Bank of Baroda v Maniar & Anor

In this matter, the Claimant (“the bank”) claims sums due pursuant to deeds by which the Defendants (Footnote: ¹) guaranteed and/or indemnified the liabilities to the Claimant of ACCHL Ltd (“ACCHL”). The Defendants deny liability on a number of grounds set out more fully below.

The trial took place on 1 to 3 April 2019.

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

On behalf of the Defendants, evidence was given by:

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.

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 (Footnote: 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:

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

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 (Footnote: 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.”

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 (Footnote: 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 creditor is, by virtue of this section, empowered to do) any rights, so far as they relate to the debt, he or she may have under section 540 to vote in respect of the proposals for a compromise or scheme of arrangement in relation to the company…

(5)

If the creditor fails to make the offer referred to in subsection (1) in accordance with that subsection, then, subject to subsection (6), the creditor may not enforce by legal proceedings or otherwise the obligation of the third person in respect of the liability.”

It is immediately notable that, in order to comply with Section 549(1), the creditor may need to act very speedily – indeed, it may require the creditor to serve the Section 549 notice on the third party on the same day as they receive notice of the Section 540 meeting.

The Court has before it limited evidence on the nature of Debt Settlement

The Irish law experts agree that: “the underlying claim by Bank of Baroda against the Maniars on foot of the guarantee has been compromised as a matter of Irish Law by the DSA under Part 3 of the Personal Insolvency Act 2012 which was approved by an Irish Court on 12 January 2018 and not appealed.”

The defence to this claim turns on:

There is also an issue as to the correct quantification of the claim.

There is common ground as to the issues that the court must decide.

At the start of the trial, counsel for the Defendants raised an issue as to the manner in which the Claimant was seeking to advance the argument about the effect of the DSAs. The DSAs had not been entered into when proceedings were issued but by paragraph 28 of the Amended Defence, the Defendants argued that the Claimant was bound by the DSAs, as a result of which any judgment in the Claimant’s favour is limited to the payment of €1,434.73 made to the Claimant in the DSA; alternatively that the Claimant is estopped from denying that this is the effect of the DSAs; alternatively that the effect of the DSAs is to discharge all liability of the Defendants. The Claimant denied in the Amended Reply that the court should apply Irish Law to give effect to the DSAs and denied that any estoppel arose. (In the event the argument based on estoppel has not been pursued.)

In their joint statement, the experts agreed, as set out above, that the effect in Irish law of the DSAs was that the underlying claim by the Bank under the deeds has been compromised. However, in its skeleton argument for the purpose of the trial, the Claimant asserted that, as a matter of Irish law, the

The Defendants complain that the Claimant’s closing submissions resurrect those arguments that I ruled could not be relied upon. The Claimant counters that this is not so - its pleaded case is that it is for the Defendants to prove Irish law; the underlying point it seeks to make is that the experts’ agreement as to Irish law on the effect of the DSAs is unpersuasive, the arguments advanced in the closing submissions simply being examples of why that is so.

I agree with the Defendants that it is not now open to the Claimant to take these points. It is unfair for a party to seek to undermine the agreed position of experts by positive assertions as to the matters upon which the experts have opined without giving the opposite party and the experts an opportunity to comment on those matters. That unfairness is not mitigated by the party saying that it is not seeking to establish a positive case that counters that of the experts, but rather is merely seeking to persuade the court that the common position of the experts is in fact not made out on the balance of probabilities.

As it happens, for reasons set out below, I find the Claimant’s argument to be unpersuasive in any event. Even if it had been permitted to advance the argument, it would not have succeeded.

Mr Walshe was the partner in the Dublin office of Kennedys Solicitors who had conduct of the examinership on behalf of the Claimant. In his statement, he explains the nature of examinership. That description is largely uncontroversial. He states that the time scales of examinerships can prove problematic in particular because generally notice of a meeting under section 540 of the CA 2014 is given less than 14 days before the meeting is to take place, so that the notice required to be served on the third party under section

As to notice in this case, Mr Walshe states that Hughes Blake, who were handling the examinership, gave notice of a meeting of members and creditors of ACCHL by email received at 15.19 on 18 September 2015. The meeting was due to take place on 23 September 2015, less than 14 days thence. In consequence, the notice under section 549 needed to be served on the

In cross examination, Mr Walshe was asked about why he had copied Mr Maniar into the email to Ms Cosgrove. He accepted that, as a matter of principle, in Ireland, a lawyer should not contact directly a represented party (the obvious inference from the fact that he copied Mr Maniar in to the email being that he did not believe Ms Cosgrove to represent Mr Maniar). Mr Walshe emphasised that he felt it was necessary to draw the attention of people who were in daily contact with Mr Maniar to the section 549 notice.

Mr Walshe was asked about the delivery failure receipt that he received in respect of the email to Mr Maniar later on 18 September 2015. He realised that

Mr Walshe accepted that, having received the delivery failure email, there were other steps that could have been taken. He could have tried to identify another email address for Mr Maniar, could have tried to find a phone number or could have arranged for the documents to be served personally or delivered to his home address.

He further accepted that, in none of the written communications did Cosgrove Gaynard say that they were acting for the Defendants personally, nor was it necessarily the case in the case of a petition such as this that the solicitors for the company were representing the directors personally. However he said that the interests of the Defendants were inextricably bound up with those of the company and he therefore thought that Cosgrave Gaynard were in fact acting for the Defendants. Mr Walshe stated that Mr Maniar had attended the hearing on 27 July 2015 with a woman whom he could not identify. At this hearing the company was represented by Cosgrove Gaynard and that this must have caused his belief that the solicitors were acting for Mr Maniar as well.

In his witness statement, Mr Walshe refers to stating at the confirmation hearing on 30 September 2015 that the Claimant intended to rely on the guarantees. He accepted that he could not produce a note that shows that this was said, but denies that it was a case of “wilful misremembering.”

It is obviously the case that Mr Walshe has a motive to assert that the Defendants were made aware of the Section 549 notices by some means, given that his firm was responsible for the service of the notices, yet now are being met with the assertion that service was not effective. I did not however form any impression that his evidence was inaccurate, still less than he was wilfully mis-stating what had happened in the examinership hearing. In any event, had

Mrs Kershaw works for the Claimant’s solicitors in their Manchester office. Much of her evidence relates to the use of recorded delivery and the service of notices by An Post. In large part it involves recounting what she has been told about the system of recorded delivery. In summary, that procedure involves an attempt to deliver the item to the address. If delivery cannot be achieved because no one is present to sign for it, a note is left at the property which invites the addressee to collect the item but states that the recipients can request that it be redelivered to the address or delivered to an alternative address.

In this case, the information from An Post indicates that an attempt to deliver was made on 22 September. The usual note was left. The items were not signed for until 1 October 2015.

Ms Kershaw accepted that the estimated time for delivery by International Recorded Delivery from the United Kingdom is probably 3 to 5 days not 2 to 5 days as stated in the Reply.

In her first statement, Mrs Kershaw referred to an investigation into the email address to which the 18^th September email was copied. That address, naeem@a-i-m.ie, had been used by Mr Maniar in his previous dealings with the bank. On 12 May 2017, Mrs Kershaw says that she sent an email to that address. It was not returned nor did she receive notice of failure of delivery. The obvious inference is that the email address was active then.

In her oral evidence, Mrs Kershaw asserted a belief on her client’s behalf that Mr Maniar had somehow manufactured the bounce back of the email. She accepted that she had no expertise in this issue.

Mrs Kershaw’s evidence was straight forward. Whilst her belief that Mr Maniar engineered the bounce back of the email is clearly controversial (and obviously in the interest of her employer, the Claimant’s solicitors), in reality

The evidence of Messrs Singh and Frawley was relied on pursuant to the Civil Evidence Act 1995. Hearsay notices were served. In fact nothing of significance turns on their evidence.

Mr Maniar gave evidence at some length. He said that his wife had been involved in the day to day activities of the business of ACCHL in its early years but that she had had not such involvement since 2008. She would leave business decision to him though would sometimes express unhappiness at being asked to sign papers and had asked to be removed as a director.

The personal guarantees were entered into because the bank required them before they would fund the business expansion that he wanted. The guarantee had to be signed in England not Ireland.

Mr Maniar was questioned about his statement of means dated May 2014 that was provided to the bank. It was not easy to follow his attempts to explain the figures.

Mr Maniar denied that Cosgrove Gaynard were ever instructed to act for him or his wife personally. They had other solicitors who acted for them personally.

As to the email address, he said that he regularly used the address to which the email on 18 September 2015 was sent. As far as he was concerned, it worked properly though there were occasions when the server was down. He had 3 other “personal” email addresses, two with Google and one with iCloud. He asserted that the Claimant knew at least of the Google mail addresses.

Mr Maniar was questioned about the extent of his disclosure for example on whether the bank was aware of another email address for him. He accepted that his obligation was to identify any document from the bank and said that he had done that.

As to Mrs Cosgrove giving evidence, he said that he had asked her to do so but that she said she was owed money and that needed to be dealt with first. He understood that there was no power to subpoena her but said that it was “astonishing” that she had not been called to give evidence.

Mr Maniar denied any knowledge of the intention of the bank to serve Section 549 notices or that he was attempting to evade such service. He did not have regular contact with Ms Cosgrove.

In respect of the hearing on 30 September 2015, Mr Maniar accepted Mr

Mr Maniar said that, at the time of confirmation hearing, he did not know anything about section 549 notices. He was asked about a letter from him to the bank dated 21 October 2015 in response to a letter dated 16 October 2015 demand payment under the guarantee. It was pointed out that that letter disclosed some reasonably detailed knowledge of the section 549 notice process which ran counter to Mr Maniar’s evidence that in the previous month he had not known about the process. Mr Maniar said that the letter was written by his then personal assistant who went on to become a barrister.

Mr Maniar said his witness statement was incorrect where, in the final sentence of paragraph 111, he says that, had Mr Walshe mentioned the intention to enforce the guarantee the confirmation hearing ,“I would certainly have taken issue with it as I had not been made aware of this beforehand and neither my wife nor I had been served with the required notices under s549.” This sentence was again inconsistent with his assertion that, at the time of the confirmation hearing, he was unaware of the procedure for section 549 notice.

Mr Maniar asserted that he did not discuss the guarantees with the examiner though he had the guarantees in mind during the examinership.

In his witness statement at paragraph 138, Mr Maniar deals with the assertion at paragraph 12 of the Amended Defence that monies held on deposit would be used to offset indebtedness under ACCHL’s facility with the bank, thereby reducing the interest payable. In the statement it is said that this agreement was made “orally with the deputy executive director of the London branch” of the Claimant. Mr Singh’s unchallenged evidence on behalf of the Claimant was that this job title did not exist in the Claimant. In oral evidence, Mr

On the issue of the service of the section 549 notice, Mr Maniar said that he was not aware that there was any attempt to serve such a document. He was aware that An Post had left a card regarding the non-delivery of a package. His wife had told him that that was in the week commencing 21 September. The delay from then till collecting the letter on 1 October was not a consequence of an attempt to avoid service, the Defendants being unaware of what the undelivered package was.

There were a number of troubling features of Mr Maniar’s evidence:

Overall, I have considerable concern about accepting Mr Maniar’s evidence where it is not consistent with other material before me.

Mrs Maniar’s witness statement deals with her relationship with Cosgrove Gaynard and the attempted service of the Section 549 notices. On the former issue, she stated that she had not instructed Cosgrove Gaynard to act on her behalf. On the second issue, she says that she was mostly at home over 19 to 21 September 2015 and she was not aware of any attempt to deliver documents. On 21 September 2015, whilst at home she had accepted service of papers on behalf of her husband and herself from Ulster Bank.

From Mrs Maniar’s oral evidence, it was apparent that she had little involvement in running the company. She trusted her husband and signed documents when asked to. She recalled having met the examiner, but it was apparent that she had limited understanding of the examinership process.

As for service of the documents, Mrs Maniar accepted in cross examination that An Post had left a note that there was a failed delivery. She said that she probably received the note a little time before she went to the depot to collect the post, though she would usually go within the week to collect a package when this happened.

Mrs Maniar’s evidence was limited in ambit but straightforward. I gained no impression that she was trying to dissemble in asserting that she was not aware of the section 549 notice until she collected it on 1 October 2015. I accept that evidence.

Mr Gorman is an Irish Barrister who was instructed by Cosgrove Gaynard to represent ACCHL at the hearing on 30 September 2015. The Revenue Commissioners initially opposed the examiner’s proposal for ACCHL because of a concern about a debt owed to them. They did not wish Mr Maniar to be a director of the company in the new arrangement. This issue was resolved by Mr Maniar giving an undertaking to the court on 30 September 2015 to resign as a director of ACCHL and not to act as a director of the company for 3 years. At the hearing, Mr Gorman was asked to and did give the undertaking on behalf of Mr Maniar.

The Claimant’s case is that, since he acted for Mr Maniar in this hearing, he was representing them personally on a more general basis and that equally his instructing solicitors, Cosgrove Gaynard were or must have been acting for the Defendants. Mr Gorman denied that to be the case both in his statement and his oral evidence (which was given by telephone for reasons of convenience).

In his oral evidence, Mr Gorman stated that he agreed to give the undertaking on behalf of Mr Maniar because it was convenient to do so – otherwise Mr Maniar would have had to take the oath. However, he represented Mr Maniar for this limited purpose only and was not representing the Maniars more generally at this or any earlier hearing.

Mr Gorman was asked about Mr Walshe’s evidence that he had mentioned the bank’s intention to enforce the guarantees at the hearing on 30 September. He said that he had no recollection or note of this but accepted that it might have happened.

I found Mr Gorman’s evidence to be clear and convincing on the matters that he was able to deal with.

The experts agreed that, unless the notice was brought to Mr and Mrs Maniar’s attention during the 48 hour period following receipt by the bank of notice of a meeting pursuant to section 540, extended to the following Monday, 21 September 2015, the Claimant could only prove service by relying on the deemed service provisions.

During the course of trial, there was considerable discussion about what amounted to “service” for the purpose of Section 549. As Mr Fanning pointed out, the statute does not provide for what is required by way of service. In his evidence, both oral and written, he concentrated on the question of deemed service. In his report at paragraph 36, Mr Fanning referred to Order 9, Rule 5 of 15 of the Rules of the Superior Court which provide that “In any case, the court may, upon just grounds, declare the service actually effected sufficient.” He saw this as the root of the court’s power to deem service good.

His evidence as to the exercise of the power to deem service was:

On the issue of the timing of a court exercising the power to deem service good, Mr Fanning maintained that the Irish court could do so at any time. His reasoning for this was that there was nothing in the statute to limit when the court could consider the issue. However, he accepted that he was aware of no case either way on whether, in guarantee proceedings following an examinership process where actual service of the section 549 notice could not be proved, the Irish court had the power to deem service good.

In terms of actual service, Mr McCarthy speaks at paragraph 36 of this first report of a need for notice to be “physically served” on the person. In cross examination, he was asked about paragraph 38 of his first report where he said, “It appears to me that the statute is clear in that for notice to be valid it must be served personally to be valid (sic).” He said that by referring to

“personal service” he was not speaking in some technical sense, for example that the document had to be handed to the person. He felt that it sufficed for the offer to be “served” that the person was made aware of the offer.

In the context of posting, Mr McCarthy considered that service required that the relevant document was put through the letter box of a person’s normal residence, though he accepted that there might be an issue if the person was away. He appeared to think that an email that was not read would not amount to “service” as such, but that if the email went to a person’s usual email address, that would be highly supportive of the court deeming service to be good.

On the issue of whether any court other than the Irish court which is dealing with the examinership has the power to deem service to be good, Mr McCarthy stated that only the examinership court can make such an order, his reasoning being that that court alone is charged with the examinership process. In particular, a court could not deem service to be good in later proceedings such as this to enforce a guarantee because section 549 prevents such proceedings being brought.

Mr McCarthy also states that the Irish courts have exclusive jurisdiction under the European Insolvency Regulations and that, even if an Irish court could deem service to be good, that is not a power available to English Court. However, it must be said that, even if the Irish court has exclusive jurisdiction, the application of that law is a matter of EU and domestic law. Accordingly, this aspect of his evidence falls outside the ambit of that which Mr McCarthy can properly opine on in this court.

In their joint statement, the experts agree on the effects of the Debt Settlement Arrangements in the passage referred to above.

Both experts were clearly trying to assist the court. In fact there was little difference between them as to matters of Irish law relevant to this trial.

My overwhelming impression from both experts was that the nature of

“service” as it has developed in Irish law is different from that in English law. In the English system, emphasis tends to be put on form – it suffices to prove service that a document was transmitted in accordance with rule such as CPR

Part 6, and the court may find “actual” service regardless of whether the person has read the document or was aware of its contents. On the other hand, in Irish law the emphasis is on proving whether the person was actually aware of the contents of the document. In so far as the Irish rules may create a problem for the person seeking to serve a document in that they cannot prove whether a person was actually aware of the contents of the document, the solution lies in the exercise of the inherent power to deem service good where proper attempts have been made to make the intended recipient aware of the contents of the document.

The Claimant’s case is that:

On the first issue, the Claimant relies on the conventional statement of law in

Dicey & Morris, paragraph 9-025, citingDynamit v Rio Tinto [1918] AC 260:

“The burden of proving foreign law lies on the party who bases his claim or defence on it.”

As to whether the English court should “recognise” the effect of Section 549, the Claimant contends that the Defendants fail to show any proper basis for finding that Section 549 applies to as to modify the Defendants’ liability to the Claimant:

The Claimant contends that the effect of Section 549 which the Defendants advance amounts to an assertion that, where notice has not been given under that section, the liability of the guarantor/indemnifier is effectively discharged.

The Claimant notes a passage from Fletcher’s The Law of Insolvency (5^th Edition), cited with approval by Hildyard J in Re OJSC International Bank ofAzerbaijan [2018] EWHC 59 (Ch), at paragraph 45:

“According to English law a foreign liquidation - or other species of insolvency procedure whose purpose is to bring about the extinction or cancellation of a debtor’s obligations - is considered to effect the discharge only of such of a company’s liabilities as are properly governed by the law of the country in which the liquidation takes place or, alternatively, of such as are governed by some other foreign law under which the liquidation is accorded the same effect. Consequently, whatever may be the purported effect of the liquidation according to the law of the country in which it has been conducted, the position at English law is that a debt owed to or by a dissolved company is not considered to be extinguished unless that is the effect according to the law which, in the eyes of English private international law, constitutes the proper law of the debt in question.”

This principle expresses the decision of the Court of Appeal in Anthony Gibbs& Sons v La Société Industrielle et Commercial des Metaux (1890) LR 25 QBD, the so-called Gibbs rule.

The Claimant notes the Defendants’ reliance on the Council Regulation No. 1346/2000 on Insolvency Proceedings (“EIR”) (Footnote: ⁹). Article 4 of EIR provides the general principle:

“(1)…the law applicable to insolvency proceedings and their effects shall be the law of the Member State within the territory of which such proceedings are opened…

(2)

The law of the State of the opening of proceedings shall determine the conditions of the opening of those proceedings, their conduct and their closure. It shall determine in particular:

…

j.

The conditions for and the effects of closure of insolvency proceedings, in particular by composition;

k.

Creditors’ rights after the closure of insolvency proceedings.”

EIR is intended to provide a scheme of efficient cross-border insolvency regulation by seeking to avoid a multiplicity of competing insolvency proceedings. It was described by Christopher Clarke J in Syska v VivendiUniversal SA [2008] EWHC 2155 (Comm) as “a piece of subordinate Community legislation which forms part of English law. It was introduced in order to lay down mandatory rules for choice of law, jurisdiction, recognition, enforcement and co-operation applicable to cross border insolvencies within the European Union.” He went on, “The correct approach to the interpretation of the regulation was accurately summarised by the Tribunal when it observed that, ‘the interpretation of the EC Regulation should strive to establish an autonomous (European) meaning based on the different language version of the regulation, considering (i) the overall scheme and purpose of the Regulation (teleological method of construction) and (ii) taking into account interpretative sources, such as the Preamble of the Regulation and the Virgos-Schmitt Report, but also the available authorities, such as Court decision – in first line, those of the ECJ – and the opinions of legal commentators’.”

The Claimant notes paragraph 90 of the Virgos-Schmitt Report:

“The law of the State of the opening of proceedings determines all the effects of the insolvency proceedings, both procedural and substantive, on the persons and legal relations concerned….The substantive effects referred to the competence of the law of the State of the opening by Article 4, are those typical of insolvency law, i.e. effects which are necessary for the insolvency proceedings to fulfil its aims. To this extent the law of the State of the opening may displace (unless the Convention provides otherwise) the law normally applicable under the common pre-insolvency rules on conflict of laws to the act concerned.”

Thus, whilst the Claimant concedes that law of the State of the opening, namely Irish law, may be required to be given effect under the EIR, that effect is limited to those aspects of Irish insolvency law which are necessary for the insolvency proceedings to fulfil their aim.

The Claimant draws my attention to the decision of Knowles J in EdgeworthCapital Luxembourg Sarl v Maud [2015] EWHC 3464. The Court was concerned with the alleged effect of Spanish insolvency law on a guarantee entered into by the Defendant of certain rights, the benefit of which was acquired by the Claimant. The principal debtor had entered into a voluntary insolvency process in Spain called concurso. The Defendant argued that the effect of Article 97.2 of the Spanish Act 22/2003 was to extinguish the principal debt and the guarantee. Knowles J found against the Defendant on the issue of construction of the guarantee, but in respect of the argument that the effect of Article 97.2 discharged the guarantee, and that the Court was obliged to give effect to Spanish law by virtue of EIR, he said this:

“In my view the mere fact that the Article 97.2 is to be found in legislation dealing with insolvency is not enough to bring it within the Insolvency Regulation. A close analysis of Article 97.2, of the legislation in which it is found and of the Insolvency Regulation is required. Having regard in particular to paragraphs (6), (11), (12), (22), (23) and (25) of the preamble to the Regulation and Articles 1.1, 4 and 25 of the regulation, if Article 97.2 did indeed extinguish third party obligations as contended by the Defendant, I would have great difficulty in accepting that Article 97.2 in that respect was a provision that fell within the Insolvency Regulation.”

Applying the analysis of Knowles J, the Claimant contends that Section 549 does not fall within the ambit of “the law applicable to insolvency proceedings” to which Article 4(1) of EIR applies. In particular:

The Claimant concedes that one aspect of the Section 549 process that may have a bearing on the examinership is the nature of the offer under Section 549(3) – in effect, where the creditor proposes to enforce the guarantee, that offer gives the guarantor the opportunity to be represented at a meeting of creditors and to use the votes that would otherwise be attributed to the creditor in respect of the principal debt. To that extent, it must be conceded that section 549 is relevant not only to the residual liability of the guarantor but also may affect the conduct of the examinership. But the Claimant contends that this has no bearing on the orderly conduct of the examinership.

In summary, the Claimant, whilst conceding that Section 549 appears in the part of the Companies Act 2014 dealing with insolvency, contends that this is a matter of form rather than substance. In substance, the provision does not deal with the opening, conduct, closure or effect of the examinership process. It would be surprising if the enforcement of a guarantee which is subject to English law would be affected by a provision of Irish law as to the giving of notice.

Indeed, the deeds provide on their face (at clause 5(a)) that the Claimant need not take any action before enforcing the guarantee. The legitimate expectation of the parties was that no notice was required to enforce the guarantee and the imposition of such an obligation by giving effect to the Section 549 procedure would be contrary to such an expectation.

It follows that, on the Claimant’s case, the failure to serve a Section 549 notice is not a provision to which the English court is bound to give effect by virtue of EIR. It does not act so as to prevent the English courts enforcing the guarantee.

The starting point of the Defendants’ case is the joint statement of the Irish law experts, in particular the following agreed paragraphs:

The Defendants contend that the effect of the failure to give section 549 notice, coupled with the conclusion of the examinership, is that the liability of ACCHL to the bank is extinguished. They rely on the statement of law at paragraph 31-114 of Dicey, Morris and Collins on the Conflict of Laws (15th edition) :

“It is an established principle of English law that a discharge from any debt or liability under the bankruptcy law of a foreign country outside the United Kingdom is a discharge therefrom in England if, and only if, it is a discharge under the law applicable to the contract. According to Art 4(2)(j) of the Regulation (Rule 183(2)(j)), the law of the State of the opening determines the conditions for and effects of closure of insolvency proceedings. This means that where main proceedings in another Regulation State are closed and the closure has, under the law of that Regulation State, the effect of discharging the debtor, that discharge must be recognised even if it is not an effective discharge under the law applicable to the contract.”

The Defendants go on to argue that it is clear that the examinership procedure, including the requirement of an offer under Section 549, are aspects of the insolvency, the efficiency of which would be adversely affected by the failure to recognise the effects under Irish law of failure to give notice. The

The Defendants say that it is wrong to place excessive reliance on the decision of Knowles J in Edgeworth Capital:

In so far as the Claimant raises an issue that the legitimate expectations of the parties under the deeds did not require the service of any notice to enforce the guarantee, the Defendants point out that this is inconsistent with the Claimant's own case in seeking to prove that it did all that it could to serve the relevant notice and that the Defendants were seeking to evade such service.

In any event, it is not atypical in English law that an insolvency process may render a liability under a guarantee enforceable – the Defendants cite the judgment of Etherton J as he then was in Prudential Assurance v PRGPowerhouse [2007] EWHC 1002 (Ch) as to the potential for a CVA to prevent a creditor taking steps to enforce the obligations of third parties to the creditor.

Three important points of law are undisputed:

The remaining questions that are in dispute are:

On the first of these points, the express terms of section 549(5) is that, if the creditor fails make the relevant offer, they “may not enforce by legal proceedings or otherwise the obligation of the third person in respect of the liability.” The Irish law experts did not suggest that the effect of the failure to make an offer under Section 549 is that the liability either of the principal or the guarantor is discharged. The wording of Section 549(5) simply does not bear that meaning.

It follows that, whilst discharge of either ACCHL or the Defendants as the guarantors under Irish law might bring into play the principle referred to at paragraph 99 above, that issue does not in fact arise here.

On the second issue, the acute difference between the parties on the application of EIR arises. There is force in the comments of Knowles J in Edgeworth Capital as to the need to look carefully at both the foreign law provision that is in issue and the EIR to determine whether the foreign law provision is in fact an aspect of “the law applicable to insolvency proceedings” to which the domestic court is obliged to give effect by Article 4 of EIR.

The important point here is the potential effect of a Section 549 offer on creditors’ meetings. The fact that the making of such an offer gives rise to the possibility of the guarantor accepting the offer and exercising the voting rights of the creditor at a members’ meeting creates a significant connection between the notice and the conduct of the examinership itself. This brings the procedure within the ambit of Article 4 of EIR.

If the Claimant were able to show some legitimate expectation on its part that events in the examinership would not affect the underlying liability under the guarantee, that might be a significant factor to weigh in the balance. But if anything, the evidence here points the other way. The Bank engaged in the Section 549 process by attempting to effect service on the Defendants. That suggests a realisation (indeed an acceptance) that the principal debtor was subject to the Irish law of insolvency including the examinership process. One might expect a sophisticated financial institution in the position of the Claimant to have such an awareness. Whilst of course the proper application of the EIR to the particular procedures of particular countries cannot turn on

It follows that failure to comply with the Section 549 notice procedure would be fatal to an action to enforce these guarantees in the English courts.

The Claimant was of course not able to show that it had sent the document to either Mr or Mrs Maniar in accordance with the time limit prescribed by Section 549. In closing submissions, the Claimant put its case as being that, in order to prove actual service on Mr Maniar, the court would have to find that one of the recipients of the email sent by Mr Walshe on 18 September 2015 had told him what they had received and forwarded it to him.

As the Claimant rightly accepted, Mr Maniar denied in evidence that anyone had told him of the contents of the email or forwarded it to him. There was no other direct evidence on this issue. however the Claimant invited me to reject

As for Mrs Maniar, the Claimant accepts that service on Mr Maniar is not itself enough to prove service on Mrs Maniar, but that the overwhelming inference to be drawn is that, if the court finds that Mr Maniar was aware of the notice, he would have spoken to Mrs Maniar about it.

The Claimant sees no problem in the Irish Courts exercising the power to deem service good for whatever purpose may be necessary. No principle of Irish law is identified to prevent this.

The Claimant contends that not only can the English Court consider the issue of whether service should be deemed to be good, it is obliged to do so. On the assumption that the Court is required to apply Irish law to the question of the adequacy of service, that law gives the court a discretion. The court cannot adopt only part of the law of the foreign court, it must adopt the whole of that law, including in this case the power to deem service,

The Claimant relies on the decision of Nicholas le Poidevin QC siting as a

The question arose as to whether the English Court could exercise the discretion to give such relief. Mr le Poidevin QC held that “the court” in Article 212 is a reference to the Jersey court not a foreign court but that the English court could exercise that discretion:

“when the English court applies a foreign law it does not do so because the foreign law is in force in England but because English rules of the conflict of laws call for an application of the foreign law. That means the whole of the foreign law material to the case, the lex causae. The only way in which that can be achieved is for the English court to assume the discretion conferred by article 212. If article 74(1) were enforced in England without regard to article 212, the English court would be applying only a truncated version of Jersey law.”

The Claimant contends that this reasoning is compelling - to fail to apply discretion that lies with the foreign court is to apply only a truncated version of the law of that country. This would be both illogical and absurd.

As indicated above, the Claimant contends that deemed service involves the exercise of the power under Order 9, Rule 15 of the Rules of the Senior Court. That it a wide power and the Claimant contends, on the basis of Mr Fanning’s evidence, that the Irish court would take a favourable view to deeming service on the facts of this case for the following reasons:

As to the expert evidence, Mr McCarthy’s written report stated that “physical service” on the person to be served was required under section 549. By the end of his oral evidence, it was not clear what service was sufficient absent the court applying the deeming provision. This undermined Mr McCarthy’s evidence in so far as it differed from Mr Fanning, but in any event, it supported Mr Fanning’s opinion that the requirement of service was less strict than Mr McCarthy initially stated.

The Defendants contend that, for the Claimant to prove service on a particular Defendant, it would have to show that the particular Defendant was aware of the contents of the notice.

The Defendants reject the suggestion that the court can draw the inference either that Mr Maniar was aware of the contents of the notice or that he told Mrs Maniar of the notice.

The Defendants adopt the evidence of Mr McCarthy. His opinion that the application needs to be made in the examinership makes good sense and is consistent with what actually happened in the case of Ely Medical, to which both experts referred in their evidence.

The Defendants contend that, even if a court other than supervising the examinership can deal with the issue of deemed service, only an Irish court can deal with the issue of deemed service. In this regard, the Defendants refer to the opinion of Mr McCarthy in his supplementary report; “It is common case that the opening of the examinership proceedings within the meaning of the Insolvency regulation) occurred in Ireland. This is important as this gives exclusive jurisdiction to the Irish Courts to hear and determine the Examinership.”

The Defendants draw attention to the concept of Centre of Main Interest and the provision of recital 12 to EIR which provides, “This Regulation enables the main insolvency proceedings to be opened in the member state where the debtor has the centre of his main interest.” (There is an exception for secondary proceedings that may occur in member states in which the debtor possesses an establishment, but such secondary proceedings are limited to assets of the debtor situated in that state. That exception has no application here.) Article 25 provides for the automatic recognition of the judgment of a court of a member state concerning the course and closure of insolvency proceedings, where the opening of insolvency proceedings in that court is recognised pursuant to EIR.

The Defendants contend that the effect of this exclusive jurisdiction of the court in which the proceedings are opened means that a decision of the Irish court on the issue of service would should be recognised by the courts of other member states. But the Defendants say that the principle goes further: the courts of another member state cannot make an order relating to service – that is a matter for the courts of the member state in which the proceedings were opened,

In support of this second proposition, the Defendants rely on the judgment of Mann J in Re Eurodis Electron [2012] BCC 57. In considering the effect of a winding-up order made by a Belgian court which was said “almost certainly” should not have been made in Belgium, Mann J said, “the purpose of the regulation is to produce a degree of uniformity and consistency of approach to insolvency matters across the Member States that are subject to it. It works by requiring the courts of one country to give effect to the orders of another or to decline to make orders where they ought to be made in another.”

The Defendants accepts that the Irish court may be willing deem service to be good where there is evidence of attempts to evade service. But beyond that they contend that the position is “murky” with no clear guidance. They point to the mandatory requirement of service of a Section 549 notice then look at the position here. As Mr Patel puts it in his closing submissions, “To look at the question of why actual service was not effected, one answer might be an attempt to evade service. Here the answer is failures by the Bank. To deem service in those circumstances would be in effect to forgive the bank those errors.”

I have no doubt that both experts were seeking to assist on the issue of what amounts to actual service, but were doing so from a standpoint that lay greater emphasis on the substance of service than its form. This standpoint no doubt reflects the position of Irish law – given the acceptance that the court has a broad power to deem service and will frequently exercise the power, it is easy to understand why the experts did not see the need to be too precise in defining the boundary line between service which does not rely on the deeming provision and service which does. Unfortunately, it is necessary to make that distinction in order to deal with the Defendants’ contention that the English Court cannot consider the exercise of the power to deem service to be good, such that the issue of service stands or falls on what amounts to service without considering that provision.

The formulation by Counsel for the Claimant in closing submissions comes close to what the experts state to be good service. On the evidence before me, I find that Irish Law requires that for the service of an offer under Section 549 to be found to be good without reliance on any deeming provision, the Court would need to be satisfied that either:

I decline to analyse further the nature of the access required to satisfy the first of these (for example, what the effect would be of a person being away from their home or unable to access a computer) because that issue does not arise on the facts of this case.

On the test of service identified above, I have no hesitation in finding that, absent the deeming provision, the Claimant fails to prove service.

I accept that one might have expected the examiner and/or the solicitors to communicate with Mr Maniar about the Section 549 notice. But it was the company, not Mr Maniar, who was their client. Mr Maniar’s evidence that the issue was not discussed is perfectly plausible.

Further, there is no material from which I can draw any safe conclusion about why the email bounced back. Whilst an email would not normally bounce back from an active email in this way, I simply do not know whether it is possible for Mr Maniar to have manufactured such an occurrence.

Accordingly, whilst I have some considerable caution about aspects of Mr

Given that the Claimant accepts that its only route to proving service on Mr Maniar (absent the deeming provision) was that he had been informed of the notices by another recipient of the email of 18 September 2015, the Claimant fails to prove actual service.

I agree with the Claimant’s contention that no principle of Irish Law has been identified which would prevent a court other than that conducting the examinership from deeming service to be good. That being so, I look to the corresponding position in English Law. In exercising any power that was dependent upon proving service, the English court charged with that decision would have the jurisdiction to deal with adequacy of service. It follows that, in a corresponding position in the English courts, the court would have power to deem service good. Absent some provision of foreign law to differing effect, the same principle should be held to apply in Irish law.

The starting point here is that EIR gives primacy to Irish Law in insolvency proceedings opened in that country. It is correct that, in determining issues in those proceedings, a court applying EIR must apply Irish law. But that is different from saying, as Mr McCarthy does in the passage cited at paragraph 125 above that exclusive jurisdiction lies with the Irish courts.

There is considerable force in the submission that for the English court to fail to consider how this discretion would be exercised in the foreign court is to give effect to part only of Irish Law. The discretion exists in Irish Law. There is some (very limited) Irish Law on how it should be applied. Whilst the determination of how a discretion would have been exercised in a foreign court is a potentially challenging task for the English court, it is one that

If it were the case that the Irish Courts could not consider the exercise of the discretion save in the course of examinership proceedings, there would be force in the argument that the English court equally could not do so. for reasons given earlier, that is not my finding as to Irish Law.

In so far as the Defendants rely on the judgment of Mann J in Re Eurodis

It follows that it is not only open to this court to exercise the discretion of the Irish Court, it is necessary for this court to determine (as a matter of fact applying Irish law) how that discretion would have been exercised on the facts of the case.

There is no dispute that the Irish court has a discretion to deem service good. For reasons that I have identified, that discretion can be exercised both within and outside of the examinership and, in so far as relevant, the exercise of the discretion can be considered by the English court. It is not however right to conceptualise this as the English court exercising the Irish court’s discretion. Rather it is the English court determining how the Irish Court would exercise that discretion.

In English law, the exercise of a discretion tends to be a mixed question of fact and law. I see no reason to think that the situation in Ireland is different save that the evidence I have heard would suggest that there is in reality very little law to guide the exercise of this discretion.

Having heard both Irish experts, I am satisfied that the Irish court is obliged to consider all of the circumstances of the case and to take a broad view of what achieves justice between those affected by the determination of the issue.

I bear in mind the stage at which the question as to the proper exercise of the discretion arises. It may well be that, in the Irish courts the issue, if raised at all, would have been dealt with in the examinership (though Mr McCarthy suggested that that would be rare). No doubt, at that stage the court would not have available much, if any, evidence on the issue as to whether the reason for the non-effectiveness of service was that the guarantor was seeking to evade service. The court would have to form an impression on that issue and I can well see that, in order to avoid this becoming a rogue’s charter, the court might lean in favour of deeming service to be good.

The suspicion that Mr and Mrs Maniar were seeking to avoid service arises from:

These points collectively have force, particularly where, as here, I have concerns about the reliability of Mr Maniar’s evidence. But it is necessary to look with some care at the detail of the material.

I have had the opportunity to hear from Mr and Mrs Maniar. Whatever the suspicions about why the email rebounded and why the notices were not collected until after the determination of the examinership process, I am satisfied on the balance of probabilities that Mrs Maniar was not seeking to avoid service. I have considered whether other doubts about Mr Maniar’s evidence lead to the opposite conclusion in his case. Given the absence of direct evidence of an attempt to avoid service and the weaknesses in the inferences that the Claimant seeks to draw as identified above, I am not satisfied that he was trying to avoid service.

It is trite law that that which is found on the balance of probabilities to have happened is treated as having happened as a matter of certainty (see Mallett vMcMonagle [1970] AC 166 per Lord Diplock at page 176). The corollary is that, where the evidence fails to establish that an event did not occur that is it is treated as certainty that it did not happen. This must be the case whatever the suspicion may be. It follows that, in considering this application, the court is bound in the light of the findings in the previous paragraph to accept that the Defendants were not seeking to evade service. It cannot fudge the issue by saying that nevertheless there was a suspicion of an attempt to evade service that might in another context have led the Irish court to exercise the discretion in a particular fashion.

The relevant factors to the exercise of the discretion in this case appear to me to be as follows:

The difficult balance as to how the power to deem service good would be exercised lies on the facts of this case between, on the one hand, the failure of the Claimant to take all reasonable steps to serve the Defendants and on the other the lack of any meaningful difference that would have flowed if the Section 549 offers been properly served. On the first point, the evidence of Mr Walshe pointed to the apparent need to ensure that service was effected. It was an obvious step for the bank to serve personally on the Defendants. No good reason has been provided as to why it did not. On the other hand, I struggle to see how, if notices had been served, either the position of these Defendants or the conduct of the examinership would have been any different.

On such a fine balance, the court would be likely to find against the person bearing the positive burden of persuading it how to act. On this issue, I heard no evidence from either expert. I can safely assume, both as a matter of private international law (see Dicey, Morris & Collins on the Conflict of Laws, 9R002) and as a matter of common sense, that Irish law on this issue is the same as English law, namely that the person seeking to persuade the Court to exercise a discretion bears the burden of persuading the court to do so. In my judgment, the Claimant fails to do so.

It follows from this that the Claimant’s claim cannot succeed, regardless of the other points before the court. however, given the effort that has been invested in arguing these points and the fact that the quantum argument, if it were to need to be considered at any stage, involves consideration of the witness evidence, especially that of Mr Maniar, it is appropriate for me to deal with these issues as I would have done had the Claimant succeeded on the section 549 point.

The Claimant’s case as to the effect of the DSAs is as follows:

At paragraphs 155 to 167 of its closing submissions, the Claimant sets out weaknesses in the expert evidence in support of the contention that I should not accept the experts’ opinion. For reasons referred to above, it is not open to the Claimant to advance a positive case on this issue and I shall not therefore deal with its case further.

On the issue of submission to Irish Insolvency process, the Claimant, using the passage from the judgment of Hildyard J in Re OJSC International Bank ofAzerbaijan op cit cited below, invites the Court to consider whether, as the

The Claimant’s final argument is that the DSA proceedings have no relevance to the liability of the Defendants under the guarantees. Whilst, pursuant to Article 4(1) of EIR, the law governing the DSA process is Irish law, Article 15 of EIR provides that “The effects of insolvency proceedings on a lawsuit pending concerning an asset or a right of which the debtor has been divested shall be governed solely by the law of the Member State of which that lawsuit is pending.”

In Virgos and Garcimartin, The European Insolvency regulations: Law and Practice (2004) Article 15 is explained thus:

“255…This exception to the application of the law governing the insolvency proceedings has a twofold explanation: the fact that, as no enforcement action is involved, the principle of collective action inherent in the insolvency proceedings is not impaired; and the close link with the procedural laws of each state resulting from the fact that the lawsuit is already on course. Further explanation. The difference between subjecting individual enforcements to the lex fori concursus and subjecting ordinary processes to the lex fori processus is sufficiently explained if we consider the different consequences of each on the insolvent debtor’s estate. In the first case, the creditor satisfies his interest directly. In the second case, he obtains a decision on the merits which does no more than allow him to join the body of creditors with an established claim.

256.

The use of the term ‘solely’ is aimed at preventing the cumulative application of different national laws. The meaning of this provision is to refer all questions concerning the possible effect of the opening of insolvency proceedings on lawsuits to the procedural law of the state where litigation is pending (or lex fori processus). the law will decide whether the proceedings are to be suspended or may continue subject to any procedural modification necessary in order to reflect the loss or restriction of the powers of disposal and administration of the debtor, and the intervention of the liquidator in his place, which all member states must recognise under article 16…”

The passage was cited with implicit approval by Longmore LJ in Syska vVivendi Universali [2009] Bus LR 1494.

The Claimant contends that the effect of the proper analysis of Article 15 is that this court should apply English law to decide the effect of the DSA procedure on these proceedings. The question of the substantive law of the guarantees remains English law under their own terms. An Irish law defence would only apply if, either applying the Gibbs rule or otherwise, the Court were bound to give effect to some relevant Irish law effect of the DSA.

The Defendants raised an argument in respect of estoppel relating to submission to process, at paragraph 31(b) of the Amended Defence. That is not an argument that has been pursued.

As to the contention that the evidence of Irish Lawyers does not support the conclusion that the effects of the DSAs is to discharge the debts, the Defendants point to the agreed position of the experts. They say that there is no material that undermines that evidence.

On the issue of submission to process, the Defendants draw my attention to a passage in the judgment of Hildyard J in Re OJSC International Bank ofAzerbaijan [2018] EWHC 59 (Ch), at paragraph 46 qualifying the Gibbs rule referred to at paragraphs 86 and 87 above:

“If the relevant creditor submits to the foreign insolvency proceedings the Gibbs rule does not apply. The rationale is simple: the creditor will be taken to have accepted that the law governing that foreign insolvency proceeding should determine the contractual rights he has elected to vindicate in that proceeding.”

The editors of Cross Border Insolvency put the principle this way at paragraph 13.26:

“Where a debt has been discharged under the law applicable to foreign insolvency proceedings and the creditor has submitted to those proceedings by taking or seeking to take a distributive share of the insolvent’s assets thereunder, the creditor will generally be bound at common law by the foreign discharge.”

As the Defendants concede, the Claimant submitted a proof of debt in relation to the costs order in its favour but did not do so in respect of the liability under the personal guarantees. However, it received a distribution not only in respect of the costs claim but also in respect of the underlying claim under the personal guarantees. The Defendants contend that this amounts to a

“distributive share of the insolvent’s assets”.

Further, whilst the Claimant did not seek this share, it did both accept the money rather than return it and subsequently act in a fashion that was indicative that it considered itself to have submitted to the process – see in particular the application for summary judgment where it stated “The Defendants have no real 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.”

In terms of the effect of the DSA, the Defendants contend that the Claimant misunderstands the nature of Article 15. That Article is only concerned with the relevant procedural law where there is lawsuit pending. It has no effect on the underlying substantive law. The law of the member state of the opening of proceedings determines the substantive effect of the proceedings (see recital 23 to EIR and Article 4 thereof, to which Article 15 creates an exception).

Thus, in answer to the Claimant’s contention that this Court should only give effect to the DSA if it is required to do so by domestic law, the Defendants say that that principle is too narrow - this court is obliged to apply both domestic and EU law; and under EU law, the Irish law effects of the DSA apply.

As I have indicated above, it is for the Defendants to prove the effect of the DSAs under Irish law, it is not open to the Claimant to mount a positive case that they do not have the effect contended for by the experts. The simple fact is that the agreed evidence of the experts is that they do have this effect. There is no material before me that so undermines the credibility of the experts as to cause me to reject their view notwithstanding that they have not been asked to explain or expand upon that opinion. I accept their opinion and find that the effect of the DSAs in Irish law is to discharge the debts of the Defendants. This deals with the first two points raised by the Claimants.

On the issue of submission to process, the Claimant raises powerful argument as to why it did not submit to the process. None of its actions indicate an intention to submit to such a process. Its failure to submit a proof of debt in respect of the personal guarantees is consistent with a lack of intention to submit to process, all the more so when such a proof was submitted in respect of the costs order.

The Claimant’s case has been inconsistent in so far as it argued in the summary judgment application that the distribution meant that the Defendants had no real prospect of success in defending the claim (implying that it considered itself bound by the DSAs) but such a legal position, doubtless taken for tactical reasons, cannot amount to submission to a process that had

Finally on the effect of the DSA in this court, the Defendants’ argument is plainly correct. This is an issue of substantive law which, by virtue of the EIR, is to be determined by the law of the Member State in which the insolvency process commenced, that is to say Irish Law. In Irish law, the liability under the guarantees has been extinguished by virtue of the DSAs for the reason given above. It follows that the liability is equally extinguished for the purpose of domestic law.

The Claimant contends that the Defendants’ case on the existence of an offset agreement is entirely unconvincing:

The Defendants contend that Mr Maniar gave clear evidence as to the existence of an offset agreement to which the court should give effect. His evidence was persuasive and in particular his inability to recall the person with

I have indicated concerns about Mr Maniar’s evidence above. An offset agreement of the kind he describes would be of considerable significance to ACCHL and the Bank. It is highly unlikely that the agreement would not have been evidenced in writing. Further, the dealings set out in the Amended Reply are indeed inconsistent with the agreement alleged by Mr Maniar. If such an agreement had been in existence, it is difficult to see why those dealings would have taken place.

The evidence taken as a whole fails to convince me that any agreement of the nature described by Mr Maniar was in place. It is probable that some discussion of an offset arrangement took place at some stage, but the Defendants wholly fail to persuade me that any concluded agreement was reached on the issue. Accordingly, I would have rejected the Defendants’ contention that any indebtedness under the guarantees would have needed to be adjusted to reflect such an agreement.

It follows from this judgment that the Claimant’s action against each of the Defendants fails.

The parties are invited to seek to agree a final order, in default of which the matters hold be listed for a further hearing before me. In accordance with an indication given in an email exchange with counsel, the time for applying for permission to appeal is extended to 4pm on 4 October 2019. I propose to deal with any such application on paper. The time for service of an Appellant’s Notice is extended to 21 days from determination of the application for permission to appeal.