Re Leonard O'Hara (a debtor): Re Noeleen O'Hara (a debtor)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Denis McDonald |
| Judgment Date | 25 February 2019 |
| Neutral Citation | [2019] IEHC 96 |
| Court | High Court |
| Docket Number | [2018 No. 411CA & 412 CA] |
| Date | 25 February 2019 |
[2019] IEHC 96
THE HIGH COURT
CIRCUIT APPEAL
McDonald J.
[2018 No. 411CA & 412 CA]
IN THE MATTER OF PART 3 CHAPTER 4 OF THE PERSONAL INSOLVENCY ACTS 2012-2015
AND IN THE MATTER OF LEONARD O'HARA (A DEBTOR)
AND IN THE MATTER OF NOELEEN O'HARA (A DEBTOR)
AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 115A(9) OF THE PERSONAL INSOLVENCY ACT 2012
Personal insolvency – Preliminary issue – Personal Insolvency Act 2012 – Personal insolvency practitioner seeking to rely on the provisions of s. 111A of the Personal Insolvency Act 2012 for the purposes of an application under s. 115A of the 2012 Act – Whether the practitioner was entitled to rely on the provisions of s. 111A
Facts: Interlocking applications were made by a husband and wife in respect of their debts to the Circuit Court under s. 115A(9) of the Personal Insolvency Act 2012 seeking an order confirming the coming into effect of proposals for a Personal Insolvency Arrangement. The applications came on for hearing in the Circuit Court on 25th October, 2012 before Judge Enright sitting at Tullamore Circuit Court. In both cases, the Circuit Court judge refused the application and upheld the objection of the objecting creditor, Pepper Finance Corporation (Ireland) DAC. A preliminary issue arose in the context of two appeals from the Circuit Court relating to whether the personal insolvency practitioner in this case, Mr Moran, was entitled to rely on the provisions of s. 111A of the 2012 Act for the purposes of the application under s. 115A.
Held by the High Court (McDonald J) that, in the circumstances, there was no scope for the application of s. 5 of the Interpretation Act 2005. McDonald J accordingly decided this case by reference to the literal meaning of the provisions of the Personal Insolvency Acts 2012-2015. In light of the provisions of s. 111A(1) of the 2012 Act, McDonald J held that there was no basis on which the practitioner could rely on s. 111A in this case; it followed that there was no basis on which the provisions of s. 115A could be invoked.
McDonald J held that he would dismiss the appeal and affirm the order of the Circuit Court dismissing the application made by the practitioner under s. 115A.
Appeal dismissed.
This judgment deals with a preliminary issue which has arisen in the context of two appeals from the Circuit Court. In both of the above cases, an application was made to the Circuit Court under s.115A(9) of the Personal Insolvency Act 2012 (‘ the 2012 Act’) (as amended) seeking an order confirming the coming into effect of proposals for a Personal Insolvency Arrangement (‘PIA’). The applications (which are interlocking) are made by a husband and wife in respect of their debts and they came on for hearing in the Circuit Court on 25th October, 2012 before Her Honour Judge Mary Enright sitting at Tullamore Circuit Court. In both cases, the learned Circuit Court judge refused the application and upheld the objection of the objecting creditor, Pepper Finance Corporation (Ireland) DAC (‘ Pepper’).
The preliminary issue which arises (and which was the basis for the decision of the learned Circuit Court judge) relates to whether the personal insolvency practitioner in this case, Mr. Niall Moran, (‘ the practitioner’) was entitled to rely on the provisions of s. 111A of the 2012 Act for the purposes of the application under section 115A. In this context, it should be noted that s.115A permits the court to confirm the coming into effect of a proposed PIA notwithstanding that the proposal has been rejected by a majority of the creditors of a debtor. There are a number of conditions that must be satisfied for this purpose. Among the conditions which must be satisfied is the requirement laid down in s. 115A(9)(g) that the proposal has been accepted by at least one class of creditors. There is an exception to this requirement where the proposal is one to which s. 111A applies. As the opening words of s. 111A(1) make clear, s. 111A applies where there is only one creditor entitled to vote at a creditors” meeting.
In the present case, on the evidence before the Circuit Court, it is clear that there were at least two creditors who were entitled to vote at the meetings of creditors. However, one of them did not return a proxy form to the practitioner and therefore did not exercise a vote at the meetings. The issue which now arises (and which was debated before me at a hearing on 10th December, 2018) is whether the 2012 Act can be interpreted as permitting s. 111A to be invoked in the circumstances which I have just described.
In the course of the hearing before me, counsel for both parties were agreed that, on a literal construction of the 2012 Act, the practitioner would not be entitled to rely on s.111A. However, counsel for the practitioner has sought to make the case that a literal interpretation of the relevant provisions of the 2012 Act leads to an absurdity such that the court is entitled to apply the approach authorised by s. 5 of the Interpretation Act 2005 in accordance with the test set out by Clarke J. (as he then was) in Irish Life and Permanent Plc v. Dunne [2016] 1 I.R. 92.
Before turning to the facts of this case, it may be helpful, in the first instance, to identify and examine the relevant provisions of the 2012 Act (as amended).
The first provision which is relevant is section 98(2). It provides that a practitioner may request a creditor to file a proof of debt (in which case the proof of debt provisions of the Bankruptcy Act 1988 apply.)
Section 98(2)(b) sets out the consequences for a creditor who does not comply with a request by a practitioner to prove the relevant debt. Section 98(2)(b) provides as follows:
‘Subject to paragraph (c), a creditor who does not comply with a request under paragraph (a) is not entitled to—
(i) vote at a creditors” meeting, or
(ii) share in any distribution that may be made under the Personal Insolvency Arrangement concerned.’
It will therefore be seen that, where a practitioner has required creditors to prove debts, the only creditors who will be entitled to vote at a meeting of creditors are those who have in fact proved their debts. In the present case, the practitioner required creditors to submit proof of debt.
Sections 106 to 108 of the 2012 Act deal with the calling of creditors” meetings by a practitioner. Section 106(1) requires the practitioner to notify the creditors of the holding of a meeting to consider the proposals for a PIA. Section 106(2) requires the practitioner to give fourteen days written notice of the meeting.
Sections 108 to 111 deal with the holding of the meeting. Section 108(8) (as inserted by s. 15(b) of the 2015 Act) provides that, where no creditor votes at a creditors” meeting, the proposed PIA is deemed to have been approved.
Section 110(1) deals with the outcome of the vote at a meeting of creditors. It provides that a proposed PIA will be considered to have been approved at a creditors” meeting where:-
‘(a) creditors representing not less than 65 per cent of the total amount of the debts due to the creditors participating in the meeting and voting have voted in favour of the proposal,
(b) creditors representing more than 50 per cent of the value of the secured debts who are-
(i) entitled to vote, and
(ii) have voted,
as secured creditors have voted in favour of the proposal, and
(c) creditors representing more than 50 per cent of the amount of the unsecured debts who—
(i) are entitled to vote, and
(ii) have voted,
at the meeting as unsecured creditors have voted in favour of the proposal.’
Section 111 provides that the Minister may make regulations relating to the holding of creditors” meetings including regulations in relation to the appointment of proxies. On 30th August, 2013, the Minister made the necessary regulations namely the Personal Insolvency Act, 2012 (Procedures for the Conduct of Creditors” Meetings) Regulations 2013 ( S.I. No. 335 of 2013) (‘ the 2013 Regulations’). Regulation 7(1) of the 2013 Regulations provides that votes at a meeting of creditors may be given either personally or by proxy. Regulation 7(2) provides that every notice summoning a meeting of creditors must be accompanied by a form of proxy which is to be completed in writing by the creditor.
Regulation 7(4) provides that each proxy is to be delivered to the office of the practitioner no later than 4 pm on the last working day before the day scheduled for the holding of the meeting.
Regulation 8 provides that, where a creditor abstains from voting at a creditors” meeting, this is not to be counted as a vote by such creditor.
Prior to the enactment of s.17 of the 2015 Act (which inserted s. 111A) there was no provision in the 2012 Act which dealt with a situation where there was only one creditor who was entitled to vote at a creditors” meeting. However, s. 111A has now been inserted into the 2012 Act. As noted above, under s. 111A(1)(b) where only one creditor is entitled to vote at a creditors” meeting, then s. 111A will apply. It is important to have regard to the relevant language of s. 111A(1) which is in the following terms:-
‘(1) Where —
…
(b) only one creditor would be entitled to vote at a creditors” meeting held under this Chapter …,
the procedures specified in this section, and not those specified in sections 106 and 108 to 111, shall apply in relation to the approval by that creditor of the proposal for a Personal Insolvency Arrangement.’
In cases to which s. 111A applies, s. 111A(2) sets out that the practitioner is to give written notice to the creditor (i.e. the only creditor entitled to vote) that the proposal for a PIA has been prepared and the creditor then has (in...
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