High Court allows cross-examination of company director in winding-up petition to test credibility of debt evidence.

THE HIGH COURT

[2025] IEHC 630

Record Number 2024 No. 237 COS

IN THE MATTER OF ANVIL REAL ESTATE LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2014

JUDGMENT of Ms Justice Nessa Cahill delivered on 19 November 2025

1. By this judgment I decide the net but novel question of whether and when it may be appropriate to direct the cross-examination of a deponent in the context of a petition for the winding-up of a company. This question arises in the context of a petition to wind-up Anvil Real Estate Limited (“the Company” or “Anvil”) on the basis that it should be deemed to be insolvent for failure to repay a debt which the Petitioner claims is owed to him. The Company asserts that the monies in question were paid in return for an investment in shares in the Company and not as a loan. An alternative position advanced by the Company is that, if it was a loan, it was not repayable on demand. Both sides challenge the credibility of the other’s evidence.

2. Two motions were issued for the cross-examination of deponents on their affidavits. The primary motion – and that which was the focus of the parties – is the motion issued by the Petitioner seeking to cross-examine a director of the Company (Mr Somerville) on the affidavits he swore on behalf of the Company in opposing the winding-up petition (“the Petition”). For the reasons set out below, I grant the relief sought.

3. I will address this Motion under the following headings:

Procedural history Relevant facts

- Overview

- Alleged areas of cross examination Relevant legal principles

- Test on a winding up petition

- Jurisdiction to direct cross-examination

- Cases on cross-examination

- English cases Assessment of the Motion Conclusions

PROCEDURAL HISTORY

4. On 2 October 2024, the Petitioner issued petitions to wind up six companies: Anvil, Purdue Properties Limited, Lehigh Holdings Limited, Penn Property Acquisitions Limited, JS Real Estate Limited and Duke Property Acquisitions Limited) (together “the Companies”). The Petitions were issued pursuant to section 569(1)(d) and section 570(a) of the Companies Act 2014 as amended (“the 2014 Act”). Each petition is made on broadly similar grounds, namely the alleged failure of the Companies to discharge sums owed in excess of €10,000 within 21 days of receipt of a demand for such payment. It is also said in the petitions that it would be just and equitable that the company in question should be wound up.

5. Affidavits were sworn by the Petitioner in support of the Petitions between October 2024 and February 2025 and further supporting affidavits were sworn by Mr David Berber (a former creditor and shareholder of four of the Companies, not including Anvil) and Mr Derek Doyle (who acted as accountant to the Companies up to August 2024). Replying affidavits were sworn by Mr Somerville on behalf of the Companies between November 2024 and May 2025.

6. The Petitioner has also issued plenary proceedings on 13 November 2024 against Mr Somerville in which he seeks a declaration that the assets of each of the Companies are partnership assets and a declaration that the Petitioner is the beneficial owner of 50% of the shares in each of the Companies.

7. The Petitioner initially served notices to cross-examine Mr Somerville in each of the six Petitions pursuant to Order 40, Rule 36 of the Rules of the Superior Courts (“the RSC”) on 9 May 2025.

By letter dated 22 May 2025, the Companies’ solicitors indicated that the Companies were taking issue with the reliance on Order 40, Rule 36, on the basis the petition is not a “trial on affidavit” and Order 74 (which governs winding-up petitions) does not provide for notices for cross-examination of deponents. Reference was made to Bank of Ireland v. O’Donnell [2015] IEHC 149 which pertains to interlocutory applications.

8. The Petitioner responded (via his solicitor) on 23 May 2025, maintaining the position that Order 40, Rule 36 was the correct procedural route and that Bank of Ireland v. O’Donnell was not relevant. The Petitioner then stated that, while his position was that leave was not required, the preliminary issue of whether leave was required should be determined in advance of the hearing of the Petitions.

9. By order made on 27 May 2025, the High Court granted leave for the Petitioner to issue a motion for leave to cross-examine Mr Somerville in one of the Petitions as a “path finder” or test case for the remaining petitions. The Court further directed that the Petitioner write to the Company by 3 June 2025 identifying the affidavits and the paragraphs of the affidavits on which it was proposed to cross-examine Mr Somerville in each petition. The Court gave the Company liberty to issue a motion to cross-examine the Petitioner’s deponents. Each motion was to issue by 3 June 2025 and to be heard on 24 June 2025.

10. By letter dated 29 May 2025, the Petitioner’s solicitors provided a list of the paragraphs of Mr Somerville’s affidavit in each of the six petitions on which it was intended to conduct a crossexamination. This list for the Company’s petition was as follows:

- First affidavit - Paragraphs: 4-5, 7, 9-15.

- Second affidavit - Paragraphs: 4, 7-22.

- Third affidavit - Paragraphs: 4-13.

- Fourth affidavit - Paragraphs: 4-21.

11. The Petitioner and the Company then issued the motions on 3 and 6 June 2025 respectively, the Petitioner’s motion being grounded on the affidavit of Mr David Sherry (solicitor) and the Company’s being grounded on the affidavit of Mr Karl Howe (solicitor). Mr Howe then swore an affidavit in reply to that of Mr Sherry in the Petitioner’s motion and Mr Sherry replied via affidavit to that of the Company. By his motion, the Petitioner seeks a court order confirming the effectiveness of the cross-examination notices issued on 9 May 2025 or, in the alternative, an order under Order 40, Rule 1 RSC directing Mr Somerville to attend for cross-examination.

The Company’s motion seeks an order for the attendance of the Petitioner, Mr Berber and Mr Doyle pursuant to Order 40, Rule 1.

12. The Company’s motion included a 12-page schedule which set out the topics alleged to be in dispute in each of the Petitions, although the motion was issued only in the proceedings pertaining to the Company (as directed by the Court). The schedule listed the paragraphs of each affidavit in each of the six petitions under each heading in respect of which crossexamination was sought. With respect to the Company, this list was as follows:

- Petitioner’s first affidavit: paragraph 11.

- Petitioner’s second affidavit: paragraphs 5, 6, 7, 14.

- Petitioner’s third affidavit: paragraph 3.

- Mr Doyle’s first affidavit: paragraphs 5, 6.

- Mr Doyle’s second affidavit: 5-8, 11, 14, 16-22.

13. At the hearing of the motions before me, counsel for the Company confirmed that the Company’s cross-examination motion is not being progressed unless the Petitioner’s motion is successful and that it was issued to ensure a “level playing field”.

14. In these circumstances, and in light of the order of the High Court, the issue for determination is whether the relief sought by the Petitioner’s motion in these proceedings should be granted.

That was the focus of the affidavits and submissions and is the focus of this judgment.

RELEVANT FACTS

Overview

15. The factual background to this Motion is not particularly complex but it is heavily contentious.

Indeed, it is readily apparent from a review of the eleven affidavits filed in the Petition – and from the existence of five additional petitions to wind-up the other Companies - that there has been a significant falling out between two former business associates (characterised by Mr Somerville as “former occasional business associates”), They now appear to have different views – for the purposes of this Petition at least – as to the basis on which certain monies were paid by the Petitioner and how those monies were to be treated. In addition to the discord between the parties, there is a marked absence of documentation recording relevant events, most notably there is no agreement or documentation governing the terms on which monies were transferred by the Petitioner to the account of the Company’s solicitor, or governing the ownership of, or interests in, the Company. There is no reference to a memo, communication or note of any meeting regarding the payment made by the Petitioner or whether it was by way of a loan (as the Petitioner contends) or as an investment in shares (as the Company claims).

16. The most neutral summary that may be attempted is that the Company was incorporated on 21 February 2020 for the apparent purpose of investing in a specific property, namely Villa Marina, Kenilworth Road in Dublin (“the Property”). The sole director is Mr Somerville. The preference shares of the Company are held by Flinbury Limited (although the Petitioner claims not to have been aware of this company’s interest) and the ordinary shares are held by JS Real Estate Services Limited (“JS”). Mr Somerville holds 100% of the shares in, and is a director of, JS. Brendan Boyland and Peter Boylan each hold 50% of the shares in Flinbury Limited.

The CRO Register of Beneficial Ownership records Mr Somerville as the indirect beneficial owner of 100% of the shares of the Company and in JS.

17. The Property was acquired for the purchase price of €690,899 in August 2020. According to the CRO register of charges, on 4 August 2020, Pinemount Finance Limited (“Pinemount”)

was granted a charge over the Company’s assets and undertakings as security for the Company’s liability to Pinemount. It seems to be common case that the loan from Pinemount was in the amount of €510,000.

18. On 20 October 2020, Mr Somerville emailed the Petitioner indicating an interest in clearing the Pinemount loan and charge for the sum of €560,000 (referring to the high interest payable on that loan). The redemption figure was subsequently confirmed at €551,000. The Petitioner’s bank account statement discloses that he transferred that sum of €551,000 to the bank account of the Company’s solicitor on 30 November 2020. The form filed with the CRO on 11 February 2021 (registered on 7 May 2021) discloses that the Pinemount loan was discharged on 7 December 2020.

19. None of the above matters are in dispute.

20. The position of the Petitioner (and the basis for the Petition) is that the sum of €551,000 was a loan and that it is repayable on demand; that a letter was sent to the Company on 7 September 2024 demanding payment within 21 days, failing which a petition to wind-up the Company would be presented; and that the Company has failed to discharge its liability to the Petitioner.

It is said that the criteria of sections 569(1)(d) and section 570(a) of the 2014 Act are thereby satisfied and that the Company should be deemed to be insolvent. He places heavy reliance on the Company’s abridged unaudited financial statements for the period 21 February 2020 to 31 December 2020, approved by Mr Somerville, which disclose that, as of 31 December 2020, the loans owed to creditors were in the amount of €690,799. He says that this includes the loan he furnished to the Company in November 2020.

21. The Petitioner states that he advanced the monies as an “interest free loan… which was repayable on demand”. He states that the emails and statements regarding the repayment to Pinemount were sent to him “as it was agreed that I would arrange for the discharge of the sum of €551,000 and that this would be a loan to the Company for said money”.

22. The Petitioner then disputes that he is the beneficial owner of shares in the Company, referring to the register of beneficial interests, and describing the assertion that the monies were for a share subscription as “unsustainable”.

23. Mr Somerville’s evidence is that he invested in property with other individuals, including the Petitioner, and handled the acquisitions, the fit out, the occupation, management, the arrangement of finance and carrying out of works. He says that the Company currently operates the day to day letting, management and upkeep of the Property, and that it is managed by JS.

These assertions were not disputed by the Petitioner.

24. Mr Somerville has accepted that the Petitioner invested monies in Anvil and in two other companies. He states that the Petitioner’s investment in the Company was funded by a loan from Pinemount which the Petitioner could not clear and that Mr Peter Boylan and Mr Brendan Boylan then became involved and invested in the Company through Flinbury Limited, along with the Petitioner and Mr Somerville. He states that each of them invested money into the Company in return for shares and that, when the Petitioner repaid the loan to Pinemount, this entitled him to shares in the Company, which are being held in trust for him by JS. He refers in his third affidavit to an “investment agreement” and to “negotiations” and “dealings” without elaboration. There are no exhibits containing such an investment agreement and no specific averments or references to facts which are claimed to support his assertions.

25. Mr Somerville accepts that the letter of demand was sent, but maintains that the investment was made in return for shares. An alternative position advanced is that, if the monies were a loan, it was not a loan that was repayable on demand. Mr Somerville’s position is that it is wholly inappropriate for the Petitioner to use the winding-up procedure to pursue an unsubstantiated claim and that he should have brought proceedings in respect of the alleged loan.

26. Mr Somerville states that he himself also extended funds to the Company which he regards as consideration for shares or, in the alternative, if it was a director/shareholder loan, his position is that it was not repayable on demand, but would instead be paid by way of the ultimate sale of the assets or business or shares of the Company.

27. Mr Somerville’s position is that the share subscription process was a “less formal arrangement where we understood that money advanced was in return for a specific percentage shareholding and not as loans”. He then asserts that the references to “creditors” in the Company’s accounts “are simply convenient and are in fact incorrect”, and these monies were instead investments by the Petitioner, Mr Somerville, Mr Paul Boylan and Mr Brendan Boylan in return for shares.

He does not specify the percentage shareholding which he says the Petitioner was entitled to (although the written submissions refer to it being 25%).

28. The position advanced by the Petitioner in his written legal submissions delivered on 15 May 2025 (in the context of the substantive Petitions), is that the evidence of Mr Somerville was contradictory, evasive and undermined by documentary evidence. It is said in those submissions that the dispute as to the debt raised by the Companies is neither bona fide nor made on substantial grounds and that the statutory test for the winding-up Petition was met.

29. The written submissions delivered on behalf of the Company (again, for the purpose of the Petitions as opposed to this Motion) were delivered on 4 June 2025. The Company advances the position that there was a bona fide defence on substantial grounds to the claims that the Petitioner’s claim that the Company is insolvent. It was emphasised that no written terms of any loan agreements were provided and that the only evidence that the loans were repayable on demand were bald assertions to that effect. Reliance is placed on documentary evidence which it is said demonstrates that the monies were advanced as payment for shares in the Company. It is said that, if the monies were by way of a loan, they were subordinated to other loans, and not payable on demand. Mr Somerville points to email correspondence from August 2018 related to other companies which he says supports this position. It includes an email from the Petitioner to Mr Berner and Mr Doyle and copied to Mr Somerville, in which the Petitioner asks whether it would make sense for Mr. Berber to hold his 33.3% of the holding company in trust for him.

Alleged areas for cross-examination

30. It is contended on behalf of the Company that the Petitioner in his motion failed to provide a precise list of the paragraphs of Mr Somerville’s affidavits on which cross-examination was said to be warranted, or the topics to which they were alleged to relate. It was pointed out that the list of paragraphs furnished in the letter of 29 May 2025 comprises almost the entirety of the affidavits. This is a valid point. Having reviewed the list of paragraphs identified by the Petitioner as warranting cross-examination, it includes every paragraph of Mr Somerville’s three affidavits, other than those which are introductory or comprise admissions.

31. At the hearing of the Motion, counsel for the Petitioner contended that the position of Mr Somerville is lacking in credibility and that he wants to canvass certain issues in evidence with him. He then focussed on a number of specific topics. The following is a summary of the points made.

(a) It was said that there is a conflict as to whether monies were advanced by way of a loan or as consideration for shares in the Company. Reliance is placed on the register maintained by the Companies Registration Office (“the CRO”), which shows Mr Somerville as the beneficial owner of the shares in JS and in the Company and on a letter of 10 September 2024, in which the Company denies that the Petitioner held shares in the Company. This letter (which is not addressed in the affidavits of Mr Somerville) is said to show inconsistency in the Company’s position. It is also said that the assertion that the investment is subordinated to another lender and the alternative argument that the monies were a loan (not being one payable on demand) are inconsistent with the Company’s position that the monies were by way of an investment in shares. The averments by Mr Somerville at paragraph 11 of his first affidavit; paragraphs 11, 18, 20 and 21 of his second affidavit; and paragraph 8 of his third affidavit, are said to be relevant here.

(b) The CRO filings regarding the Pinemount loan were referred to and it was said that the Petitioner wants to question Mr Somerville regarding the timing of same, given the loan is recorded as having been discharged on 7 December 2020, some 7 days after the monies were transferred by the Petitioner to the Company.

(c) The Petitioner wishes to cross-examine Mr Somerville in relation to the reference to “creditors” in the Company’s accounts and the assertion on behalf of the Company that this was incorrect.

(d) Counsel for the Petitioner refers to the assertion in the Company’s written submissions that he is entitled to 25% of the shares in the Company and asserts that this is an appropriate topic of cross-examination, given an alleged inconsistency with the authorised share capital of the Company being €400,000. No paragraph of the affidavit of Mr Somerville is specified in this respect.

(e) The Petitioner wants to challenge the assertion that the loan to Pinemount was a personal loan taken out by him, rather than a loan to the Company. This is referable to paragraph

11 of Mr Somerville’s first affidavit.

(f) The role of Flinbury is relied upon and it is said that there is a dispute as to the role of this company, by reference to paragraph 11 of Mr Somerville’s first affidavit and paragraphs

13 onwards of the Petitioner’s second affidavit.

32. This was not said to be an exhaustive list, but even taking it as illustrative (and leaving to one side the Company’s strong opposition to that approach by the Petitioner), it appears to me that

(b) does not relate to an issue that is in dispute, as Mr Somerville’s evidence is that the loan to Pinemount was discharged after the monies were transferred by the Petitioner and I do not see a relevant factual dispute (or credibility challenge) to arise in this respect. In addition, (d) arises from a written submission rather than the affidavit of Mr Somerville. As regards Flinbury, I am not satisfied that the role of this company is material to deciding whether the alleged debt is disputed on bona fide grounds. This leaves issues (a), (c) and (e), all of which relate to the question of whether the monies paid by the Petitioner were paid by way of loan or investment in shares.

33. For completeness, it may be noted that this question is also identified as an area of dispute by the Company in the schedule to its motion. In that schedule, the Company lists the areas of dispute as follows:

(a) Whether money was advanced to the Company;

(b) Whether the investment was by way of a loan or for a shareholding or some other purpose;

(c) Whether any repayment terms were ever agreed, including that the repayment was by demand;

(d) Credibility of the Petitioner having regard to the inconsistent claims made in the plenary proceedings in which he seeks a declaration that he is the beneficial owner of 50% of the shares in the Company;

(e) The extent of Mr Doyle's alleged knowledge of the dealings between Mr Somerville and Mr Kelleher and his involvement in commercial negotiations relating to the Companies;

(f) The extent of Mr Doyle's failure to disclose Mr Kelleher's alleged loans to Capitalflow and why those alleged loans were not subordinated;

(g) The credibility of the allegation that information was being requested in respect of loans, rather than historical investments, in correspondence in July 2022;

(h) The credibility of the allegation that Whatsapp messages between Mr Doyle and Mr Somerville shows information being requested in respect of loans rather than historical investments;

(i) Whether the accounts of the company records loans to Mr Kelleher;

(j) The credibility of the information received from Mr Moloney and the actual source of that information.

34. Taking these in turn, I do not see that (a) is an area of factual conflict or in which a credibility challenge is mounted, as Mr Somerville does not dispute that monies were paid by the Petitioner and were applied towards the discharge of the Pinemount loan (Mr Somerville’s second affidavit at paragraph 16). The issues at (b), (c), (d), and (i) all relate to the same question of real controversy identified by the Petitioner, namely whether the monies were advanced by way of a loan or investment in shares and, if a loan, whether it was payable on demand.

35. It is notable that the list of issues advanced by the Company shows some emphasis on the affidavits of Mr Doyle (issues (e), (f), (g) and (h)). He is neither the Petitioner nor the Company’s deponent. His relevance to the Petition is of a lesser order, given the task of the court at the hearing of the Petition is not to make a finding of fact. In addition, it is manifest from the exchange of averments between Mr Doyle and Mr Somerville that there has been a significant clash between them, with Mr Somerville asserting he fired Mr Doyle, an assertion denied by the latter. Moreover, the factual conflicts surrounding their relationship and the role of Mr Doyle are not on any view relevant to the resolution of the Petition. The exchanges of affidavits between Mr Doyle and Mr Somerville also contain several references to companies other than the Company and are not relevant to this motion. There is some limited potential relevance in Mr Doyle’s second affidavit, in which he addresses his alleged insight into the arrangements between the Petitioner and Mr Somerville. However, the limited nature of the task assigned to the court hearing the Petition must be recalled, and I consider that the court discharging that task would need to assess the potential relevance of the affidavit evidence of Mr Doyle before it could decide whether to permit cross-examination on same. There is a real danger of the hearing being derailed into irrelevant evidence and I do not wish to open the door to that occurrence.

36. This leaves one area in which there is a specific relevant conflict between the Petitioner and Mr Somerville, namely whether the monies were a loan or an investment in the Company and, if a loan, whether it was agreed to be payable on demand. The next question is whether and to what extent this is an issue in respect of which cross-examination is necessary or appropriate.

LEGAL PRINCIPLES

Test on Winding-Up Petition

37. The threshold for granting or refusing a petition to wind-up a company, based on its deemed inability to pay its debts, is addressed in section 570 of the 2014 Act:

“For the purposes of this Act, a company shall be deemed to be unable to pay its debts—

(a) if—

(i) a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding €10,000 then due, has served on the company (by leaving it at the registered office of the company) a demand in writing requiring the company to pay the sum so due, and

(ii) the company has, for 21 days after the date of the service of that demand, neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor…”

38. Here, the Company admits the letter of demand of 7 September 2024 was sent, but denies that there was a loan. The Petition therefore hinges on the characterisation and purpose of the monies transferred by the Petitioner to the Company and whether they gave rise to a debt. The test that must be applied when a Company disputes that a debt is owed, is whether this dispute is bona fide and based on substantial grounds.

39. McCracken J. in Re WGM (Toughening) Limited (No. 2) [2003] 1 IR 389 at 392 noted,

“There is no real dispute between the parties as to the proper test to be applied by the court in the circumstances. That test is set out in the judgment of Buckley L.J.

in Stonegate Securities v. Gregory [1980] Ch. 576 at p. 579, and has already been approved . . . in In re Pageboy Couriers Ltd. [1983] I.L.R.M. 510. The passage reads at p. 512:-

‘If the Company in good faith and on substantial grounds disputes any liability in respect of the alleged debt, the petition will be dismissed, or if the matter is brought before a court before the petition is issued, its presentation will in normal circumstances be restrained. That is because a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed’.’”

40. The way this operates in practice is that the petitioner must first discharge the burden of showing the conditions for the grant of a winding-up order are met, and the burden then rests on the Company seeking to dispute a debt to demonstrate that the dispute is bona fide and on substantial grounds.

41. In Re Bayview Hotel (Waterville) Ltd [2022] IEHC 516 (“Re Bayview”), Butler J explained this evidential burden:

“In the context of the deeming provisions of s. 570, the onus of proof is undoubtedly on the petitioner to establish the existence of the debt, the service of the notice and the nonpayment of the debt in response to that notice. The case law recognises that a petition should be dismissed if the company disputes liability for the debt in and on substantial grounds (see In Re Pageboy Couriers (above), Stonegate Securities v.

Gregory (above) and Truck and Machinery Sales Ltd v. Marubeni Komatsu Ltd [1996]

1 IR 12). However, it does not follow that the petitioner bears the onus of proving the negative proposition that the company does not have substantial grounds for disputing a debt and cannot do so in good faith. In normal course, it is a matter for the company to put forward any grounds on which a debt is disputed. It is not necessary that the company establish that it will succeed in avoiding liability for the debt on those grounds, merely that there is a bona fide dispute which warrants the court refusing to wind up the company for non-payment of that debt” (at [55]).

42. This is important in the context of this case and confirms that the Company does not have to prove as a matter of probability that it is not liable for the debt, only that the debt is disputed in good faith. It is not the function of a court hearing a petition to make a final determination on conflicts of fact or decide whether the debt is in fact owed.

Jurisdiction to direct cross-examination

43. The Company did not dispute that a court may direct the cross-examination of deponents in the context of the hearing of a winding-up petition. However, the Company did dispute the entitlement of the Petitioner to proceed pursuant to Order 40, Rule 36 RSC, as attempted.

44. That rule is contained under the heading “trial on affidavit” and provides,

“[w]hen the evidence is taken by affidavit, any party desiring to cross-examine a deponent who has made an affidavit filed on behalf of the opposite party may serve upon the party by whom such affidavit has been filed a notice in writing, requiring the production of the deponent for cross-examination at the trial…”

45. Order 40, Rule 1 provides as follows:

“Upon any petition, motion, or other application, evidence may be given by affidavit, but the Court may, on the application of either party, order the attendance for crossexamination of the person making any such affidavit.”

46. As noted earlier, the Petitioner’s motion is premised in the first instance on Order 40, Rule 36 being the correct procedural route, with Order 40, Rule 1 being invoked as an alternative jurisdictional basis for the motion.

47. I note that the Petitioner emphasises the reference in Re Bayview to the possibility that a notice for leave to cross-examine a deponent may be served under Order 40, Rule 36. The relevant paragraph of the judgment of Butler J. described an affidavit which had been sworn on behalf of the company in that case regarding possible directions for discovery, interrogatories and cross-examination and continued:

“Although the affidavit proceeded to set out the grounds which could be relied on in support of these reliefs, it does not appear from the papers that any formal application was made in this regard. There is a procedure under O. 40, r. 36 through which a party seeking to cross-examine the deponent of an affidavit may file a notice requiring the production of the deponent at trial. It does not appear from the papers that any such notice was served. Equally, the papers provided to the court do not include any order from the judge in charge of the Chancery list either allowing or refusing the applications which the solicitor stated it was intended to make. Therefore, I can only presume either that the application flagged in the affidavit was not moved or that it was dismissed in limine by the judge.” (at [47]).

48. While Butler J. did refer to the existence of a procedure under Order 40, Rule 36, she was not called upon to, and did not, decide the procedural point that is before me.

49. In a judgment which was relied upon by the Company in submissions – Lehane v. Dunne [2016] IEHC 96 – Costello J. (as she then was) explains when a notice may be served under Order 40, Rule 36, by contrast with the power of parties to make an application to court for leave to crossexamine under Order 40, Rule 1:

“10. The Rules of the Superior Courts expressly provide for a deponent to be crossexamined on any affidavit filed by him. The extent of the entitlement of a party to crossexamine a deponent depends upon the nature of the proceedings or the application in which the affidavit has been sworn. Where the procedures are by way of summary summons or special summons or, in the case of proceedings commenced by a plenary summons, a trial on affidavit has been directed, a party who wishes to cross-examine a deponent can serve a notice to cross-examine on the party who filed the affidavit requiring that the deponent be produced for cross-examination at trial. Unless a

deponent is produced for cross-examination, his affidavit cannot be used as evidence except by leave of the court. Leave of the court to serve such a notice is not required.

11. On interlocutory applications and proceedings commenced by petition or originating notice of motion, a notice to cross-examine may only be served with leave of the court. The court may order the attendance for cross-examination of the person making the affidavit (see O.40, r.1 of the Rules of the Superior Courts). There is no absolute right to cross-examine a deponent even if the relief sought is the dismissal of the proceedings.”

50. This confirms that the right to serve a cross-examination notice under Order 40, Rule 36 only arises in trials on affidavit commenced by way of a summons (whether a plenary, summary or special summons). In the case of a petition, as here, the leave of the court is required. I am satisfied that this application for leave was necessary and that the jurisdiction of the court to direct the attendance of witnesses for cross-examination on a winding-up petition arises under Order 40, Rule 1 and not under Order 40, Rule 36.

Cases on cross-examination

51. The question that is central to this motion is how the undoubted discretion to order crossexamination should be exercised. Two judgments that were emphasised most heavily at the hearing before me and which warrant close consideration are the judgment of the Supreme Court in RAS Medical Limited v. Royal College of Surgeons in Ireland [2019] 1 IR 63 (“RAS Medical”) and the judgment of Butler J. in Re Bayview. I will also address certain other cases on which the parties relied, including judgments of the English courts.

52. Taking RAS Medical first, that arose from a challenge by way of judicial review to a decision of the Royal College of Surgeons of Ireland (“the RCSI”) not to grant accreditation for a continuing professional education surgical training event. One of the grounds of challenge was that the RCSI had applied a set of guidelines that were not properly in place or communicated before the impugned decision was taken. There was asserted to be a direct conflict between certain affidavit evidence sworn on behalf of the RCSI and documentation obtained by way of discovery. The Court of Appeal granted the relief sought, quashing the RCSI decision, but the Supreme Court overturned this decision on appeal. The findings of Clarke CJ (O'Donnell J., MacMenamin J., Dunne J., Finlay Geoghegan J. concurring) that are relevant here concern the complaint by the RCSI that the Court of Appeal had rejected the sworn evidence tendered without the relevant witness being subject to cross-examination.

53. The key passages of the judgment of the Supreme Court are as follows:

“[88] Where a party wishes to assert that evidence tendered by an opponent lacks either credibility or reliability, then it is incumbent on that party to cross-examine the witness concerned and put to that witness the basis on which it is said that the witness's evidence should not be accepted at face value. It is an unfair procedure to suggest in argument that a witness's evidence should not be regarded as credible on a particular basis without giving that witness the opportunity to deal with the criticism of the evidence concerned. A party which presents evidence which goes unchallenged is entitled to assume that the evidence concerned is not contested. However, there may, of course, be legitimate debate about whether the evidence, even if accepted so far as it goes, is sufficient or appropriate to establish the facts necessary to resolve the case in favour of the party tendering the evidence in question.

…

[92] ... it is frankly not appropriate for parties to enter into controversy as to the facts contained either in affidavit evidence or in documents which are admitted before the court without successful challenge, without exploring the necessity for at least some oral evidence. If it is suggested that there are facts which are material to the final determination of the proceeding and in respect of which there is potentially conflicting evidence to be found in such affidavits or documentation, then it is incumbent on the party who bears the onus of proof in establishing the contested facts in its favour to use appropriate procedural measures to ensure that the potentially conflicting evidence is challenged. Where, for example, two individuals have given conflicting affidavit evidence and where it is considered that a resolution of the dispute between those witnesses is necessary to the proper disposition of the case, then there has to be crossexamination and the onus in that regard rests on the party on whom the onus of proof lay to establish the contested fact.

[93] A similar principle applies where it is suggested that there is documentary evidence, properly before the court, which might cast doubt on the reliability of sworn testimony. It is not permissible to invite a court to reject sworn testimony either on the basis that there is sworn testimony to the contrary or that the testimony might be said to be either lacking in credibility or unreliable (on the basis of, for example, a documentary record) without giving the witness concerned an opportunity, under crossexamination, to explain, if that be possible, any matters which might go to credibility or reliability.”

54. The following points arise: First, if a party wants to impugn the reliability or credibility of sworn evidence (whether by reason of conflicting sworn evidence, documentary evidence or otherwise) they must do so by way of cross-examination ([88]). Second, it is open to a party to decide not to impugn the credibility or reliability of sworn evidence but instead to take it at its height and assert its insufficiency. No cross-examination is then required. Third, if there is a conflict of evidence (whether arising from affidavits or documents) the resolution of which is material to the final determination of the proceeding, it falls to the party who bears the onus on that question to challenge the evidence which conflicts with his case ([92]).

55. According to the judgment in RAS Medical, the need for cross-examination therefore arises either if the evidential clash is material to the “final determination” of proceedings or if the credibility or reliability of a deponent is being impugned. The focus on a “final determination”

can be traced to the judgment of the Supreme Court in IBB Internet Services Limited v.

Motorola Limited [2013] IESC 53 (“IBB v. Motorola”). In the course of his judgment in that case, Clarke J. (McKechnie and MacMenamin JJ. agreeing) quoted passages from the judgment of Hardiman J. in Boliden Tara Mines Limited v Cosgrove [2010] IESC 62 and from his own judgment in Re McInerney Homes Limited (No.2) [2011] IEHC 4, both of which emphasised the need for cross-examination when a party is contradicting the affidavit evidence of another party (subject to the right of the contradicting party to take the affidavit evidence at its height, challenging its sufficiency rather than credibility). Clarke J. commented that these were

“...cases where the court was required to make a final order and where, therefore, the substantive rights and obligations of all interested parties were to be finally determined. Insofar as the making of a final order requires a court to take a view on the facts, and insofar as material facts may be the subject of conflicting evidence placed before the court on affidavit and where the contested facts have a bearing on the order which the court will have to make, then the comments made in those cases clearly apply” (at [7.3]).

56. IBB v. Motorola itself arose from an application for security for costs and Clarke J. emphasised, “there are sound reasons of principle and policy as to why, save in exceptional circumstances, courts should not contemplate cross-examination in interlocutory matters” ([7.4]). The finding of the High Court that the inability to pay costs had not been shown was upheld, despite the absence of cross-examination. This principle that cross-examination in interlocutory applications must be extremely rare – a principle emphasised by the Company in this Motion - was reiterated by Barniville P. in Trafalgar Developments Limited v Mazepin [2021] IEHC 69 and by the Court of Appeal in Criminal Assets Bureau v Routeback Media AB t/a Local Mart [2024] IECA 112.

57. A question which was discussed during the hearing of the Motion before me was whether the Petition should be categorised as an interlocutory matter or a final determination. Counsel for the Company points to the fact that a decision on the Petition does not decide whether the debt is due and owing but only whether the Petition is refused or granted and that, if the Petition is refused, the Petitioner retains the right to pursue his alleged debt in separate proceedings. While no specific authorities were cited on the distinction between interlocutory and final determinations, the general barometer that emerges from the cases just considered (RAS Medical and IBB v. Motorola) as well as more recent cases (such as CAB v. Routeback Media AB and Cave Projects Ltd. v. Gilhooley [2022] IECA 245) is whether the court is called upon to resolve conflicts of evidence or reach conclusions on the balance of probabilities as to the substantive rights or liabilities of the parties, thereby finally disposing of the proceedings. It has also been emphasised that interlocutory orders are provisional measures put in place during the currency of proceedings “to progress litigation or assist a party in advancing or defending their case” (per MacMenamin J. in Ennis v. Allied Irish Bank plc [2021] IESC 12 at [22]).

58. It is not readily apparent where a winding-up petition based on deemed insolvency fits within that analysis. On the one hand, the grant of a winding-up order directly and materially affects the position and interests of the company, its shareholders, creditors and directors in a way that is more than purely procedural or provisional. The company can no longer carry on its business and the powers of the directors cease (section 677 of the 2014 Act). It is not a temporary measure put in place pending, or in aid of, the final resolution of a plenary dispute.

59. On the other hand, an order on a winding-up petition based on deemed insolvency does not involve a final resolution of a conflict of fact or a decision on the balance of probabilities on the merits of a substantive dispute. It is instead premised on a more superficial filter, as to whether a bona fide defence is made out. To that extent, a parallel may be drawn with IBB v.

Motorola, which concerned an application for security for costs under section 390 of the (then)

Companies Act 1963. The test applied under that provision was whether the company had a “prima facie defence” and whether the plaintiff would be unable to pay the costs. Clarke J described this test as “at least partly hypothetical and subject to estimate”, noting that “ordinarily, a court hearing an application under s. 390 should simply do the best it can on the basis of all of the affidavit evidence which the parties choose to put before it”. His conclusion on this aspect of the appeal was that a court should “take into account all of the evidence and reach a conclusion as to whether it can still truly be said, in the light of all that evidence, that there is ‘good reason’ to believe that the company ‘will be unable to pay costs’” (at [7.4]).

60. Regardless of how a winding-up petition is categorised, it is not seriously disputed that to date such petitions have been heard on affidavit, with the court weighing that sworn evidence to assess whether it discloses a prima facie case that a debt is owed or a bona fide dispute in that respect. Indeed, the parties could identify no previous instance of cross-examination having been conducted in a winding-up petition. Both accept that it must be a rare and exceptional occurrence, whether the petition is equated with an interlocutory or a final determination.

61. For these reasons, I am not satisfied that it is strictly necessary or helpful to seek to categorise the Petition as either an interlocutory or final application. The overriding question instead is whether the justifications for ordering cross-examination as identified in RAS Medical properly apply in this specific case, bearing in mind the general and default approach that winding-up petitions should be heard on affidavit and with expedition.

62. In this respect, the Company understandably focusses on the limited role of the court, highlighting that there can be no resolution of substantive rights or liabilities in a winding-up petition and that, if a real conflict does arise, there is necessarily a bona fide dispute. It is said that the appropriate avenue of recourse for the Petitioner in those circumstances is separate debt recovery proceedings.

63. It is plainly correct that a court in a winding-up petition based on deemed insolvency does not finally determine any factual disputes. However, the resolution of relevant factual contests is not the sole basis for ordering cross-examination. As noted earlier, the Supreme Court in RAS Medical (at [88] and [93]) carefully and separately identified that cross-examination may be required to afford a deponent whose credibility is impugned the opportunity to address this in oral evidence. It seems to me that this is the more pertinent limb of RAS Medical for the assessment of this Motion.

64. A very similar scenario arose in Re Bayview. That case, like this one, involved a falling out of two former business associates who had together acquired various properties and interests. In Re Bayview, a company controlled by one of the individuals (Mr Noonan) issued a petition to wind-up the relevant company, Bayview Hotel (Waterville) Limited (“Bayview Limited”) on the basis of a loan advanced by a company controlled by Mr Noonan in 1986 to clear the debts of that company.

65. The loan in question was secured by a written mortgage debenture, which was registered in the CRO and reflected in the accounts of Bayview Limited. The other individual, Mr O’Shea, had separately issued proceedings asserting that, although the shares of Bayview Limited were 100% owned by Mr Noonan, he was entitled to beneficial ownership of 50% of those shares.

He filed several lengthy affidavits in those proceedings which were also relied upon in opposing the petition. Mr O’Shea’s case was that the loan was a capital investment which was only repayable by agreement following the sale of the hotel (although he had asserted in his plenary proceedings that his shares should have been allocated upon the repayment of that loan).

66. There are several similarities with this case. Butler J. commented specifically on “a striking lack of formality and a consequent lack of any documentary record of much of what was allegedly agreed between the two men” ([4]), which certainly resonates here. She also identified a lack of consistency in the position of Mr O’Shea, most notably between his assertion that he was entitled to shares upon the repayment of the loan, and his contention that the loan was not repayable until the sale of the hotel. The facts as outlined in the judgment in Re Bayview were considerably more complex than the summary here suggests and involved different groupings of creditors, some opposing and some supporting the petition. However, its salience for this judgment rests in the approach Butler J. took to the sworn evidence of the two main protagonists, Mr Noonan and Mr O’Shea.

67. In that respect, Butler J. outlined how the evidence could have been weighed (if that was an appropriate exercise to undertake). The Court noted that she would have found the evidence of Mr O’Shea to be unconvincing and incoherent, coupled with the fact that he had no standing to speak for Bayview Limited, given his asserted right to shares in Bayview Limited had not been determined. Mr O’Shea was also a stranger to the relevant loan agreement and there were inconsistencies with his position in the plenary proceedings. By contrast, Butler J noted that the evidence of the petitioner was supported by a written mortgage debenture, stated to be “payable on demand”, registered at the CRO, and reflected in the company’s accounts.

68. However, Mr O’Shea raised the evidential objection that the issues in dispute could not be resolved absent cross-examination. Butler J set out the relevant paragraphs from the judgment of Clarke CJ in RAS Medical and continued,

“The implications of RAS Medical are far reaching. Whereas Hardiman J. in Tara Mines Pension Plan regarded a failure to cross-examine a deponent as going to the weight to be afforded to the evidence and, by implication, to any objection to it, RAS Medical positively requires a deponent to be cross-examined whenever evidence is objected to on grounds of credibility or reliability and even where the affidavit evidence is contradicted by other documentary evidence” (at [51]).

69. Butler J. then found that “the logic of the RAS Medical decision” is that the court could not assess and determine the weight to attach to the sworn evidence, because there were disputes on the affidavits as to the existence and terms of an agreement regarding the repayment of the loan and such disputes could not be determined in the absence of cross-examination. In Re

Bayview, it appeared that a motion to cross-examine had been threatened in correspondence, but no such motion was pursued. Butler J. concluded “with some reluctance” that it must be found that the petitioner had not discharged his burden of showing the debt was owed for the purpose of the 21-day demand procedure ([60]). While Butler J. noted that she would “probably” have rejected the evidence of Mr O’Shea if deciding the matter on affidavit, she observed that RAS Medical requires that he have the opportunity to present his evidence orally before it is rejected as lacking in credibility or reliability.

70. These conclusions led the Court towards the refusal of the petition on the basis of the deemed insolvency of Bayview Limited. However, the petition was based on two planks, the petitioner contending that the company was in fact insolvent as well as being deemed to be insolvent.

Butler J. ultimately accepted that the petitioner did discharge the onus of showing that Bayview Limited was in fact unable to pay its debts. The petition was therefore granted on that ground.

71. The analysis of the evidential objection raised (on which the Petitioner here places emphasis)

was accordingly not the basis for the decision reached or the outcome of the petition in Re Bayview. It is nonetheless important as an indication of how a court should approach the application of RAS Medical to a contested winding-up petition. In particular, Re Bayview indicates that, if a winding-up petition grounded on the company’s deemed insolvency necessitates or depends on the rejection of sworn evidence as lacking in credibility or reliability, it cannot be granted absent cross-examination on that evidence.

72. It is critical to note that this analysis is based on challenges to the credibility or reliability of sworn evidence. The judgment does not on its terms address or determine whether there was a material factual dispute which must be finally determined and for which cross-examination was necessary. This other limb of RAS Medical was not assessed.

73. The next judgment that was relied upon was the judgment of Sanfey J. in Re Green D Projects Ireland Ltd [2023] IEHC 773 (“Re Green D”), which concerned a petition to wind-up a company on the basis that the company was factually unable to pay its debt as they fell due (as opposed to being deemed to be insolvent). The Court found,

“I accept that there may be occasions where, even though there is a conflict on the evidence between two sets of deponents, the court considers nonetheless that there is sufficient documentary or other uncontested evidence which would establish definitively, in a winding up petition, that the company is unable to pay its debts….” (at [45])

74. This is wholly consistent with IBB v. Motorola and the other authorities referenced above. As noted by Sanfey J., it was necessary to resolve the dispute in that case as to whether the company was insolvent and unable to pay its debts: the court had to satisfied on this point.

However, the evidence of the company’s own accountant, Mr Bolger, was challenged as lacking credibility or reliability. Sanfey J. confirmed that

“[i]n such circumstances, Mr Bolger must be given an opportunity to respond to the criticism made of his evidence. This follows clearly from the decision of the Supreme Court in RAS Medical, and the interpretation of that decision by Butler J in Bayview, with which I agree.” ([47]).

75. His ultimate conclusion was that

“[i]n the absence of cross-examination, it is not appropriate to draw conclusions about the solvency of the company… if a petitioner wishes to proceed by way of affidavit evidence, it may transpire that it cannot discharge its evidential burden without crossexamination where there are conflicting affidavits. This is what has happened in the present case” ([49]).

76. The petition was dismissed.

77. Re Green D is somewhat distinct from the present case, in that it was a petition based on factual insolvency rather than deemed insolvency. Nonetheless, it does again confirm that, when a deponent’s credibility or reliability is impugned in a respect that is material to the discharge of a party’s burden of proof, RAS Medical requires this to be done by way of cross-examination.

78. In the present case, the parties to the Petition did also rely on certain earlier judgments on winding-up petitions. One judgment relied upon by the Company in its written submissions was Re Kasam Investments Ireland Limited [2012] IEHC 553. There, the Court concluded that the terms of the loan that gave rise to the debt being relied upon could not be determined on the evidence before the court and the petition was dismissed on this basis. The Court emphasised that the only factor that led to that determination was that there was an unresolved question as to when the loan was repayable ([29]). According to Laffoy J., the question of whether there is a good faith dispute on substantial grounds “… is a question of fact to be determined on the basis of the affidavit evidence before the Court, which, as almost invariably happens in these cases, is not an easy task, and, as frequently happens, is an impossible task.”

79. The Court considered the conflicting affidavit evidence as to whether the loan was payable on demand, concluding that “the terms on which that loan was repayable by the Company cannot be determined on the evidence before the Court. Therefore, the petition must be dismissed.”

This outcome – which has some resonance here – is consistent with RAS Medical: there was a challenge by the petitioner to the credibility of the company’s dispute regarding the terms of the loan, but no cross-examination on this point. Consequently, the court could not determine the terms of the loan (on which the petitioner bore the initial burden) or find in favour of the petitioner.

80. These cases demonstrate the importance of the placement of the burden of proof when applying RAS Medical. The party bearing the burden of proof on an issue must ensure that the evidence material to that issue is tested by cross-examination, if they wish to challenge its credibility or reliability. In winding-up petitions based on deemed insolvency, this may have different outcomes depending on the facts. As already noted, the petitioner bears the initial burden to show the debt is owed, was demanded and remains unpaid, and the burden is then placed on the company to show the existence of a bona fide dispute on substantial grounds. A petitioner could decide to take the company’s evidence at face value and dispute its sufficiency as an answer to the debt. A petitioner may also decide to focus on the want of objective substance to the dispute raised. There could be also be arguments of law or contractual construction that could be mounted in the absence of cross-examination. However, if the petitioner wants to challenge the veracity or truthfulness of the evidence, the question of cross-examination is a potentially live one.

81. In this case, it seems fair to observe that the same essential dispute afflicts both burden-bearers.

The common fundamental question of whether the monies were paid by the Petitioner by way of a loan or as consideration for shares is at the heart of both the Petitioner’s claim and the Company’s defence. Each asserts the other’s evidence is not presented in good faith and, put bluntly, is untruthful. In these circumstances it can be understood why the Petitioner applied for cross-examination, lest the very failure to do so would result in a refusal of the Petition.

English cases

82. In opposing the application, the Company relied on several judgments of the English courts which establish that, while cross-examination can be permitted on petitions to wind-up companies, it is an extremely rare occurrence (Re Janesh Ltd [1990] BCC 250; Ross & Craig (a firm) v. Williamson [2006] EWHC 880 (Ch); Re a Company, ex p Electrical Engineering [1992] BCLC 248).

83. This is explained in that jurisdiction by reference to the low threshold that has to be met by a company seeking to dispute a debt. Harman J. in Re a Company, ex p Electrical Engineering refused to exercise his discretion to order cross-examination in the context of an application to restrain the presentation of a winding-up petition. He emphasised that the only question for the court on a winding-up petition is whether there was a bona fide dispute:

“That means that the Court is not required to make findings of fact as to the true answer to matters but to discover whether there really is something to be said on each side. If there is something to be said on each side this court is not the proper place to pursue it since a creditor’s petition can only be pursued by an undoubted creditor. It thus follows that the court practically never allows cross-examination, although it has jurisdiction so to do, upon an application of this sort because there is no need to resolve by cross-examination the truth or falsity of matters but merely to find out whether there isa substantial case to be argued either way.”

84. Park J. made the following observation in Ross & Craig (a firm) v. Williamson:

“…where there are crucial disputes about who said what to whom in a conversation, the case cries out for a trial with oral evidence and cross-examination. In those circumstances, my opinion is that this case is unsuitable for the insolvency enforcement procedures on which Mr. Williamson has embarked. What he should do is sue for his debt in a normal civil action” (at [15]).

85. These cases highlight neatly the reasons why cross-examination sits uneasily with a petition to wind-up a company based on its deemed insolvency, in which the court’s role is solely to establish whether there is a bona fide dispute, not its outcome.

86. However, in the course of the hearing of this motion before me, counsel for the Petitioner distinguished those cases and their rationale, relying primarily on RAS Medical. It does appear that there is now a difference in approach between England and this jurisdiction. The governing approach here is that, if a petitioner relies on a challenge to the credibility of an opposing deponent to discharge their burden on a relevant aspect of the petition, the petition must be rejected unless there is cross-examination of that deponent. This is so even in the absence of a material conflict of fact which requires to be finally resolved. Similarly, if a company’s defence to a petition based on deemed insolvency hinges on a challenge to the credibility of the petitioner’s evidence, the company will not be able to discharge its burden without crossexamination of the petitioner.

ASSESSMENT OF THE MOTION

87. If the need to resolve a material factual conflict was the only basis for permitting crossexamination, the first and fundamental obstacle here is that it is not the court’s function on a winding-up petition based on deemed insolvency to make a final determination on a factual conflict. I would in any event be concerned that the Petitioner and Mr Somerville rely in their affidavits on assertions; a pattern of informality; and unwritten “understandings” in their dealings with each other and with the Company. There is no suggestion by any deponent that there was a specific conversation, meeting or documentation on these material points. It is also a notable feature of this matter that both deponents appear to have alternated and altered their position as to whether the Petitioner had or has a beneficial interest in shares of the Company (including the letter issued on behalf of the Petitioner on 7 September 2024, the response sent on behalf of the Company on 10 September 2024, and the proceedings issued by the Petitioner seeking a declaration that he has a beneficial interest in 50% of the shares of the Company).

88. However, it is not necessary to determine this Motion on the basis of the need to resolve factual conflicts. RAS Medical demonstrates that the need to resolve a factual conflict in a final determination is not the sole threshold for deciding whether to direct cross-examination and that cross-examination can become necessary when a deponent’s credibility is challenged in a material respect.

89. In the context of this Petition, each side is impugning the credibility and reliability of the opposing deponent’s sworn evidence, on the basis of documentation and related proceedings, and it appears to be inevitable that the credibility of both the Petitioner and Mr Somerville will be further attacked at the hearing of the Petition. It is not for me to assess the merits of the parties’ position in these or any other respects, or to seek to predict how a court hearing the Petition may assess matters. However, in light of RAS Medical and Re Bayview, there is at least a risk that, if there is no cross-examination, the Petition would fall to be dismissed on that basis, rather than being weighed on its merits. Accordingly, I do consider it appropriate and necessary to grant an order directing cross-examination.

90. In making this order, I believe it is important to be clear that the need for cross-examination does not arise from the assessment of whether there is a “bona fide dispute”. This criterion does not import some form of test of the honesty, integrity or credibility of the individual deponent within the meaning of RAS Medical. On the contrary, “bona fide” is frequently used to denote a filtering test which intends to weed out defences or arguments that have no reasonable prospect of success. Cases on applications for summary judgment apply the test of a “bona fide” defence and this is commonly formulated as “real or bona fide”. Similarly, in the injunction context, the test varies between a “bona fide”, “fair” or “serious” issue to be tried. The term “bona fide” in the petition setting is similarly accompanied by words “on substantial grounds” and signifies a defence that has some prospect of succeeding, that has some substance and cannot be dismissed summarily.

91. Viewed in this manner, it is particularly important in the context of the motion before me not to equate “bona fide” with some test of the honesty or truthfulness of the individual deponent.

That could have the negative and unintended effect of importing a need for cross-examination into petitions which are intended to be dealt with summarily and on affidavit.

92. Put simply, “credibility” rather than “bona fides” is the benchmark adopted in RAS Medical for determining the need for cross-examination. To add to the risk of confusion, however, the test of “credibility” has been applied in several judgments on summary applications, although these cases seem to focus on whether a litigant’s defence or claim is capable of being believed, rather than some determination as to whether an individual’s evidence is truthful.

93. In one judgment cited by counsel for the Company, Aer Rianta c.p.t. v. Ryanair Ltd [2001] 4 IR 607, Hardiman J. noted the debate between the sides as regards the meaning of a “credible”

defence, with the plaintiff contending that it meant “not seriously improbable”. He concluded that “In my view, the fundamental questions to be posed on an application such as this remain:

is it "very clear" that the defendant has no case? Is there either no issue to be tried or only issues which are simple and easily determined? Do the defendant's affidavits fail to disclose even an arguable defence?”

94. In that judgment, Hardiman J. observed that earlier cases (including one referenced by counsel for the Company here, First National Commercial Bank v. Anglin [1996] 1 I.R. 75) did focus on the specific question of credibility, which, according to Hardiman J. “arose rather starkly”

there based on direct factual contradictions. Hardiman J. continued, “I consider that the references in these cases to credibility and to fair and reasonable probability may be misleading if read without reference to their own unique facts.”

95. McGuinness J. in Aer Rianta cpt v. Ryanair also equated credibility with the test of a bona fide defence:

“it is for this court to decide whether in the instant case the defence set out in the affidavits…, together with the documents exhibited therewith, is credible, or in other words, whether there is a fair or reasonable probability of the defendant having a real or bona fide defence. Since there had been no oral hearing and neither deponent has been crossexamined on his affidavit, it was not for the learned High Court Judge to weigh the affidavit evidence of Mr. O’Leary and Mr. Byrne or to attempt to resolve the factual contradictions contained in it. Still less is it for this court to attempt any such task. In deciding whether the defendant may have a “credible” defence, the court must concentrate its attention on the matters put forward in the defence itself. The court does not ask whether Mr. O’Leary’s account of events is probable, or likely to be true; nor does it ask whether Mr. Byrne’s account of events is more likely. The question is rather whether the proposed defence is so far fetched or so self contradictory as not to be credible.” (at page 615).

96. McGuinness J. noted the weaknesses in the defence proferred but nonetheless remitted the matter to plenary hearing on the basis that there remained a probability that there was a real or bona fide defence. Later, Clarke J. in Irish Bank Resolution Corporation v McCaughey [2014]

1 IR 749 returned to this topic of “credibility” as a barometer for summary judgment, noting “[i]t needs to be emphasised again that it is no function of the court on a summary judgment motion to form any general view as to the credibility of the evidence put forward by the defendant” (at [23]). Clarke J. also adverted to the finding by Finlay Geoghegan J. in Bank of Ireland v. Walsh [2009] IEHC 220, that the term "credible" in relation to a defence has “a very narrow meaning”.

97. What clearly emerges from these judgments is that the term “credible” can be used as a form of synonym for “bona fide”, with both encompassing the exercise of filtering out defences or claims that have no real or reasonable prospect of success. When used in that sense, neither term connotes a test of individual credibility, in the sense of possible impugning of the honesty or truthfulness of a deponent’s averments.

98. However, the position is somewhat different here. In Aer Rianta v. Ryanair, for example, the Court had the option to remit the matter to plenary hearing. In this case, there is no such facility.

Further, given the intervention of RAS Medical and its application in Re Bayview and Re Green D, it is important to be careful when affidavit evidence is alleged to be inconsistent with available documentation and lacking in credibility, or when factual averments are directly alleged to be untrue in the context of winding-up petitions. Such assertions cannot be relied upon absent cross-examination.

99. Turning to this case it is necessary to assess whether the credibility of the evidence of Mr Somerville (or indeed the Petitioner) is being challenged in the sense referenced by Clarke CJ in RAS Medical.

100. On the basis of the summary of the facts, there is a direct factual contradiction between two deponents on a key question on which there appears to be little or no contemporaneous evidence (such as a meeting note, agreement, minute). The crux of the issue is not whether the monies were paid by the Petitioner, the issue is for what. On this factual question, the two deponents clash directly and there are inconsistencies and difficulties with the evidence presented by both sides. If there is no cross-examination, it is difficult to see how a court could resolve this, even at a relatively superficial, filtering level. Both deponents would also be denied the opportunity to deal with the challenges to their evidence in cross-examination.

101. I wish to emphasise that I make no comment or findings on the merits of the Petition. It would not be appropriate to do so. I also steer clear of speculating as to what may transpire at the hearing of the Petition, save for making the one necessary finding that there is a possibility that the Petition could potentially be refused on the basis there are attacks on credibility and no cross-examination (as occurred in Re Bayview). Given the existence of that possibility, I consider that the only just or correct outcome is to grant the relief sought by the Motion. I note the complaint of delay that was raised by the Company and I do not believe that such a factor does weigh against the grant of the relief sought or could do so, given the countervailing risk faced by the Petitioner.

102. There must however be sensible limits to the scope and purpose of the permissible crossexamination. The hearing of a petition cannot become a forum for airing grievances or resolving debt disputes: that is not its intended purpose or effect. If the parties wish to engage in a full plenary hearing, there are separate mechanisms of which they may avail (such as plenary debt recovery proceedings or the Petitioner’s existing plenary proceedings).

103. Moreover, RAS Medical cannot be interpreted as requiring a blanket permission to crossexamine witnesses at large on matters that are tangential or irrelevant to the determination the court has to make, or to permit cross-examination to address gratuitous or generalised attacks on a deponent’s credibility. The judgment of Clarke C.J. expressly confines cross-examination to material issues.

“The onus is on a party who wishes to urge on a court that sworn affidavit evidence should not be accepted, in respect of any point of fact material to the court's final determination, to ask the court to take appropriate measures such as granting leave to cross-examine, so that questions concerning the credibility or reliability of the evidence concerned can be put to the witness and the court reach a sustainable conclusion as to the accuracy or otherwise of the evidence concerned.” (at [113])

104. Accordingly, cross-examination arising from attacks on a deponent’s reliability or credibility must be limited to those paragraphs of a deponent’s affidavits the credibility or reliability of which are specifically, necessarily and directly challenged by a party bearing the burden of proof on the precise material issue to which they relate.

105. It is important to be clear that the order being made here is not an order for anything approximating a plenary hearing of the Petition. There can be no question of a petition of this nature allowing for an open airing of all grievances between estranged former business partners.

On the contrary, each deponent can be cross-examined solely as to their credibility or reliability on the net questions of whether the monies advanced by the Petitioner were in fact advanced by way of a loan or in exchange for shares in the Company and, if a loan, whether it was repayable on demand.

106. Based on the submissions and affidavits presented, it appears to me that the paragraphs of the affidavits that are engaged and on which there may be cross-examination are the following:

paragraph 11 of Mr Somerville’s first affidavit; paragraphs 11, 18, 20 and 21 of his second affidavit; and paragraph 8 of his third affidavit (the paragraphs identified by counsel for the Petitioner as those that are relevant to these issues). The relevant paragraphs of the Petitioner’s affidavits (as identified by the Company) are paragraph 11 of his first affidavit; paragraphs 5, 6, 7, 14 of his second affidavit and paragraph 3 of his third affidavit. I will however hear the parties as to the accuracy and completeness of these lists.

CONCLUSIONS

107. There is a jurisdiction to direct cross-examination on a winding-up petition. It arises under Order 40, Rule 1 RSC. There is no stated or apparent limit to that discretion, but it is a discretion that should not lightly be exercised. On the contrary, cross-examination should only rarely be allowed in winding-up petitions, particularly those based on the deemed insolvency of a company. The default position must remain that these petitions are dealt with expeditiously and on affidavit.

108. However, in this case, I regard the following factors to be important and to weigh in favour of directing limited cross-examination on the affidavits sworn in this Petition.

109. First, the Petitioner has pointed to several specific matters on which he says cross-examination is necessary to ensure Mr Somerville’s credibility on relevant issues can be properly tested.

The challenge to the credibility of Mr Somerville is not based on assertion alone, but is made by reference to available documentation. The same applies to the Company’s application to cross-examine the Petitioner on specific paragraphs of his affidavit. On the basis of RAS

Medical as applied in Re Bayview, cross-examination may well be found to be required in these circumstances.

110. Second, the greater risk of injustice could arise if leave to cross-examine was refused. In those circumstances, a court hearing the Petition may conclude that the Petition fell to be dismissed for the very reason that there was no cross-examination to test the mutual credibility attacks being mounted by the parties. Given the parties did take the step of issuing the motions that are before me, that is certainly a risk to be avoided.

111. Third, it is plainly the case that the Petition will take longer to be heard in the event there is cross-examination. To seek to contain this to the greatest extent possible, I have identified (based on the parties’ submissions) the list of paragraphs and issues on which I consider crossexamination to be permissible. I do not think it will be an appropriate exercise of my discretion to refuse leave to cross-examine if the cross-examination which appears to be necessary for the fair determination of this Petition can be conducted in that limited and curtailed manner.

112. In summary, given the specific credibility challenges identified by both parties, I believe this falls within the category of exceptional cases in which it would not be consistent with the fair disposition of the Petition to refuse leave to conduct cross-examinations. I therefore direct cross-examination on the limited basis outlined on this judgment. This is not in any way an alteration or expansion of the proper scope of a winding-up petition based on the deemed insolvency of the company: the questions remain whether the debt has prima facie been shown to be owed and validly demanded and whether a bona fide dispute on substantial grounds has been raised. These are the limited, threshold tests to be applied, regardless of whether there is oral evidence. It is not a plenary hearing of the parties’ dispute.

113. As this is in the nature of a case management decision and each side issued a motion for the cross-examination of the other, my provisional view is that the correct and just decision on costs, is that the costs of each motion should be costs in the cause. I will however list the matter before me at 10.00 am on 25 November 2025 for the purpose of hearing the parties’ submissions regarding the precise form of orders to be made and as to the allocation of costs.