Re O'Connor, a Debtor

JudgeMs. Justice Baker
Judgment Date21 May 2015
Neutral Citation[2015] IEHC 320
CourtHigh Court
Docket Number[2014 No. 196 CA]
Date21 May 2015

[2015] IEHC 320


[No. 196 CA./2014]
O'Connor (a debtor), In re

Insolvency – Personal Insolvency Act 2012Personal Insolvency Act 2012 (Procedures for the Conduct of Creditor's Meetings) Regulations 2013, S.I. 335/2013 – Personal insolvency arrangement – Exclusion of proxy vote

Facts: The appellant/debtor had appealed against the decision and judgment of the circuit court which upheld that objection of the Bank against Personal insolvency arrangement. The debtor sought a decision on whether the proxy vote of the Bank was properly excluded by the chairman and whether the Bank was unlawfully prevented from casting a vote personally at the creditors' meeting. The debtor contended that the proxy form was invalid, it did not show the fact of authorization, that the chairman was required to obtain evidence of authorization and that the chairman had discretion to exclude the proxy.

Ms. Justice Baker held that the instrument that created the proxy was valid in form and substance and hence effective. The Court observed that reg. 7 (3) of the Regulations of 2013 could not be interpreted to mean that it made a requirement of a particular form as mandatory rather it emphasized on the substance and context of the form. The regulation did not require that the fact of authorisation to be stated in the form. The Court held that the proxy vote was unlawfully excluded at the creditor's meeting. The Court found that the chairperson had no discretion to exclude the proxy vote. The Court observed that reg. 7 (5) of Regulations of 2013 do not give discretion to the chairman to refuse the acceptance of an instrument of proxy except on limited grounds under reg. 7 (2) of Regulations of 2013.


1. This is an appeal from a decision of the Circuit Court of the 3 rd October, 2014 made by Judge Enright, a specialist judge appointed for the purposes of applications under the Personal Insolvency Act 2012 ("the Act of 2012"), by which she upheld the objection of Bank of Ireland ("the Bank") to the personal insolvency arrangement ("the PIA") proposed by Joseph O'Connor, a debtor. The matter came on for hearing before me grounded on the documentation which was before the Circuit Court, and on lengthy legal submissions from counsel.


2. Before turning to the grounds of objection I briefly outline the facts.


3. The Bank claims that the debtor is indebted to it in the round sum of €280,000 in respect of which demand has been made. The debtor appointed Mitchell O'Brien, a Personal Insolvency Practitioner (hereinafter "the PIP"), for the purposes of making a proposal for a PIA pursuant to the provisions of the Act of 2012. No argument is made that the procedural requirements of the Act to appoint the PIP were not properly met.


4. The Bank's debt comprises 22.2% of the total debt, and 70.1% of the secured debt of the debtor. Because the Bank is owed more than 50% of the secured debt of the debtor it had a blocking vote, and the PIA could not be approved without its support.


5. A notice of a meeting for the purpose of considering the PIA in the statutory form was sent to the Bank on the 8 th July, 2014 for a meeting scheduled to be held at 11am on the 23 rd July, 2014 at premises in Dungarvan, Co Waterford. The PIA was subsequently amended and the amended PIA was furnished to the Bank one day before the scheduled creditors' meeting.


6. As is required by the legislation the PIP requested that creditors submit proof of debt within 14 days of the letter. Ulster Bank, one of the creditors, did not prove its debt, although its claim was included by the PIP for a dividend in the proposal put to the meeting. That inclusion is one of the grounds of objection raised by the Bank.


7. The Bank determined to vote against the proposal and emailed a proxy form to the PIP appointing him as its proxy to vote against the proposal at the meeting. The email was sent just before 4pm, the deadline, on the 22 nd July 2014.


8. The chairman of the creditors' meeting refused to accept the proxy instrument.


9. An officer of the Bank, Ms Ormiston, attended at the creditors' meeting to vote in person on behalf of the Bank. For that purpose she presented evidence of her authorisation to act on behalf of the Bank to the PIP who acted as chairman of the meeting. The PIP rejected her evidence and did not permit her to vote.


10. Thus the Bank's blocking vote was not cast against the PIA which was deemed to have been approved pursuant to the provisions of s. 108 (8) of the Act.


11. By notice of objection dated the 1 st August, 2014 the Bank notified the Circuit Court, the Insolvency Service of Ireland and the PIP of its objection to the PIA coming into force on the five grounds set out therein.


12. The application to approve the PIA was heard by Judge Enright on the 1 st September, 2014. The objection of the Bank was grounded on the affidavit of Ms Anthea Ormiston sworn on behalf of the Bank on the 28 th August, 2014. Written submissions were furnished to the court, which having reserved its judgment to the 3 rd October, 2014, upheld the Bank's objections.


13. The effect of the Circuit Court decision is that the PIA procedure has come to an end and the debtor no longer has the benefit of a protective certificate. Section 114(3) of the Act of 2012 provides that:-

"Where the appropriate court upholds the objection to the Personal Insolvency Arrangement, the Personal Insolvency Arrangement procedure shall be deemed to have come to an end, and the protective certificate issued under section 95 shall cease to have effect."


14. It is from this determination of the Circuit Court that the debtor has appealed. It is agreed that four issues arise for determination by me on the appeal as follows:-


) Whether the proxy vote of the Bank was properly excluded by the chairman.


) Whether the Bank was unlawfully prevented from casting a vote personally at the creditors' meeting.


) Whether the creditors' meeting ought to have been adjourned having regard to the variations in the proposal.


) Whether Ulster Bank was improperly included for a dividend despite not having submitted proof of debt.

Procedure on appeal

15. It fell first to me to determine the appropriate means by which this appeal would be prosecuted. The Act of 2012 is silent on the mode of an appeal, and indeed on the entitlement to an appeal. There is nothing however to displace the provisions of the s. 37 (1) of the Courts of Justice Act 1936 which provides in all cases an appeal from the decision of the Circuit Court:

"An appeal shall lie to the High Court sitting in Dublin from every judgment given or order made (other than judgments and orders in respect of which it is declared by this Part of this Act that no appeal shall lie therefrom) by the Circuit Court in any civil action or matter at the hearing or for the determination of which no oral evidence was given."


16. The appeal, being an appeal from a decision of the Circuit Court heard other than on oral evidence, is an appeal to the High Court on Circuit sitting in Dublin. Section 37 (2) of the Courts of Justice Act 1936 provides that an appeal shall be heard and determined by one Judge of the High Court sitting in Dublin:-

"Every appeal under this section to the High Court shall be heard and determined by one judge of the High Court sitting in Dublin and shall be so heard by way of rehearing of the action or matter in which the judgment or order the subject of such appeal was given or made, but no evidence which was not given and received in the Circuit Court shall be given or received on the hearing of such appeal without the special leave of the judge hearing such appeal."


17. Henchy J, in Northern Bank Corporation Ltd. v. Charlton & Ors. [1979] IR 149 held that the expression "re-hearing" for the purposes of s. 37(2) meant that that the matter would be determined on the evidence already heard in the Circuit Court "by examining documentary material, particularly a written version or report of the evidence", and that only in "exceptional cases" would "fresh or re-presented evidence" be received.


18. Furthermore, the appeal is confined to the grounds already argued in the Circuit Court, and that this is clear by analogy with appeals to the Supreme Court from the decision of Denham J. in Blehein v. Murphy & Ors. [2000] 2 I.R. 231 at p.240:-

"There being no exceptional reasons, the additional grounds of appeal, being matters not argued in the High Court, should not be permitted."


19. Kearns J explained the policy behind this reasoning in Quinn v. Mid Western Health Board & Anor. [2004] I.R. 1 at p. 19:-

"parties to litigation must bring forward their whole case and each and every point which properly belongs to the subject of litigation in the course of trial and not seek to do so at a later time."


20. No application was made by either party to adduce farther evidence than that available before the Circuit Court.


21. The second question that fell for determination was how the appeal should proceed. Following argument, counsel for both parties agreed that, while formally the debtor ought to present the case, the only matters of substance before me on the appeal, and the only matter of substance before the Circuit Court, were the four points of objection raised by the Bank, and no argument was made that the formal proofs for the approval of the PIA were in order. Accordingly the Bank presented its grounds for objection and the debtor responded.


22. Counsel facilitated the hearing considerably by narrowing the issues to...

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