Re Hickey (a debtor) No.3

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 31 May 2018
• Neutral Citation: [2018] IEHC 313
• Docket Number: [H:IS:HC:2017:000050]
• Court: High Court
• Date: 31 May 2018

[2018] IEHC 313

THE HIGH COURT

Baker J.

[H:IS:HC:2017:000050]

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

IN THE MATTER OF MICHAEL HICKEY OF KILMACOMMA HILL, CLONMEL, TIPPERARY (‘THE DEBTOR’)

AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 115A(9) OF THE PERSONAL INSOLVENCY ACT, 2012 TO 2015.

(No. 3)

Personal Insolvency Arrangement – Debtor – Eligibility criteria – Objecting creditor seeking to raise a procedural objection – Whether the debtor satisfied the eligibility criteria

Facts: The debtor, Mr Hickey, made a proposal for a Personal Insolvency Arrangement (PIA) which was rejected at a meeting of creditors held on 25 January 2018. Thereafter, on 2 February 2018, a motion issued for an order pursuant to s. 115A(9) of the Personal Insolvency Act 2012. KBC Bank Ireland Plc, the objecting creditor, raised a procedural objection before the High Court that the debtor did not satisfy the eligibility criteria specified in s. 91 of the Act. The objection related to whether the debtor was entitled to seek and obtain on 20 November 2017 a third protective certificate. It was argued that the third protective certificate issued wrongly because it issued in the currency of an extant period of protection. In the circumstances, the objecting creditor argued that the debtor did not satisfy the eligibility criteria specified in s. 91 of the Act and that the application must fail. The ground of objection called for consideration of whether the issuing of a motion for relief pursuant to s. 115A(9) of the Act has the effect of continuing in force the protection afforded by a protective certificate, even in circumstances where the application under s. 115A(9) was made outside the currency of a certificate.

Held by Baker J that the debtor was not competent to make an application for a third protective certificate on 3 November 2017, and that the certificate granted on 20 November 2017 was not made in accordance with the statutory requirements; he did not satisfy the eligibility criteria specified in s. 91 of the Act. Baker J noted that compliance with s. 91 is a mandatory precondition to the court exercising its jurisdiction under s. 115A(9); he was therefore not competent to make application for review under s. 115A.

Baker J held that the preliminary objection made by the objecting creditor was correct and that the application under s. 115A was not properly before the court.

Application refused.

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

1 Michael Hickey (‘the Debtor’) made a proposal for a Personal Insolvency Arrangement (‘PIA’) which was rejected at a meeting of creditors held on 25 January 2018. Thereafter, on 2 February 2018, a motion issued for an order pursuant to s. 115A(9) of the Personal Insolvency Act 2012 as amended (‘the Act’). This judgment concerns one objection raised by KBC Bank Ireland Plc (‘the Objecting Creditor’), a procedural objection that the Debtor does not satisfy the eligibility criteria specified in s. 91 of the Act.

2 The objection relates to whether the Debtor was entitled to seek and obtain on 20 November 2017 a third protective certificate. It is argued that the third protective certificate issued wrongly because it issued in the currency of an extant period of protection. In the circumstances, the Objecting Creditor argues that the Debtor does not satisfy the eligibility criteria specified in s. 91 of the Act and that the application must fail.

3 The ground of objection calls for consideration of whether the issuing of a motion for relief pursuant to s. 115A(9) of the Act has the effect of continuing in force the protection afforded by a protective certificate, even in circumstances where the application under s. 115A(9) was made outside the currency of a certificate. The point has not been the subject of any judicial determination.

Background

4 This is the third judgment given in respect of Mr. Hickey, who has evoked the provisions of the Act on two previous occasions.

5 Following the issue to Mr. Hickey of a first protective certificate on 17 December 2015, on 17 February 2016, a meeting of his creditors held pursuant s. 70 of the Act rejected a proposed Debt Settlement Arrangement (‘DSA’).

6 Mr Hickey obtained a second protective certificate on 4 July 2016, and on 9 September 2016 a meeting of his creditors was held to consider a proposed PIA, which was also rejected.

7 Mr. Hickey then issued a notice of motion for an order pursuant s. 115A(9) of the Act (an ‘application under s. 115A’) on 23 September 2016.

8 Judgment in In Re Hickey (No. 1) [2017] IEHC 20 was delivered on 18 January 2017 by which, at para. 33, his application under s. 115A was held to be out of time:

‘[T]he debtor was out of time for the lodging of an application by way of appeal under s. 115A (9) of the Act of 2012. There was no argument advanced that I have a power to enlarge the time for the making of appeal […]. The statutory time limit is strict. I consider therefore that the application must fail.’

9 On 6 February 2017, an order pursuant to s. 91(3) of the Act (a ‘s. 91(3) order’) issued to Mr. Hickey allowing him to make a proposal for a PIA notwithstanding that he had made a proposal in the previous twelve months. On 22 May 2017, KBC obtained judgment acceding to its application, In Re Hickey (No. 2) [2017] IEHC 324, and an order pursuant to the inherent jurisdiction of the court setting aside the s. 91(3) order was made on 29 May 2017.

10 On 3 November 2017 Mr. Hickey made an application pursuant to s. 93 of the Act for the issue of a third protective certificate, which issued on 20 November 2017.

The legal issues arising

11 It is with regard to events following the application under s. 115A made on 23 September 2016 that the present judgment is given. It is argued that it was not until the application under s. 115A was determined and judgment was delivered on 18 January 2017, that it could properly be said that Mr. Hickey did not have the benefit of a protective certificate. In the circumstances, it is argued that he was not competent to make application for a protective certificate as he had enjoyed the benefit of the protective certificate in the twelve months immediately prior to the date of the application, 3 November 2017.

12 Section 95(2) provides as follows:

‘Where the appropriate court receives the application for a protective certificate and accompanying documentation […], it shall consider the application and documentation and, subject to subsection (3)—

(a) if satisfied that the eligibility criteria specified in section 91 have been satisfied and the other relevant requirements relating to an application for the issue of a protective certificate have been met, shall issue a protective certificate’.

13 Section 91(1)(i) provides as follows:

‘Subject to the provisions of this section and this Chapter, a debtor shall not be eligible to make a proposal for a Personal Insolvency Arrangement unless he or she satisfies the following criteria:

(a) – (h) […];

(i) that the debtor has not –

(i) been the subject of a protective certificate issued under section 95 less than 12 months prior to the date of the application for a protective certificate’.

14 The question for determination on the facts, therefore, is whether the Debtor has ‘been the subject of a protective certificate’ less than twelve months prior to the date of the application for the third protective certificate. The matter will fall to be determined in the light of a consideration of whether the protection afforded by a protective certificate continues when a debtor evokes the provisions of s. 115A.

The legislative scheme

15 Certain statutory provisions govern the timeframe within which steps must be taken for the purposes of the Act. A meeting of creditors to consider a proposed PIA must take place within the 70-day period of protection afforded by an order under s. 95(2)(a), or the 40-day extension under s. 95(6).

16 An application for an extension of the period of protection must be made before a meeting of creditors is held, as the provisions of s. 95(6) in their clear term provide as follows:

‘Where a protective certificate has been issued pursuant to subsection (2)(a), the appropriate court may, on application to that court by the personal insolvency practitioner, extend the period of the protective certificate by an additional period not exceeding 40 days where—

(a) the debtor and the personal insolvency practitioner satisfy the court that they have acted in good faith and with reasonable expedition, and

(b) the court is satisfied that it is likely that a proposal for a Personal Insolvency Arrangement which is likely—

(i) to be accepted by the creditors, and

(ii) to be successfully completed by the debtor,

will be made if the extension is granted.’

17 The statutory meeting of creditors must take place with the currency of a protective certificate, or extended currency as the case may be.

18 An application under s. 115A is to be made within 14 days of the meeting of creditors, as provided in s. 115A(2):

‘An application under [s. 115A] shall be made not later than 14 days after the creditors' meeting referred to in subsection (16)(a)’.

19 Section 115A(5) makes express provision for the continuation of the protection afforded by a protective certificate if the application under s. 115A is made during the currency of the protective certificate:

‘Where an application is made under this section before the expiry of the period of the protective certificate, such protective certificate shall continue in force until —

(a) the Personal Insolvency Arrangement comes into effect under subsection (13), or

(b) one of the following occurs —

(i) the time for bringing an appeal against a refusal of the appropriate court to make an order under subsection (9)...