Re Meeley a debtor

JurisdictionIreland
JudgeMs. Justice Baker
Judgment Date05 February 2018
Neutral Citation[2018] IEHC 38
Docket Number[2016 Nos. 41, 42 & 53 IS & 2017 Nos. 15 & 16 IS],[Record No. H:IS:HC:2016:000041] [Record No. H:IS:HC:2016:000042] [Record No. H:IS:HC:2016:000053] [Record No. H:IS:HC:2017:000015] [Record No. H:IS:HC:2017:000016]
CourtHigh Court
Date05 February 2018

[2018] IEHC 38

THE HIGH COURT

Baker J.

[Record No. H:IS:HC:2016:000041]

[Record No. H:IS:HC:2016:000042]

[Record No. H:IS:HC:2016:000053]

[Record No. H:IS:HC:2017:000015]

[Record No. H:IS:HC:2017:000016]

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

AND IN THE MATTER OF NIAMH MEELEY OF CORNASEER, KILTOOM, ATHLONE, COUNTY ROSCOMMON ('THE DEBTOR')

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

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

AND IN THE MATTER OF RONAN MEELEY OF CORNASEER, KILTOOM, ATHLONE, COUNTY ROSCOMMON ('THE DEBTOR')

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

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

AND IN THE MATTER OF DONAL TAAFFE, APARTMENT 47, BLOCK E, SMITHFIELD MARKET, DUBLIN 7 ('THE DEBTOR')

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

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

AND IN THE MATTER OF JOHN FOYE OF ILLUANA, MILTOWN, GALWAY ('THE DEBTOR')

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

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

AND IN THE MATTER OF CHRISTINE FOYE OF ILLUANA, MILTOWN, GALWAY, ('THE DEBTOR')

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

Insolvency - Part 3, Chapter 4 of the Personal Insolvency Acts 2012-2015 - S. 115A of the Personal Insolvency Acts 2012 to 2015 ('the Act') - Rejection of Personal Insolvency Arrangement ('PIA') by creditors - Role of debtor in Personal Insolvency Practitioner (PIP)

Facts: The present judgment resolved issues of law involved in five sets of proceedings. The issues involved were whether the debtor had any legal right to directly engage in the PIA and whether the voice of the PIP should have been heard on behalf of a debtor in the light of s. 115A of the Personal Insolvency Acts. Another issue was raised concerning the imposition of costs against the PIP, if an application under s. 115 was found to be unsuccessful. The debtor contended that the role of the PIP was confined only to the making of the application under s. 115A and then the debtor could proceed without the intervention of the PIP.

Ms. Justice Baker held that a PIP had facilitated the insolvency process by keeping the interests of both the debtor and the creditor and thus, the PIP was entrusted with the responsibility to engage in the PIA. The Court noted that the debtor did not lose legal capacity merely by engaging with the Act. The Court opined that the substantive proceedings remained between the debtor and the objecting creditor. The Court observed that the debtor was entitled to be heard in a review application under s. 115 subject to the discretion of the Court. The Court held that it had wide discretion to engage in the review of a proposed PIA and the Court could direct the hearing of arguments and evidence of the debtor who had vital interest in the result. The Court further held that there would not be any costs order against the PIP as the PIP had no financial interest in the outcome of the application. The Court, however, noted that it was only exceptional circumstances that a Court should have made a costs order against the PIP in cases where the PIP had acted dishonestly and without bona fides.

JUDGMENT of Ms. Justice Baker delivered on the 5th day of February, 2018.
1

This judgment concerns the interpretation and application of the statutory procedural requirements for the determination by a court of an application for review under s. 115A of the Personal Insolvency Acts 2012 to 2015 ('the Act').

2

Five applications under s. 115A were heard together and similar, albeit precisely not the same, questions arise for consideration.

3

The applications heard over three days concluding on 22nd December, 2017 were dealt with by way of the determination of the preliminary issue whether the applications were properly constituted in the light of the procedural requirements of the legislation. Counsel, including senior counsel, appeared for each of the debtors, and the relevant creditors. The Insolvency Service of Ireland ('the ISI') by reason of its statutory functions under the Act made submissions though counsel James Doherty SC as amicus curiae following directions given by me on 10th November, 2017.

4

The matter is of some importance and I am advised that some 400 applications under s. 115A are for practical purposes suspended pending clarification of the questions raised herein.

5

The question for determination is whether in the light of the statutory provisions and the central and substantive statutory role of a Personal Insolvency Practitioner ('PIP') in the review by the court of a proposed PIA under s. 115A, there exists a residual right in the debtor to directly engage in the process.

Relevant legislative provisions
6

Section 115A(1) provides jurisdiction to the relevant court following a review under s. 115A(9) to confirm the coming into operation of a proposed personal insolvency arrangement ('PIA') notwithstanding that it was rejected at a statutory meeting of creditors. The power is far reaching and the effect of an order is to alter the contractual arrangements in a manner that binds all relevant creditors. The primary purpose of the section is to approve a PIA where the arrangement will permit a debtor to continue to own or occupy his or her principal private residence.

7

The section was not contained in the original Act of 2012 and was added by the amending legislation of 2015 which came into force on 20th November, 2015, by the commencement of s. 21 of the Personal Insolvency (Amendment) Act 2015.

8

Section 115A(1) set out the circumstances in which application may be made:-

'115A. (1) Where'

(a) a proposal for a Personal Insolvency Arrangement is not approved in accordance with this Chapter, and

(b) the debts that would be covered by the proposed Personal Insolvency Arrangement include a relevant debt,

the personal insolvency practitioner may, where he or she considers that there are reasonable grounds for the making of such an application and if the debtor so instructs him or her in writing, make an application on behalf of the debtor to the appropriate court for an order under subsection (9).' (Emphasis added)

9

I have emphasised phrases in 115A(1)(c) as these were the focus of my judgment delivered on 5th October, 2017 in Re Darren Reilly & the Personal Insolvency Acts 2012 to 2015 [2017] IEHC 558, and the application and import of that judgment were the starting point of argument in the present applications.

The judgment in Re Darren Reilly
10

The material facts briefly were as follows: The specialist judge in the Circuit Court refused to make an order under s. 115A(9) and his judgment was appealed to the High Court on Circuit by a notice of appeal which expressly identified the debtor as the appellant and which was signed by his solicitor. The PIP was not a moving party or a notice party. The objecting bank argued that the appeal to the High Court on Circuit was wrongly constituted in that it was made by the debtor and not the PIP. The preliminary objection raised by the bank at the hearing of the appeal to the High Court was found to be correct, the appeal of the debtor was not properly constituted and was dismissed. In the course of the judgment it was noted that the legislation was silent on the mode of appeal, but having regard to the scheme of the Act and the nature of the jurisdiction of the High Court sitting as an appellate court in a statutory appeal under the Courts of Justice Act 1936, an appeal from the Circuit Court is required to be made by the PIP.

11

The judgment in Re Darren Reilly is authority for a narrow proposition, that the involvement of the PIP in the process is mandatory, and that a debtor does not have an independent or free standing right to appeal a decision of the Circuit Court under s. 115A.

12

The present applications commenced in the High Court, the court with jurisdiction under the Act when the secured liabilities of a debtor exceed the statutory monetary threshold of 2.5 million euro. None of the parties to the present applications argue that the decision in Re Darren Reilly is wrong in law. It must follow accordingly that a debtor has no free standing right to bring application under s. 115A without the engagement of the PIP.

13

The judgment in Re Darren Reilly is not authority regarding the more complex question at play in the present applications, whether the voice of the PIP is the sole voice to be heard on behalf of a debtor in the statutory review.

14

Before I consider the arguments and statutory provisions I will set out the material facts giving rise to the objections by the creditors that the present applications are not properly constituted.

The applications under consideration: interlocking applications of Meeley
15

Niamh Meeley made a proposal for a PIA which was rejected at a meeting of creditors on 9th March, 2017. A notice of motion under s.115A issued which in its operative part states the following:-

'TAKE NOTICE that on the 24th day of April 2017 at 11:30 in the forenoon or the first available opportunity thereafter, solicitor/counsel on behalf of the Debtor, will apply to this Honourable Court sitting at The Four Courts, Inns Quay, Dublin 7 for the following Order or Orders

1. An Order pursuant to the provisions of section 115A(9) of the Personal Insolvency Acts 2012 to 2015.' (Emphasis added)

16

The motion is signed by...

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