An Application Pursuant to Section 115A(9) of the Personal Insolvency Acts 2012–2015 - David Langan
| Jurisdiction | Ireland |
| Judge | Mr Justice Mark Sanfey |
| Judgment Date | 13 June 2023 |
| Neutral Citation | [2023] IEHC 320 |
| Court | High Court |
| Docket Number | [Record No. H:IS:HC:2020:000801] |
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[2023] IEHC 320
[Record No. H:IS:HC:2020:000801]
THE HIGH COURT
JUDGMENT of Mr Justice Mark Sanfey delivered on the 13 th day of June 2023
. This judgment concerns an application by Mr Gary Digney, a personal insolvency practitioner (‘ PIP’), on behalf of David Langan (‘ Mr Langan’ or ‘ the debtor’) pursuant to s.115A(9) of the Personal Insolvency Acts 2012–2015 (collectively referred to herein as ‘ the Act’) for an order confirming the coming into effect of a personal insolvency arrangement (‘ PIA’) proposed by the PIP. The application is made under this Court's jurisdiction, i.e., unlike most such applications, it is not an appeal of a decision of the Circuit Court.
. The application is opposed by a creditor, Promontoria Aran Limited (‘ Promontoria’ or ‘ PAL’), which filed a notice of objection on 12 April 2021, albeit that the notice incorrectly set out the amount owing to Promontoria. One of the grounds of objection was that, in breach of s.120(h) of the Act, the debtor gave a preference as defined by s.2(5) of the Act to a solicitor, Mr Tom Casey, within three years preceding the issue of the debtor's protective certificate on 23 November 2020.
. Mr Casey claimed to be entitled to a first legal charge on premises contained in folio 35826F of the Register of Freeholders, County Wexford. Mr Casey had carried out a very considerable amount of work on behalf of the debtor in connection with certain litigation in which the debtor was involved. The debtor accordingly executed a charge in favour of Mr Casey on 3 January 2019. In view of the contention of Promontoria that the charge was a preference, Mr Casey was represented at the hearing before this Court of the debtor's application by senior and junior counsel. Promontoria and the PIP were also represented by counsel, and very detailed written and oral submissions were made in relation to a multiplicity of issues.
. In his affidavit of 16 April 2021, Mr Langan avers that he is a single man with no dependants. His principal private residence (‘ PPR’) is a one-bedroom apartment at 187 Bachelors Walk, Dublin 1. The debtor established a furniture business in 1986, comprising a number of retail outlets selling household furniture. There were a number of companies operated by the debtor, and he entered into personal guarantees to obtain loans for these companies. Unfortunately, the recession impacted severely on the business and the companies were wound up in 2009.
. The debtor engaged with his lenders throughout his financial difficulties. Ultimately his loans were sold by Ulster Bank to PAL, and there was a petition by PAL to bankrupt the debtor in 2019, after which a protective certificate was issued to the debtor on 23 November 2020. Bank of Ireland is the PPR lender, and the debtor, who is now employed as a salesman, has been making regular payments in respect of the PPR mortgage.
. The PIA proposed by Mr Digney on behalf of the debtor was presented to the meeting of creditors on 12 March 2021. The total of the specified debt creditors in the PIA is €5,745,478.71. The proposed arrangement is for twelve months. It is stated that the secured creditors will receive 67 cent in the euro as opposed to 62 cent in the euro in bankruptcy, and that the unsecured creditors will receive 0.48 cent in the PIA as opposed to 0.27 cent in the bankruptcy.
. In para. 1.1.1 of part IV of the PIA, Mr Casey is described as a “secured” creditor who has a “first legal charge” in the sum of €236,800 on the Wexford property. Various Promontoria accounts, in excess of €4m, are also set out, and are described as “unsecured”. Part IV sets out the treatment of Mr Langan's assets. The mortgage term for his PPR is to be restructured to a ten-year term, with arrears capitalised and a variable interest rate. A buy-to-let property in Malahide County Dublin, which is secured in favour of Permanent TSB, is to be sold, and it is not envisaged that any equity will accrue to the debtor from the sale.
. Paragraph 2.5 of the PIA related to Mr Casey's “secured debt”. The secured property is 7 Sandy Lane, Ballymoney, County Wexford (‘ the property’ or ‘ the Wexford property’), and is also a buy-to-let property. It is proposed that the property be placed on the market at the s.105 agreed value of €250,000 on approval of the PIA, which states that “the secured creditor is to be repaid from the net sales proceeds with the surplus of the proceeds of sale to be remitted into the PIA for the benefit of the creditors…” [para. 2.5.6]. Importantly, para. 2.5.7 states as follows:
“It should be noted that Promontoria (Aran) Limited have registered a Lis Pendens against the property. Promontoria (Aran) Limited issued High Court proceedings, by way of a special summons, on 7 June 2020 seeking declaratory relief with regard to the property. The said proceedings have not yet been determined.”
This paragraph is repeated at para. 6.2.6 of the PIA.
. Paragraph 15 of the PIA states as follows:
“15.1. Section 98(1) submissions from creditors to make submissions to the personal insolvency practitioner regarding the debts concerned and the manner in which the debts might be dealt with as part of a Personal Insolvency Arrangement:
15.1.1. No such submissions were received from creditors by the personal insolvency practitioner.
15.2 Section 102(1) indications from the secured creditor(s) detailing a preference as to how, having regard to subsection (3) and sections 103 to 105, that creditor wishes to have the security and secured debt treated under the personal insolvency arrangement:
15.2.1. No such indications were received from creditors by the personal insolvency practitioner.”
. The PIP certifies that 100% of the secured creditors — Bank of Ireland, Permanent TSB, AIB and Mr Casey – voted in favour of the PIA, and that 86% of the unsecured creditors – consisting entirely of the €4,111,850.80 owed to PAL – voted against the PIA. Accordingly, it became necessary for the PIP to make the current application, which first came before the court on 19 April 2021.
. On 15 February 2021, an application was made to this Court on behalf of Mr Casey for an order permitting late submission by him of his proof of debt. Counsel for the PIP indicated that the PIP was not objecting to the application. An order was made by this Court on that date that a late proof of debt submission by Mr Casey be allowed.
. Subsequently, Mr Casey made an application to this Court seeking to prove his debt in court, as he would be entitled to do under para. 2(b) of the First Schedule to the Bankruptcy Act 1988 as amended, paras. 1–22 of which are applicable to the personal insolvency regime by virtue of s.98(2)(a) of the Act. It is notable that, in a letter to PAL of 25 February 2021, to which I refer in detail at paras. 38 to 42 below, the PIP notified PAL of Mr Casey's intention to make this application.
. I insisted that PAL be served with the application, and the matter was adjourned from 1 March 2021 to 8 March 2021, given the imminence of the creditors' meeting. Mr Casey's affidavit of 26 February 2021 grounding the application set out at exhibit DC1 his proof of debt, and outlined his alleged security and the nature of it.
. No appearance was made by or on behalf of PAL on 8 March 2021. Mr Casey swore an affidavit of service on 4 March 2021 of his notice of motion and affidavit of 26 February 2021 on PAL and the solicitors acting for them. I was satisfied that appropriate service had been effected on PAL, and having considered the evidence proffered by Mr Casey, was satisfied that he had proved his debt, and indicated that I would accede to the relief sought at para. 2 of the notice of motion i.e., “…an order under s.2(b) of the First Schedule of the Bankruptcy acts proving the debt of the specified creditor… [Mr Casey]”.
. At the hearing before me of the present application, the terms of the perfected order of 8 March 2021 gave rise to some dispute. The order states as follows:
“Upon application of counsel for Tom Casey the specified creditor being mentioned before the Court on this day for an Order allowing a late proof of debt by the said specified creditor Tom Casey practising under the style and title of Tom Casey Solicitors in the presence of Counsel for the Personal Insolvency Practitioner on behalf of the debtor
Whereupon and on reading the Notice of Motion filed on 15 th day of February 2021 and the Affidavit of Tom Casey filed on 15 th day of February 2021 and the documents and exhibits therein referred to
And on hearing Counsel for the specified creditor and Counsel for the Personal Insolvency Practitioner
And the Court being satisfied that the specified creditor Tom Casey has proven the debt of Tom Casey Solicitors of €236,800.00 secured by way of first legal charge dated 3 rd day of January 2019 over folio WX35826F being 7 Sandy Lane, Wexford
And the Court doth make no order as to costs”.
. The order is problematic from a number of points of view. A formal order had in fact been made on 15 February 2021 permitting a late proof of debt submission by Mr Casey, not on 8 March 2021 as the above order might suggest. The order does not refer to the affidavit of 26 February 2021 sworn by Mr Casey, on which the application to prove the debt and the charge was grounded. Also, the format of the order does not accurately reflect the orders made by the court.
. Counsel for Promontoria contended at the hearing of the present application that the only curial part of the order was...
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Langan v Personal Insolvency Acts 2012–2015
...to the orders to be made on foot of a substantive judgment (‘ the judgment’) which I gave in the above matter on 13 June 2023: see [2023] IEHC 320. I invited the parties involved in the application – Mr Gary Digney, the personal insolvency practitioner (‘ the PIP’), the objecting creditor P......