Bank of Baroda v Mrs Anne Maniar

Hearing dates: 1 st – 3 rd April 2019

I direct that, pursuant to CPR PD 39A para 6.1, no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

In this matter, the Claimant (“the bank”) claims sums due pursuant to deeds by which the Defendants 1 guaranteed and/or indemnified the liabilities to the

The trial took place on 1 to 3 April 2019.

During the trial the following witnesses gave evidence on behalf of the Claimant:

(a) Mr Michael Walshe, by statement dated 16 May 2017 and oral evidence;

(b) Mr Brendan Frawley, by statement dated 16 May 2017;

(c) Mr Shailendra Singh, by statement dated 17 May 2017;

(d) Mrs Anne Kershaw, by statements dated 18 May 2017, 20 June 2017 and 12 October 2018 and oral evidence;

(e) Mr Rossa Fanning SC, by statement dated 21 January 2019, joint report with Mr McCarthy dated 11 March 2019 and oral evidence.

On behalf of the Defendants, evidence was given by:

(a) Mrs Maniar, by statement dated 12 October 2018 and oral evidence;

(b) Mr Maniar by statement dated 12 October 2018 and oral evidence;

(c) Mr Ross Gorman, by statement dated 12 October 2018 and oral evidence;

(d) Mr Gary McCarthy SC, by statements dated 8 February 2019 and 15 March 2019, together with the joint statement with Mr Fanning of 11 March 2019 and his oral evidence.

At the end of the trial, the parties made oral submissions on certain of the issues and an order was made for the service written closing submissions on other issues, with a right of reply. Those submissions were filed by 8 May 2019. The Claimant served submissions dated 29 April 2019, with a reply to the Defendants' submissions dated 8 May 2019. The Defendants served submissions dated 26 April 2019, with a reply to the Claimant's submissions dated 8 May 2019.

Background

The Claimant is an Indian bank which carries on business in the United Kingdom.

The Defendants are a married couple. In 1998, Mr Maniar established Aim Cash and Carry Limited, a company registered in Ireland. Its business involved importing goods and selling wholesale to traders in Ireland. In 2014, the company changed its name to ACCHL 2. Throughout the relevant period, he and Mrs Maniar were directors of the company, though Mr Maniar was the person who took the lead in running and managing the company.

ACCHL entered into a credit facility with the Bank in 2005. The facility was renewed from time to time.

In 2008, ACCHL acquired the exclusive rights to the Iceland franchise in Ireland. It opened a number of supermarkets under that name.

In 2010, the Defendants each entered into deeds of guarantee in respect of the liability of the company to the Bank. Both deeds were stated to be subject to English law and the parties submitted to the non-exclusive jurisdiction of the High Court of Justice in England.

In 2015, ACCHL entered into examinership pursuant to Part 10 of the Companies Act 2010. The chronology of that process was as follows:

1.7.15 Originating notice of motion presented to the Circuit Court, Dublin Circuit by Cosgrove Gaynard on behalf of ACCHL for the appointment of an examiner.

8.7.15 The Circuit Court granted ACCHL protection and directed a hearing on 20.7.15.

17.7.15 Kennedys Solicitors, on behalf of Claimant, gave notice of intention to appear at hearing on 20.7.15.

27.7.15 First hearing of the petition. Judge Linnane made an order appointing Mr Joseph Walsh as Examiner and adjourning the matter to 9.9.15 with protection.

7.9.15 Mr Walsh reported to the court proposing a meeting of members and creditors on 18.9.15.

18.9.15 Claimant sent letters to the Defendants by International Recorded Delivery from Manchester containing offers pursuant to Section 549. The offers were copied to a number of people including the First Defendant and Ms Susan Cosgrave, solicitor for ACCHL, under cover of an email from the Claimant's solicitor (Mr Walshe of Kennedys) stating, “ Please find attached a copy of the Section 549(2) Notice which has been served in respect of the personal guarantees held by Bank of Baroda.” Mr Walshe received a message stating that delivery to Mr Maniar's email address had failed because “ the email address you entered couldn't be found.”

22.9.15 An Post 3 attempted to deliver the letters posted by International Recorded Delivery; no one was at the Defendants' home address so notices were left stating that the letters would be held at the depot for 16 working days.

23.9.15 A meeting of the creditors and members of ACCHL took place.

24.9.15 Mr Walshe submitted his report to the Circuit Court.

30.9.15 Hearing before the Circuit court. Examiner's proposals and scheme of arrangement approved.

1.10.15 Mr Maniar collected the An Post notices from the local post office.

7.10.15 Examiner discharged.

9.10.15 Examiner sends cheque for €13,057.97 to the Claimant.

On 16 October 2015, the Bank demanded payment of €439,770.13 from the Defendants pursuant to the deeds.

On 21 March 2016, the Claimant issued the claim herein for €426,754.83 (the sum claimed on 16 October 2015 less credit for the payment made by the examiner on 9 October 2015, though the figures do not exactly tally). These proceedings have had a convoluted history, set out at paragraph 24 of the Claimant's opening submissions. That history is not relevant to the matters that I have to decide.

Meanwhile, in or around January 2017, the Defendants each commenced the process of entering into a Debt Settlement Arrangement (“DSA”), a scheme pursuant to Part 3 of Chapter 3 of the Personal Insolvency Act 2012. Ms Claire Kelly of Kildare Audit and Accountancy Services was appointed the Personal Insolvency Practitioner in respect of the arrangements.

The Circuit Court approved the DSAs on 12 January 2018. Under the DSAs, the Claimant sought to prove for a costs order but did not seek to prove in respect of liability under the personal guarantees. In the event, the sum of €1 was included in the list of creditors as a contingent liability to the Claimant to reflect the potential liability under the guarantees 4. With the addition of the costs liability, the Claimant was paid the sum of €1,434.74 out of the DSAs.

On 22 June 2018, the Claimant applied for summary judgment in these proceedings. The application notice stated, “ The Defendants have no reasonable prospect of defending the claim because they entered into a debt settlement arrangement (DSA) in Ireland on 12 January 2018 under which the Claimant received a distribution.” The application was supported by a witness statement from a solicitor, Mrs Kershaw, who stated, “The Bank cannot recover any further monies for the debt as it has been paid the full sum allocated to the debt … the whole claim has been compromised under the DSA.”

The Relevant Scheme of Irish Law — Examinership

Many of the issues in this case involve consideration of the scheme of examinership within Irish Insolvency Law. That scheme is set out in Chapter 4 of Part 10 of the Companies Act 2014 (“CA 2014”). In essence, it involves the appointment of an examiner who formulates a proposal for the restructuring of a company in financial difficulty. Such a scheme will typically involve the purchase of the company by a new investor and the writing down of debt. The examiner consults parties who may be affected by the proposed scheme and reports to the court at a “confirmation hearing” where the court may confirm,

In Re Traffic Group Limited[2008] 3 IR 253 at 260, Clarke J described the purpose of examinership under Irish Law as being:

“ …to enable, in an appropriate case, an enterprise to continue in existence for the benefit of the economy as a whole and of equal or indeed greater importance to enable as many as possible of the jobs which may be at stake in such enterprise to be maintained for the benefit of the community in which the relevant employment is located … It is not designed to help shareholders whose investment has proved to be unsuccessful. It is to seek to save the enterprise and jobs.”

Section 548 of the CA 2014 provides the general rule by which liability under a guarantee or indemnity is not affected by a compromise or scheme of arrangement in an examinership. This rule is however subject to an important exception, by virtue of Section 549 which provides:

“ Enforcement by creditor of liability: restrictions in that regard unless certain procedure employed to the benefit of third person

549. (1) If the creditor proposes to enforce, by legal proceedings or otherwise, the obligation of the third person in respect of the liability, then he or she shall –

(a) if 14 days or more notice is given of such meeting, at least 14 days before the day on which the meeting is convened under section 540 5 to consider the proposals is held, or

(b) if less than 14 days' notice is given of such meeting, not more than 48 hours after he or she has received notice of such meeting,

serve a notice on the third person containing the following offer.

(3) That offer is an offer in writing by the creditor to transfer to the third person (which the...