Re Varma, a Debtor

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 06 April 2017
• Neutral Citation: [2017] IEHC 218
• Docket Number: [C:IS:MIWH:2016:001616],[2017 No. 29 CA]
• Court: High Court
• Date: 06 April 2017

[2017] IEHC 218

THE HIGH COURT

Baker J.

[C:IS:MIWH:2016:001616]

MIDLAND CIRCUIT COUNTY OF WESTMEATH

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

AND IN THE MATTER OF SIDDHARTHA VARMA OF 4 THE DRIVE, LAKEPOINT, MULLINGAR, WESTMEATH ('THE DEBTOR')

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

Insolvency – Personal Insolvency Arrangement ('PIA') – Notice of Objection – Extension of Time – Jurisdiction of the Court – Discretion – s. 115A(9) of the Personal Insolvency Acts 2012 – 2015

Facts: Following an order of extension of time to lodge a notice of objection, the debtor appealed against the impugned order. The debtor argued that the special judge of the Circuit Court lacked jurisdiction to extend the time. The debtor argued that a strict time limit had been prescribed, which would be mandatory in nature.

Ms. Justice Baker held that the debtor's appeal against the impugned order would be rejected. The Court considered that the application to extend the time had been made within the jurisdiction. The Court observed that the specialist judge had the power to make the order and had exercised the power within the broad discretionary framework.

JUDGMENT of Ms. Justice Baker delivered on the 6th day of April, 2017.

1 This judgment is given in an appeal by Siddhartha Varma ('the debtor') from an order of the specialist judge of the Circuit Court, Judge Lambe, made on 2nd February, 2017, by which she extended time for Ulster Bank Ireland DAC ('the objecting creditor') to lodge a notice of objection to the coming into effect of a proposed Personal Insolvency Arrangement ('PIA').

2 The debtor made a proposal for a PIA which was rejected at a meeting of creditors on 4th January, 2017. On that date, Mr. Colm Arthur, the Personal Insolvency Practitioner ('the PIP') issued a notice of motion pursuant to s. 115A(9) of the Personal Insolvency Acts 2012 – 2015 ('the Act'), that the court would approve the coming into effect of a PIA notwithstanding the rejection of the arrangement at the statutory meeting of creditors.

3 The legal questions arising for determination are as follows:

(a) Whether the time limit provided in the statute for the lodging of a notice of objection is one that is capable of being extended.

(b) Whether the special judge of the Circuit Court has jurisdiction to extend the time.

4 Whether the specialist judge was correct in the present case in making the decision to extend time also falls for consideration, as do the matters required to be considered in the exercise of such discretion, should a discretion exist.

Time limits under the Act

5 Section 115A provides for the first time a mechanism by which a PIP may seek approval of the court of a PIA notwithstanding its rejection at a statutory meeting of creditors. The power is far reaching, and involves the court making an order by which the contractual arrangements between a debtor and creditor may be varied, and as a result of which the variation is binding on all creditors.

6 The procedural rules governing an application under s. 115A are set out in the section and in O. 73 of the Circuit Court Rules ( S.I. No. 317 of 2013)

7 Order 73, r. 29A(1) provides that application under s. 115A is to be brought not later than fourteen days after the meeting of creditors by notice of motion on notice to each creditor concerned. The time limit is mandatory and no provision exists for the extension of time: Re Hickey & Personal Insolvency Acts [2017] IEHC 20.

8 The process of application to the court under s. 115A having been commenced by the debtor's notice of motion, s. 115A(3) provides for service of the notice of motion on 'all creditors concerned' and for the service of a notice making provision for opposition by creditors to the application:

'(3) A notice to a creditor under subsection (2) shall be accompanied by a notice indicating that he or she may, within 14 days of the date of the sending of the notice, lodge a notice with the appropriate court, setting out whether or not the creditor objects to the application, and the creditor's reasons for this.'

9 The form of a notice of objection is provided in Form 52D of the Schedule of Forms in the Circuit Court Rules, entitled 'notice of objection', and is required to specify the reason for the objection by the creditor to the application.

10 A debtor who lodges a notice of objection is required under s. 115A(4) to serve a copy of the notice on the Insolvency Service of Ireland, the PIP and each other creditor concerned.

11 The debtor argues that a strict time limit exists for the lodging by a creditor of a statutory notice of objection and that the statutory provisions must be construed as precluding a power of the court to extend that time limit.

12 For the purposes of making a determination under s. 115A, the appropriate court is required to hold a hearing by virtue of the provisions of s. 115A(6):

'The appropriate court, for the purpose of an application under this section, shall hold a hearing, which hearing shall be on notice to the Insolvency Service, the personal insolvency practitioner and each creditor concerned.'

13 Certain matters are to be noted with regard to how the procedure for the making of application under s. 115A envisages service on, and the engagement by, all creditors at the court hearing. Service and participation in the hearing is not confined to those creditors who serve a notice of objection.

14 Section 115A(7) requires that the hearing shall be held 'with all due expedition'. Order 73, rule 29A(3) provides for the early listing of the proceedings, not less than 21 days after the issue of the notice of motion. Order 73, rule 5 gives the court a wide discretion to make directions for the conduct of the matter, including directions in regard to the exchange of affidavits, delivery of written submissions and if necessary the hearing of oral evidence.

15 The process then is envisaged as being one in which the debtor and all creditors are entitled to participate and is envisaged as an inter partes hearing.

Is the time limit under section 115A(3) mandatory?

16 In Re Hickey & Personal Insolvency Acts, the statutory period for the lodging by a debtor of a notice of motion by way of appeal under s. 115A(2) was held to be a mandatory time limit in respect of which no jurisdiction to extend exists. The language of s. 115A(2) is expressly mandatory, or in the language of Finlay Geoghegan J. giving the judgment of the Court of Appeal in Law Society of Ireland v. Tobin & Anor. [2016] IECA 26, 'clear and unambiguous'.

17 The various factors in the express language of s. 115A(3) and the nature of the right of an objecting creditor to be heard require a different consideration.

18 The Act is silent as to the effect on the engagement a creditor may have at the hearing of the motion under s. 115A when that creditor has not lodged a notice of objection. It seems evident that the purpose of the notice of objection is to provide a form of pleading which sets out the basis of the objection, and that interpretation is consistent with the general requirement that the hearing be held with expedition and in a manner 'likely to minimise the costs of the proceedings' (Order 73, rule 5(1)). The purpose of the notice of objection is to foster expedition and to provide a cost effective means by which the hearing is to be conducted, and this is also consistent with the express provisions in the Rules by which the court may make case management directions.

19 However, I do not consider that the language of s. 115A(3) is sufficiently similar to the language in s. 115A(2) to lead to the same conclusion with regard to the mandatory nature of the time limit. This is for a number of reasons: the fourteen day time limit is found in a subsection directed to the debtor and which...