Langan v Personal Insolvency Acts 2012–2015

• Jurisdiction: Ireland
• Judge: Mr Justice Mark Sanfey
• Judgment Date: 13 July 2023
• Neutral Citation: [2023] IEHC 410
• Court: High Court
• Docket Number: [Record No. H:IS:HC:2020:000801]

In the Matter of Part 3, Chapter 4 of the Personal Insolvency Acts 2012–2015

and

In the Matter of David Langan of 187 Bachelor's Walk, Dublin 1

and

In the Matter of An Application Pursuant to Section 115A(9) of the Personal Insolvency Acts 2012–2015

[2023] IEHC 410

[Record No. H:IS:HC:2020:000801]

THE HIGH COURT

RULING of Mr Justice Mark Sanfey delivered on the 13 ^th day of July 2023 .

1 . This ruling relates 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 Promontoria (Aran) Limited (‘ PAL’) and a secured creditor, Tom Casey, whose interests were directly affected by the objections of PAL – to make written submissions in relation to the appropriate orders, given the terms of my judgment. Each of the three parties took up this invitation and made helpful written submissions (‘ the costs submissions’) which I have now considered.

2 . The original application by the PIP was for an order pursuant to s.115A(9) of the Personal Insolvency Acts 2012–2015 (‘ the Act’) confirming the coming into effect of the personal insolvency arrangement (‘ the PIA’). This Court had original jurisdiction in the matter, i.e., it was not an appeal from the Circuit Court. PAL objected to the application on two grounds. Firstly, it contended that a charge on the property in favour of Mr Casey was a preference as set out in s.120(h) of the Act, and that the PIP accordingly had not complied with s.115A(8)(b) in that the PIA proposed by the PIP involved the discharge of monies due to Mr Casey on foot of the charge: see in particular paras. 44–45 of the judgment. Secondly, PAL contended that the PIA was “unfairly prejudicial” to its interests contrary to s.115A(9)(f) of the Act.

3 . I do not propose, in this ruling, to reiterate the terms of the judgment, which speak for themselves. The court found that none of the objections of PAL was valid. In relation to the issue of whether or not there was a preference, Mr Casey was permitted to attend the hearing and contest the issue, given that the first objection of PAL affected his interests directly. While PAL at the hearing accepted that Mr Casey had a first charge, it was contended, not just that it was an impermissible preference, but that an equitable mortgage which PAL submitted should be found by the court as established in its favour must be regarded as having priority over Mr Casey's charge.

4 . It was suggested on behalf of PAL in its costs submissions that the PIP should have gathered evidence from Mr Casey so that the matter could have been dealt with when the PIP's application first came before the court in July 2021. There is no reality to this submission. By the time the matter came on for hearing before this Court, Mr Casey had sworn a substantial affidavit, proffered written submissions in relation to the issue concerning him, and engaged senior and junior counsel to defend his position in relation to PAL's “preference” objection. In my view, the participation of Mr Casey in the hearing was necessary, and it would not have been fair to him to refuse him the opportunity to participate, or to expect the PIP to fight his corner.

5 . It is also in my view not correct to assert, as PAL does at para. 6 of its costs submissions, that Mr Casey's interests “could not be affected by the refusal of the arrangement”. Indeed, the very next sentence accepts that Mr Casey's situation “could be markedly improved by the approval of the arrangement…”. While it is true that the refusal of the arrangement would not have affected Mr Casey's status as a first legal charge holder, PAL itself points out in that paragraph that Mr Casey's position “…is arguably greatly improved by the approval of the arrangement as they no longer have to await the outcome of well-charging proceedings which might affect their relative priority over the proceeds of sale for the property”.

6 . The issue of the correct interpretation of s.120(h) was a novel issue which had not been the subject of a previous reported decision of the High Court. What constitutes a preference under the sub-section is by no means clear, and this issue took up a considerable amount of the court's time in hearing from the parties. However, the objection that the charge in favour of Mr Casey was a preference under s.120(h) was, in the words of McDonald J in Re Finnegan [2019] IEHC...