Re Lisa Parkin (a debtor)
|Mr. Justice Denis McDonald
|04 February 2019
| IEHC 56
|[2017 258 CA]
|04 February 2019
IN THE MATTER OF PART 3, CHAPTER 4 OF THE PERSONAL INSOLVENCY ACTS 2012 – 2015 AND IN THE MATTER OF LISA PARKIN, A DEBTOR
IN THE MATTER OF AN APPLLICATION PURSUANT TO SECTION 115A (9) OF THE PERSONAL INSOLVENCY ACTS 2012-2015
 IEHC 56
[2017 258 CA]
THE HIGH COURT
Creditors – Personal Insolvency Arrangement – Personal Insolvency Acts 2012 – 2015 s. 115A – Permanent TSB seeking to appeal against the decision of the Circuit Court Judge – Whether the proposed Personal Insolvency Arrangement unfairly prejudiced Permanent TSB
Facts: Proceedings under the Personal Insolvency Acts 2012 – 2015 were commenced in the Circuit Court in 2016. In accordance with the requirements of the Acts, the Personal Insolvency Practitioner, Ms Mooney, formulated proposals for a Personal Insolvency Arrangement (PIA) which were considered by the creditors of the debtor, Ms Parkin, at a meeting of creditors held on 7 November, 2016. Under the proposals, the secured debt on foot of the mortgage granted to Permanent TSB (PTSB) would be written down to €160,000 (which was the agreed market value of the principal private residence). The balance of €173,785.39 would be treated as unsecured debt and would share with the credit union a dividend of 8 cent in the euro. At the end of the PIA, the balance of the unsecured element of the debt would be written off. The creditors’ meeting was attended by two creditors namely PTSB and the credit union. PTSB voted against the proposal. The credit union voted in favour. The total debt due to PTSB (including the sum of €9,948 due on foot of Ms Parkin’s credit card and the sum of €20 due on foot of a personal loan) amounted to €343,753.00. In percentage terms this represented 98.9% of the total debt voted at the meeting. The amount due to the credit union was €3,752.43 which represented 1.1% of Ms Parkin’s total indebtedness. Thereafter, an application was made to the Circuit Court by the practitioner under s. 115A(9) seeking an order confirming the coming into effect of the proposed PIA notwithstanding that it had been rejected. For the purposes of satisfying the requirements of s. 115A(9)(g), the practitioner argued that the credit union comprised a separate class of creditor from PTSB. For that purpose, s. 115A(17)(a)(i) enables a court to consider a single creditor as a separate class. PTSB filed a Notice of Objection in the Circuit Court. A hearing subsequently took place before Judge Ryan in the Circuit Court. On 9 August 2017, the Circuit Court Judge delivered a written judgment in which she rejected the grounds of objection and expressed the view that the proposed PIA did not unfairly prejudice PTSB. PTSB appealed to the High Court against the decision of the Circuit Court Judge. PTSB drew attention to the far reaching nature of s. 115A and submitted that the onus of proof lay on the practitioner to demonstrate that all of the requirements of s. 115A had been satisfied.
Held by McDonald J that all of the requirements of s. 115A had been satisfied.
McDonald J held that he would dismiss the appeal of PTSB and affirm the order of the Circuit Court Judge.
Ms. Parkin, the debtor in this case, was born in 1972. She is married but separated from her husband, who is now living in the United Kingdom. She has one dependent child (a daughter) who is now fifteen. Her daughter is obviously very talented. The evidence before the court shows that she is an excellent student and is particularly proficient in Irish. She is expected to do sufficiently well in her Leaving Certificate examinations to qualify to study veterinary medicine at UCD.
Ms. Parkin and her daughter live in the family home on Ballyfermot Road, Dublin 10. They have lived there since September 2005 when it was acquired, with the benefit of a bank loan, in the names of Ms Parkin and her husband.
In circumstances described in more detail below, Ms. Parkin's husband moved to the United Kingdom in 2015. According to the evidence of Ms. Parkin, he makes no contribution, financial or otherwise, to the household. He does not contribute to the mortgage repayments, nor does he make any payment in respect of child maintenance.
As noted above, the family home was acquired by Ms. Parkin and her partner in 2005 with the assistance of a loan (secured in the usual way by a mortgage) from Permanent TSB (PTSB). Ms. Parkin is described in the papers before the court as a finance manager employed by the HSE. Her net monthly income from her employment is €2,909.47.
Ms. Parkin fell into financial difficulty for the first time in 2007. She explains in her affidavit that her husband developed an addiction to gambling and borrowed €7,000 from ‘loan sharks’ which he used to place bets. This debt was simply too much to repay on top of the ordinary expenses of the household and Ms. Parkin says that, as a consequence, she and her husband began to fall behind on various bills. In para. 8 of her affidavit sworn on 9 January 2017, she says: -
‘The people who provided the loan were unsurprisingly persistent to be repaid and we were coming under pressure to pay off the debt in full. The harassment was becoming worse and I borrowed a sum of money from my sister … in order to discharge the debt. My husband's departure did not negatively impact [my financial situation] … as he was not contributing’.
Ms. Parkin also explains that, notwithstanding the episode with the loan sharks, her partner's gambling problem became worse. At that stage, she first fell into arrears with the mortgage repayments to PTSB. It is clear from the summary estimated statement of affairs at Appendix 1 to the proposed Personal Insolvency Arrangement (‘PIA’) that, in addition to the home loan liabilities to PTSB and the liability to her sister, she also incurred borrowing costs in respect of a loan obtained from her staff credit union at the HSE (‘the credit union’) and she ran up a significant bill on her PTSB credit card.
In the meantime, in common with many other properties, the value of Ms. Parkin's home fell significantly. The current debt due to PTSB and secured on the home is in the order of €333,785 while the value of the home has dropped to €160,000. This value has been agreed between PTSB and Ms. Judy Mooney, the Personal Insolvency Practitioner (‘the practitioner’) acting in this case on behalf of Ms. Parkin.
There is no dispute between the parties that, as of 1 January, 2015, Ms. Parkin was in arrears with her payments in respect of the PTSB home loan. Ms Parkin's indebtedness on foot of the loan is therefore a relevant debt for the purposes of s 115A(18) of the Personal Insolvency Act 2012 (‘the 2012 Act) such as to satisfy the gateway requirement of s. 115A. In the Circuit Court, Ms Parkin sought and obtained an order under s 115A(9) confirming the coming into effect of proposals for a Personal Insolvency Arrangement (‘PIA’) notwithstanding that the proposals have been rejected by a majority (in value) of her creditors.
It should be noted, at this point, that the home loan (and the relevant mortgage in favour of PTSB) are in the joint names of Ms. Parkin and her husband. The family home (which is clearly a principal private residence for the purposes of the Personal Insolvency Acts 2012 – 2015) is also in joint names.
Ms. Parkin has not taken any steps against her husband to require him to make any contribution to the mortgage repayments or to the maintenance of their daughter. In para. 6 of her affidavit sworn on 9 January 2017, Ms. Parkin says that her partner: -
‘… does not communicate with me and I do not know the address at which he currently resides nor do I have any forwarding address for him. I say that [he] has deliberately not provided me with any contact details lest he is pursued for child maintenance or other financial obligations. My daughter visits her grandmother in Yorkshire and has met her father there….’
Proceedings under the 2012 – 2015 Acts were commenced in the Circuit Court in 2016. In accordance with the requirements of the Acts, the practitioner formulated proposals for a PIA which were considered by Ms. Parkin's creditors at a meeting of creditors held on 7 November, 2016. Under the proposals, the secured debt on foot of the mortgage granted to PTSB will be written down to €160,000 (which is the agreed market value of the principal private residence). The balance of €173,785.39 will be treated as unsecured debt and will share with the credit union a dividend of 8 cent in the euro. At the end of the PIA, the balance of the unsecured element of the debt will be written off.
The creditors” meeting was attended by two creditors namely PTSB and the credit union. PTSB voted against the proposal. The credit union voted in favour. The total debt due to PTSB (including the sum of €9,948 due on foot of Ms. Parkin's credit card and the sum of €20 due on foot of a personal loan) amounted to €343,753.00. In percentage terms this represents 98.9% of the total debt voted at the meeting. The amount due to the credit union is €3,752.43 which represents 1.1% of Ms. Parkin's total indebtedness. Thereafter, an application was made to the Circuit Court by the practitioner under s. 115A(9) seeking an order confirming the coming into effect of the proposed PIA notwithstanding that it had been rejected in the manner outlined above. For the purposes of satisfying the requirements of s. 115A(9)(g), the practitioner argued that the credit union comprised a separate class of creditor from PTSB. For this purpose, s. 115A(17)(a)(i) enables a court to consider a single creditor as a separate class.
PTSB filed a Notice of Objection in the Circuit Court. In that Notice, PTSB raised a number of issues as follows:...
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