the Company" and that he was liable to pay to the Official Liquidator the sum in question. The order made by Costello J. directed the payment of the sum in question by the Bankrupt to the Official Liquidator. While Mr. Nesbitt acknowledged that it maybe that, if the Applicant were to collect the sum of £1,809,611.96 from the Bankrupt the Official Liquidator could successfully contend that the monies were impressed with a trust in his favour, he submitted that it is not the case that the Applicant does not have a legal right to enforce the declaration. I do not agree. I can see no basis on which the Applicant has an entitlement to enforce any of the declarations contained in or any other provision of the order of Costello J. The Applicant was not a party to the proceedings in which the order was made. The order was made on the application of the Official Liquidator and the declarations were made in his favour and the order directing the Bankrupt to pay the sum of £1,809,611.96 was an order for payment of that sum to the Official Liquidator and not to anybody else. If the Official Liquidator had enforced the order and received payment on foot of it from the Bankrupt, in my view, on the proper construction of section 297 the Liquidator would have held the monies recovered to be dealt with on the same basis as any other assets of the Company, that is to say, to be disbursed in accordance with the order of priority and the scheme for distribution provided for in the Act of 1963.

19. Accordingly, I hold that the Applicant has not established that the sums referred to at (f) above constitute debts provable by it in the bankruptcy of the Bankrupt and for that reason I refuse the application for extension of time in relation to those sums. I would make two additional points in relation to the sums referred to at (f). If, as I have found to be the case, as a matter of law, they do not constitute debts of the bankrupt provable by the Applicant in the bankruptcy, it is immaterial that the sum of £1,800,000 referred to in the Statement of Affairs may have been intended by the bankrupt to correspond to those sums. Secondly, I have given no weight to the recitals in the final order in the liquidation of the Company in reaching the foregoing conclusion.

20. For the sake of completeness, I should perhaps say that I consider that Mr. Salafia's argument that, vis-à-vis the Bankrupt, the entitlement to enforce the order of Costello J. is statute barred does not stand up. Indeed, the principal authority relied on by Mr. Salafia, In Re Benzon, Bower -v- Chetwynd [1914] 2 Ch 68 establishes this. The facts in that case were somewhat unusual. The donee of a general testamentary power of appointment over a fund of £15,000 had been adjudicated bankrupt in January 1890 and a small dividend had been paid. In 1892 he was again adjudicated, but no dividend was paid. He never obtained his discharge in either bankruptcy. He died in July 1911 having by his will duly exercised his power of appointment. In an action for the administration of his estate, which consisted almost entirely of the appointed fund, the creditors in the bankruptcies claimed to be paid the balance still remaining unsatisfied of their respective debts. On the operation of the Statue of Limitations Channell J. in the Court of Appeal stated as follows (at page 75):

21. Later on in his judgment at page 77, Channell J. concluded as follows:

22. A relatively recent example of there being a means of recovering a debt provable in a bankruptcy other than under the machinery of the bankruptcy - the decision of Buckley J. in Cotterell -v- Price [1960] 3 All E.R. 315 - illustrates the point made by Channell J very clearly. Having quoted in part the passage from the judgment of Channell J. which I first quoted above, Buckley J. went on to comment as follows:-

23. The means of recovering the debt other than by proving in the bankruptcy under consideration by Buckley J. was a claim by a mortgagee creditor who was relying on his security. In relation to the position of a secured creditor, Buckley J. went on to state as follows:-

24. In the instant case what the Applicant is seeking to do in relation to the sums referred to at (f) above is to prove in the bankruptcy. If I was satisfied that those sums represented a debt due by the Bankrupt to the Applicant, even though the debt accrued before the date of adjudication, there could be no question of the debt being statute barred. A provable debt against which time is running but which has not been statute barred at the date of adjudication remains provable in the bankruptcy even after the ordinary limitation period has elapsed. This is a necessary corollary to section 136 of the Act of 1988 which, on the making of an order of adjudication, precludes a creditor of the Bankrupt from any remedy against the property or person of the Bankrupt in respect of the debt apart from his rights under the Act of 1988.

25. There will be an order in favour of the Applicant extending the time for submitting proof of debt in respect of the sums referred to at (c) above for the period of 28 days from 20th December, 1999.