O'Regan v Personal Insolvency Acts 2012
| Jurisdiction | Ireland |
| Judge | Mr. Justice Cian Ferriter |
| Judgment Date | 20 June 2022 |
| Neutral Citation | [2022] IEHC 373 |
| Court | High Court |
| Docket Number | Record No: 2021/162 CA |
In the Matter of
And in the Matter of
[2022] IEHC 373
Record No: 2021/162 CA
Record number: C:IS:SEWD:2019:002021
THE HIGH COURT
CIRCUIT APPEAL
Personal insolvency arrangement – Preliminary objection – Moot – Objecting creditor appealing against the making of an order which approved the coming into effect of a personal insolvency arrangement in respect of the debtor – Whether the fact that a personal insolvency arrangement had come into effect, and its specified duration had expired, rendered the appeal against that personal insolvency arrangement moot
Facts: Ulster Bank Ireland DAC (the objecting creditor) brought an appeal to the High Court against the making of an order by the Circuit Court on 14 October 2021 which approved the coming into effect of a Personal Insolvency Arrangement (PIA) under s. 115A of the Personal Insolvency Act 2012 as inserted by the Personal Insolvency (Amendment) Act 2015 in respect of Mr O’Regan (the debtor). The debtor’s Personal Insolvency Practitioner (PIP) raised a preliminary issue to the effect that the appeal was moot and should no longer be entertained by the Court in circumstances where the period of the PIA had expired and a certificate of completion had been issued by the PIP in accordance with s. 125 of the Personal Insolvency Acts 2012 to 2015.
Held by Ferriter J that the fact that a PIA had come into effect, and its specified duration had expired, did not render the appeal against that PIA moot. He held that a live controversy remained i.e. whether the PIA should have been approved. He held that there were real and definite issues in which the parties retained a legal interest i.e. should they remain bound by the terms of the PIA (including the restructuring of the loan term to involve another 25 years at interest only) or should the PIA be set aside, and the parties restored to their prior contractual mortgage loan relationship. He held that in the event that the objecting creditor was successful, there was no step which had been taken to date which could not be undone. He held that the amounts paid to the objecting creditor pursuant to the PIA would be credited against the amounts otherwise owing in the event that the original terms of the mortgage loan are restored. He held that the debt of the unsecured creditors would be restored. He held that in the event the objecting creditor was successful on appeal, the Court would make an order overturning the Circuit Court's decision to approve the PIA. He held that any affected parties, including the debtor and the objecting creditor, would be bound by the consequences of that order. Ferriter J held that in the event the objecting creditor was unsuccessful on the appeal, the post-PIA sanctioned arrangements would remain in place.
Ferriter J dismissed the preliminary objection to the appeal, and directed that the appeal proceed to hearing in the ordinary way.
Preliminary objection to appeal dismissed.
Judgment of Mr. Justice Cian Ferriter delivered this 20 TH day of June 2022
Ulster Bank Ireland DAC (“the objecting creditor”) has brought an appeal to this Court against the making of an order by the Circuit Court on 14 October 2021 which approved the coming into effect of a Personal Insolvency Arrangement (“PIA”) under s. 115A of the Personal Insolvency Act 2012 as inserted by the Personal Insolvency (Amendment) Act 2015 (“s. 115A”) in respect of the debtor. (For ease, I will refer to the Personal Insolvency Acts 2012 to 2015 as “the Act”.) This is my decision on a preliminary issue raised by the debtor's Personal Insolvency Practitioner (“PIP”) to the effect that the appeal is moot and should no longer be entertained by the Court in circumstances where the period of the PIA has expired and a certificate of completion has been issued by the PIP in accordance with s.125 of the Act.
The material background to the application is as follows. The debtor is a divorced man in his late 60s who lives on his own in a single bed house in Co. Waterford. The objecting creditor provided the debtor with a mortgage loan which was secured on that property. The debtor got into financial difficulties and sought to secure approval for a PIA under the Act. The objecting creditor had proved a total debt of just under €98,000 as due and owing to it by the debtor on foot of the secured mortgage loan. The market value of the principal private residence in 2019, as determined in accordance with s.105 of the Act, was €210,000. In addition to the debt owed to the objecting creditor, the debtor had two unsecured creditors. One of these debtors had proved a debt in an amount of just over €8,000. The objecting creditor voted against the proposed PIA at the relevant creditors meeting under the Act and the PIA was not approved as a result. The PIP appealed to the Circuit Court and, notwithstanding the objecting creditor's opposition, the Circuit Court approved the PIA pursuant to s.115A.
The PIA in respect of the debtor had been formulated as a three-month arrangement. The central terms of the PIA involved capitalisation of the arrears on the mortgage loan (which amounted to some €25,000); no write-down on the amount of the loan owed; the term of the loan, which was due to be completed in 2024, to be extended for 360 months (30 years) meaning that the debtor would be 97 years of age if he lives to the end of the mortgage loan period; mortgage repayments of €93.70 per month for each of the three months of the PIA (representing interest only); mortgage payments of €93.70 per month for the remainder of the restructured mortgage term; the full mortgage loan balance to be repaid on the expiry of the restructured loan-term or on the death of the debtor whichever event occurred first. No PIP fees were included in the PIA. No dividend was proposed for the unsecured creditors.
While it appears that the objecting creditor sought a stay from the Circuit Court at the time of the making of the order of 14 October 2021 under s.115A, the stay application was refused. The parties were not aware, in practice, of the Circuit Court ever having granted a stay in circumstances where an objecting creditor was seeking to appeal the approval of a PIA by the Circuit Court under s.115A.
Following the Circuit Court decision, the PIA came into effect on 14 October 2021. The PIP notified the creditors in writing that the PIA had come into effect on 18 October 2021. The objecting creditor did not ask the PIP to extend or vary the PIA.
The Act makes no express provision for an appeal to the High Court from a Circuit Court decision approving a PIA under s.115A. However, the debtor accepts that the objecting creditor has a right of appeal in the ordinary way. The objecting creditor lodged its appeal on 21 October 2021 within ten days of the perfection of the Circuit Court order, as it was required to do under the relevant rules of court.
The objecting creditor seeks to contend in this appeal that the PIA should not have been approved and that the Circuit Court order should be overturned on the basis the debtor is not “ reasonably likely to be able to comply with the terms of the proposed arrangement” within the meaning of s.115A(9). It relies on the judgment of the High Court in Re Fennell [2021] IEHC 297 in that regard. The objecting creditor also seeks to challenge the validity of a PIA which involves interest-only repayment terms for the full duration of the restructured mortgage.
The PIP for his part contends that the PIA as approved by the Circuit Court is perfectly valid, that the debtor's position is readily distinguishable from that of the debtor in Re Fennell and that the PIA as approved by the Circuit Court should be affirmed by the High Court.
The appeal came before this Court on 22 November 2021 on its first return date. It appears that there were a number of adjournments on consent, at the request of the objecting creditor, in circumstances where the objecting creditor was awaiting the outcome of a separate “ Re Fennell”-type appeal.
The PIA completed on 14 January 2021. In accordance with the requirements of the Act, the PIP issued the s. 125 notice on 19 January 2021.
The PIP subsequently brought this application, by way of preliminary issue in the appeal to the effect that the appeal is rendered moot by virtue of the service of the completion certificate and/or the completion of the PIA itself (“the mootness application”).
The PIP's position is straightforward: the PIA has expired, the debtor has complied with his obligations under the PIA and the PIP has notified the debtor, creditors and the insolvency service; accordingly, the PIP maintains that the PIA “ has fully completed and cannot be revived”, both on its own terms and pursuant to the provisions of the Act. The PIP contends that it follows that the appeal is moot. As he puts it: “ the PIA is over. The issues between the parties are redundant. The appeal is against the coming into effect of the PIA which has now come into effect, has been performed, and has completed. The PIA cannot now be reopened and thus the appeal cannot unwind the effect of the PIA.”
In his written submissions, the PIP expresses his position in the following way:
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