Re Patrick Halpin (a debtor)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Denis McDonald |
| Judgment Date | 18 February 2019 |
| Neutral Citation | [2019] IEHC 87 |
| Court | High Court |
| Docket Number | [H:IS:HC:2018:000063] |
| Date | 18 February 2019 |
[2019] IEHC 87
THE HIGH COURT
McDonald J.
[H:IS:HC:2018:000063]
IN THE MATTER OF THE PERSONAL INSOLVENCY ACTS 2012-2015
AND IN THE MATTER OF PATRICK HALPIN (A DEBTOR)
Secured debt – Protective Certificate – Personal Insolvency Acts 2012-2015 – Kenmare Property Finance DAC seeking an order to set aside an order previously made by the court – Whether the debt of the debtor to Kenmare was a secured debt for the purposes of the Personal Insolvency Acts 2012-2015
Facts: Kenmare Property Finance DAC applied to the High Court for the following relief: (a) an order to set aside the order previously made by the court on 24th January, 2019, whereby the period of the Protective Certificate was extended for a period of 40 days; (b) directions as to whether the debt of the debtor, Mr Halpin, to Kenmare was a secured debt for the purposes of the Personal Insolvency Acts 2012 to 2015 (this question arose in the context of a property known as Aberdeen Lodge); and (c) an order declaring that the debt of Mr Halpin to Kenmare was not a relevant debt for the purpose of s. 115A of the 2012 Act (as amended by the 2015 Act).
Held by McDonald J that, for the purposes of these proceedings under the 2012-2015 Acts, there was no secured debt of Mr Halpin over Aberdeen Lodge. McDonald J made a consequential direction that there was no scope for the application of s. 105 of the 2012 Act in relation to Aberdeen Lodge and equally no scope to bring Aberdeen Lodge into play as an asset for the purposes of any Personal Insolvency Arrangement that may be proposed on behalf of Mr Halpin. McDonald J refused the application to set aside the order made on 24 January, 2019. McDonald J made no determination in relation to the relief described in (c) but merely observed, on an obiter basis, that the answer to the question posed in (c) seemed obvious.
McDonald J held that he would hear the parties in due course in relation to costs and any other consequential orders that may be required.
Reliefs refused.
This judgment relates to an application brought on behalf of Kenmare Property Finance DAC (‘Kenmare’) for the following relief:-
(a) An order to set aside the order previously made by the court on 24th January, 2019, whereby the period of the Protective Certificate was extended for a period of 40 days;
(b) directions as to whether the debt of the debtor, Mr. Patrick Halpin, to Kenmare is a secured debt for the purposes of the Personal Insolvency Acts 2012 to 2015 (‘the 2012 Act’ and ‘the 2015 Act’ respectively). For completeness, it should be noted that there is also a similar application before the court brought by the practitioner (identified below). This question arises in the context of a property known as Aberdeen Lodge (dealt with in detail below): and
(c) an order declaring that the debt of Mr. Halpin to Kenmare is not a relevant debt for the purpose of s. 115A of the 2012 Act (as amended by the 2015 Act).
At this point, it should be noted that the order of 24th January, 2019 was made ex parte on the application of Mr. James Green, the Personal Insolvency Practitioner (‘the Practitioner’) acting in this case. The order was sought by the Practitioner on the basis of an affidavit sworn by him on 24th January, 2019. In that affidavit he sought, pursuant to s. 95(7) of the 2012 Act, an extension of the Protective Certificate for a period of 40 days in order to facilitate seeking creditor approval under the 2012 Act (as amended), to allow him to engage with the creditors, and, if necessary, re-draft proposals which he had prepared for a Personal Insolvency Arrangement (‘PIA’). In his affidavit, the Practitioner also sought directions in relation to what he described as:- ‘ the section 105 process’ ( i.e. the process under which security can be valued either by agreement between the Practitioner and the relevant secured creditor or by an independent expert appointed by the parties or, in default of agreement between them, by the Insolvency Service of Ireland (‘ISI’)).
This was the second application by the Practitioner for a 40-day extension. A previous application had been made in December 2018 under s.95(6) of the 2012 Act on foot of an affidavit in which the Practitioner suggested (in para. 31) that a s. 105 valuation of Aberdeen Lodge would be required in order to finalise the proposed PIA. At a later point in this judgment, it will be necessary to consider this affidavit in more detail.
The extension of the period of the Protective Certificate has implications for Kenmare as a creditor of Mr. Halpin. Under s. 96(1) of the 2012 Act, Kenmare is prevented, for as long as the Certificate remains in force, from taking a wide range of action against Mr. Halpin. Kenmare is therefore a person adversely affected by the order made on 24th January, 2019. In those circumstances, there is no doubt that, if there are grounds to do so, Kenmare has the necessary locus standi to apply to the court to vacate the order made, without notice to it, on 24th January, 2019. The relevant principles governing such an application are addressed in the judgment of Baker J. in James Nugent [2016] IEHC 127 where she applied the principles outlined in the judgment of Hogan J in Re Belohn Limited [2013] IEHC 157. For reasons which will be explained in more detail below, Kenmare also claims that its ability to enforce a debt and related security as against a company called Elektron Holdings Limited is also affected by the approach which the practitioner proposes to adopt in this case.
As noted above, the order of 24th January, 2019 extended the period of the Protective Certificate by a period of 40 days from 26th January, 2019. In the course of the hearing which took place before me on Monday 4th February, 2019 the parties were agreed that the relevant 40-day period will expire on 7th March, 2019. In those circumstances, there is only a very limited time available to me to consider the issues that were debated in the course of that hearing and to give my decision on those issues. This is for the very simple reason that, if it is appropriate for the Practitioner to proceed with proposals for a PIA, he will have to give at least 14 days” notice to creditors of the necessary meeting at which the creditors will vote on those proposals. In those circumstances, this judgment is required to be given not later than Monday, 18th February, 2019.
In light of the relatively tight timeframe for the delivery of the judgment, I will confine my description of the background to this dispute to what I consider to be the most relevant facts. I will not attempt to set out every element of the extensive background as canvassed in the affidavit evidence before the court.
On 4 October, 2012 Irish Bank Resolution Corporation Limited (‘IBRC’) obtained a judgment for €20 million against Mr. Halpin in the High Court. That was followed by subsequent judgment of 7 November, 2013 in the same proceedings under which IBRC obtained judgment against Mr. Halpin for a further sum of €6,338,369.09. The right to enforce those judgments now vests in Kenmare. By order of the High Court of 3rd November, 2015 Kenmare was given leave to issue execution in respect of those judgments against Mr. Halpin. The judgments in question were obtained on foot of a guarantee given by Mr. Halpin to Irish Nationwide Building Society (‘INBS’) in respect of the liabilities of a company called Crossplan Investments Limited (‘Crossplan’). IBRC is the successor in title to INBS.
The amount now due on foot of the judgments is €23,933,503.09. This follows a realisation made by a receiver (appointed by IBRC in 2012) over the assets of Crossplan. The receiver realised a sum of €2,404,866 on the sale of a property known as ‘Merrion Hall’.
Mr. Halpin was not the only guarantor of the debts of Crossplan. Those debts were also guaranteed by a company called Elektron Holdings Limited (‘Elektron’) which also owed money to IBRC on foot of a loan to it from IBRC. Kenmare now stands in the shoes of IBRC in relation to the indebtedness of Elektron. As part of the security for its indebtedness, Elektron gave security over a property known as Aberdeen Lodge on Park Avenue, Sandymount, Dublin 4. This is a hotel or guest house and it is also, reputedly, the family home of Mr. Halpin and his partner Ms. Ann Keane but this is not accepted by Kenmare. Ms. Keane is a director of and a shareholder in Elektron. In 2012, IBRC appointed a receiver over the assets of Elektron including Aberdeen Lodge.
Since the appointment of the receiver, there has been protracted litigation in relation to Aberdeen Lodge. Two sets of proceedings were commenced by the receiver in 2012. The first set of proceedings was issued pursuant to s. 316 of the Companies Act 1963 (‘the 1963 Act’) in which the receiver sought a declaration as to the validity of his appointment. Both Mr. Halpin and Ms. Keane were respondents to that application. Separately, High Court Proceedings were initiated by special summons by the receiver in which the receiver sought an order against Mr. Halpin and Ms. Keane for possession of Aberdeen Lodge. On 8th November, 2013, a determination was made by the High Court that the receiver had been validly appointed and that he was entitled to possession of Aberdeen Lodge as against Mr. Halpin and Ms. Keane and also against Elektron. That order was appealed to the Supreme Court but, on 11th March, 2016, the Supreme Court dismissed the appeal. By a further order of 8th April, 2016 the Supreme Court granted the receiver possession of Aberdeen Lodge with effect from 8th May, 2016.
According to Ms. Sharon Delaney (the solicitor acting for Kenmare in these proceedings) Mr. Halpin and Ms. Keane failed to comply with the order for possession. As a result, an application for attachment and...
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