Re: Enright (a debtor), [2018] IEHC 314 (2018)

Docket Number:2017 161 CA
 
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THE HIGH COURT ON CIRCUIT [2017 No. 161 CA]

[C:IS: MIWH: 2016:001493]MIDLAND CIRCUIT COUNTY OF WESTMEATH

IN THE MATTER OF PART 3 CHAPTER 4 OF THE PERSONAL INSOLVENCY ACTS, 2012 TO 2015

IN THE MATTER OF PHILIP ENRIGHT (“A DEBTOR”) AND

IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 112(3) OF THE PERSONAL INSOLVENCY ACTS, 2012 TO 2015.

JUDGMENT of Ms. Justice Baker delivered on the 31st day of May, 2018

  1. This judgment is directed to the difference between an “amended” proposal for the purposes of s. 111A(3) of the Personal Insolvency Act 2012 to 2015 (“the Act”) and a “modification” for the purposes of s. 111A(5). The distinction is of some consequence, as where a proposed Personal Insolvency Arrangement (“PIA”) has been amended, the time limit for the service by a creditor of an objection to the proposed PIA is enlarged.

  2. Section 111A of the Act, as inserted by s. 15 of the Personal Insolvency (Amendment) Act 2015, commenced by SI 414 of 2015, governs engagement by a PIP where a debtor has only one relevant creditor entitled to vote on a proposed PIA. This amending section replaces the procedures set out in ss. 106, and 108 to 111 of the Act of 2012 by obviating the need, in those circumstances, for the holding of a formal meeting of creditors.

  3. The general procedure provided by s. 111A(2)(a) requires the PIP to:

    “give written notice to the creditor that the proposal for a Personal Insolvency Arrangement has been prepared and that the creditor may, within [14 days of the giving to him or her of such notice], notify the personal insolvency practitioner in writing of his or her approval or otherwise of that proposal”.

  4. The PIP, in addition to giving notice of the proposal for a PIA, must furnish the creditor with the documents identified in s. 107 of the Act, including a statement of the debtor’s financial affairs in the form of a prescribed financial statement (“PFS”), the terms of the proposal for a PIA, together with a report of the PIP describing the outcome for creditors and expressing a view that the proposal PIA represents “a fair outcome for the creditors” and how that outcome differs from the likely outcome in bankruptcy, and indicating that he or she considers that the debtor is reasonably likely to comply with the terms of the proposed PIA.

  5. These documents must be served also on the Insolvency Service of Ireland (“ISI”).

  6. Section 111A(6) makes provision for the response by a single creditor by which it indicates “approval or otherwise” of a proposed PIA within the time limits therein provided:

    “A creditor to whom this section applies shall notify the personal insolvency practitioner in writing of his or her approval or otherwise of a proposal for a Personal Insolvency Arrangement within —

    (a) 14 days of the giving to him or her of the notice under subsection (2), or

    (b) if later, 7 days of the date on which a notice under subsection (4)(a) is first given to him or her.”

  7. Section 111A(7)(b) of the Act makes provision for a stark result so that, if a single creditor fails to notify an objection within the statutory time limit, the proposed PIA is deemed to have been approved by the creditor concerned.

    The present appeal

  8. This is an appeal from an order of Judge Lambe made on 24 May 2017, by which she determined that certain alterations made to the proposed PIA of the debtor were amendments to which the provisions of s. 111A(3) applied, and that the extended time period provided by s. 111A(6)(b) applied to the proposal.

  9. Whether this conclusion was correct depends on the correctness of her finding that a second document sent by the PIP was, in truth, an amended PIA. If the second proposed PIA was an amended PIA, the proposed PIA fails, subject only to a possible application by the debtor under s. 115A(9) of the Act. If the second proposed PIA was a modification, the proposed PIA is deemed to have been approved by the single creditor.

  10. The judgment also deals with the appeal of an identical order of the Circuit Court judge in respect of the wife of the debtor, Patricia Enright, an interlocking debtor (Record No. 2017 160 CA).

    Material dates

  11. On 13 October 2016 a Protective Certificate issued to the debtor in accordance with s. 95(2)(a) of the Act. On 4 November 2016, proof of debt was served by Capita Asset Services (Ireland) Limited (“Capita”), the duly authorised loan management agent on behalf of ACC Loan Management DAC (“ACC”).

  12. The PIP, Mr. Colm Arthur, made a proposal for a PIA (“the first proposed PIA”) in respect of Mr. and Mrs. Enright and on 7 December 2016, in performance of his obligations under s. 111A(2), the PIP sent the proposal to ACC.

  13. The first proposed PIA contained a number of inconsistencies which were clarified in a telephone communication on 14 December 2016, between the PIP and Ms. Jackie Sheridan of the Debt Solutions Department of Capita. In particular, the creditor had sought confirmation as to whether the proposed term of the PIA was 24 or 72 months, as both terms had been included in the proposal. The creditor also clarified the extent of its security interests and that ACC already held a second charge or an extension of an existing charge over the principal private residence of the debtors. No discussion was had between the PIP and the agent of the creditor with regard to the treatment of a small plot of land which is central to this judgment. For ease, I will refer to this land as “the small plot”.

  14. On 16 December 2016, following the telephone conversation, a second proposed PIA (“the second proposed PIA”) was prepared and served on Capita.

  15. No response for the purposes of s. 111A(6)(a) was served within the 14 day time limit provided therein, and the PIP therefore treated the proposed PIA as having been approved on 21 December 2016 by virtue of s. 111A(7)(b), and thereafter issued a “Notice of Outcome” to the creditor in accordance with the statutory procedures.

    The basis of objection

  16. The creditor brought an application pursuant to s...

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