Reilly & Personal Insolvency Acts 2012-2105

JurisdictionIreland
JudgeMs. Justice Baker
Judgment Date05 October 2017
Neutral Citation[2017] IEHC 558
Docket Number[2017 No. 176 CA],[2017 No. 176 CA] [C:IS:NRND:2016:001384]
CourtHigh Court
Date05 October 2017

[2017] IEHC 558

THE HIGH COURT ON CIRCUIT

NORTHERN CIRCUIT COUNTY OF MONAGHAN

Baker J.

[2017 No. 176 CA]

[C:IS:NRND:2016:001384]

IN THE MATTER OF PART 3 CHAPTER 4 OF THE PERSONAL INSOLVENCY

ACTS 2012-2015

AND IN THE MATTER OF DARREN REILLY OF DRUMBEO, CASTLESHANE, COUNTY MONAGHAN (‘THE DEBTOR’)

AND IN THE MATTER OF AN APPLICATION PURSUANT TO

SECTION 115A (9) OF THE PERSONAL INSOLVENCY ACTS 2012-2015

Insolvency – Representation of the People – Personal Insolvency Acts 2012-2015 – Validity of appeal – Whether debtor had right to lodge appeal instead of Personal Insolvency Practitioner

Facts: The key issue in the present proceedings pertained to the validity of the appeal lodged by a debtor against the order of the Circuit Court for refusing to approve the Personal Insolvency Arrangement (‘PIA’) as proposed by the Personal Insolvency Practitioner (‘PIP’) appointed by the debtor. The debtor contended that since his interests would be primarily affected by the order of the Court, he possessed the locus standi to file the present appeal. The creditor/bank, however, argued that the Insolvency Acts 2012-2015 had envisaged a mandatory involvement of the PIP at all stages in the debt management process.

Ms. Justice Baker held that the objection lodged by the bank was correct. The Court was of the view that the appeal should have been dismissed; however, the Court stated that it would hear the parties for making an order for substitution. The Court noted that though the debtor had the right to appoint and terminate the PIP, yet the purpose of the legislature for appointing the PIP for bringing an application under s. 115A of the said Acts of 2012-2012 was to achieve an orderly processing of the debt management process. The Court observed that the engagement ofa PIP was mandatory so that the professional expertise of a PIP would help in the speedy resolution of the debt management process. The Court noted that the PIP was an intermediary and represented the interests of both the creditor and the debtor.

JUDGMENT of Ms. Justice Baker delivered on the 5th day of October, 2017.
1

John Donnan the personal insolvency practitioner (‘PIP’) made a proposal for a Personal Insolvency Arrangement (‘PIA’) on behalf of Darren Reilly (‘the Debtor’) under the Personal Insolvency Acts 2012-2015 (‘the Act’) pursuant to his function in that regard. The proposal did not receive the requisite support of creditors at a meeting of creditors held to consider the proposal on 23rd November, 2016.

2

An application was lodged pursuant to s. 115A that the court would approve the PIA notwithstanding the result of the vote at the meeting of creditors.

3

By order of 1st June, 2017 His Honour Judge William G. Lyster, specialist judge of the Circuit Court sitting at Monaghan Circuit Court determined to refuse the application under s. 115A(9) of the Act.

4

The decision of the specialist judge has been appealed and this judgment is given in a preliminary issue raised by Bank of Ireland (‘the Bank’), viz whether the notice of appeal dated 7th June, 2017 from the order of the specialist judge is properly constituted. The preliminary issue to be determined is one of some importance as the Bank argues that the appeal is not validly brought as it was not made by the PIP, but rather by the Debtor himself. The Bank argues that the appeal must fail as the involvement of a PIP in all stages of the process, including an appeal from a determination by the Circuit Court, is mandatory in all applications under the Act.

5

Counsel for the Debtor has argued that as he is the person whose interests are affected by the appeal he has sufficient locus standi to prosecute the appeal.

6

This judgment does not concern itself with the merits of the appeal, or whether the specialist judge of the Circuit Court was correct to refuse to confirm the coming into operation of the PIA notwithstanding the objection of the Bank, and is concerned with the role of the PIP in the insolvency process, and where the engagement of the PIP ends. It also concerns itself with the broad question of the interplay between a debtor and the PIP.

Background facts and procedural steps
7

A meeting of creditors was held on 23rd November, 2016 at which the proposed PIA was considered. KBC Bank Ireland plc, holding a debt of approximately €600,000, voted in favour of the PIA, but the Bank, which holds a debt of almost €720,000, and holds security over the principal private residence of the Debtor, voted against the proposal.

8

By notice of motion in statutory form dated 24th November, 2016 application was made to the Circuit Court for a review pursuant to the provisions of s. 115A(9) of the Act, that the court would approve the coming into effect of the PIA notwithstanding its rejection by the relevant class of creditors. That notice of motion was signed by the PIP and addressed to all relevant parties, and identified that solicitor or counsel on behalf of the Debtor would move the application. The application was grounded on an affidavit of the PIP.

9

The Bank through its solicitors lodged a notice of objection on 14th December, 2016, again in the statutory form.

10

A long affidavit of Jane Boland, an agent of the Bank, was sworn on 15th February, 2017 to ground the Bank's objection, and that was followed by a replying affidavit from the Debtor, sworn on 8th March, 2017, a replying affidavit on behalf of the Bank sworn on 20th March, 2017 and from the PIP sworn on 27th April, 2017.

11

The matter came on for hearing before Judge Lyster, specialist judge of the Circuit Court on 4th May, 2017, who having reserved his judgment, delivered a ruling on 1st June, 2017 in which he declined to make the order.

12

It is with regard to the notice of appeal to the High Court that the issue now sought to be determined arises. By notice of appeal dated 7th June, 2017 the Debtor appealed to the High Court against the order of the specialist judge of the Circuit Court. That notice of appeal expressly identifies the appellant as the Debtor, and is signed by his solicitor. The PIP is not a moving party to the appeal and is not a notice party, although the Bank as objecting creditor did serve its memorandum of appearance on the PIP.

The issue to be determined
13

It is the Bank's case that the appeal to the High Court is wrongly constituted in that it is not made by the PIP but rather by the Debtor himself. The Bank argues that the absence of the PIP, and the fact that the appeal was lodged by the Debtor, and not by the PIP, is fatal to the prosecution of the appeal. The Bank argues that having regard to the scheme of the Act a debtor has no standing to maintain an appeal as the legislation envisages that all applications, including appeals, are to be prosecuted by the PIP.

14

By letter of 20th June, 2017 the solicitors acting on behalf of the Bank consented to the making of an order that the PIP be substituted for the Debtor as appellant in the appeal. That offer was rejected as unnecessary by the solicitor for the Debtor, who noted in her replying correspondence of 22nd June, 2017 that she did not act for the PIP.

15

The question raised is one that engages the construction of the legislation, but also the broader question raised by the Debtor of the right of access to the courts.

Relevant legislative provisions
16

Section 115A(1) states as follows:

‘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,

(c) 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).’

17

The language of 115A (1) is clear and vests in a PIP the power to make an application to the court for a review under subsection (9), where the PIP considers that there are reasonable grounds for the making of such application. Accordingly, the power vested in the PIP is not unconstrained, but is to be exercised in appropriate cases and where the PIP can justify the making of the application on reasonable grounds.

18

It is also clear that the power vested by s. 115A(1) is to make application on behalf of the debtor, the person whose interests are impacted by the application, and I accept the argument of the Debtor in the present case that it is the interests of the Debtor and not those of the PIP that are in play in any application for review by the court. The PIP is not a party to the application in the sense that his or her interests may be affected by the result.

19

Before considering the procedural question raised in this appeal, I turn briefly to examine the question of how the interests of a debtor are dealt with in the legislative scheme, and the interplay between a debtor and a PIP.

Interests of the debtor are affected.
20

Section 2 of the Act defines a debtor as ‘a natural person who owes a debt to a creditor or otherwise has a liability to a creditor’. A PIA is entered into by a debtor, not by or through a PIP on behalf of the debtor. The jurisdiction of the court is determined by the residence or domicile of the debtor and not of the PIP. The debtor must perform a number of statutory steps before the application is processed, including the step of appointing a PIP. Section 49(3) envisages the debtor engaging with the Insolvency Service of Ireland (‘ISI’) before a PIP is appointed. Section 49 provides for a meeting with a PIP or an employee of the PIP in order to advise the debtor as to the feasibility of making a proposal for a PIA or DSA. It is the debtor who appoints the PIP to...

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7 cases
  • Re Meeley a debtor
    • Ireland
    • High Court
    • 5 February 2018
    ...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 ......
  • Promontoria Oyster DAC (the Objecting Creditor) v Fergus O'Connor (the Debtor)
    • Ireland
    • Supreme Court
    • 30 November 2023
    ...and the PIP's involvement is mandatory: Re Meely, Re Nugent, the costs ruling in Re Nugent [2016] IEHC 309, in Re Darren Reilly [2017] IEHC 558, [2018] 1 I.R. 357 and the judgment of McDonald J. in Re Varvari (A debtor) [2020] IEHC 23. The PIP must have financial expertise and skills and is......
  • Sweeney & Personal Insolvency Acts 2012-2105
    • Ireland
    • High Court
    • 31 July 2018
    ...intermediary who brings to the process financial specialist knowledge must be respected: see In re Nugent [2016] IEHC 127, In re Reilly [2017] IEHC 558, and In re Meeley [2018] IEHC 59 What is also highlighted by the present case is the fact that it is for the court and not the PIP to ul......
  • Re McNamara & The Personal Insolvency Acts 2012- 2015
    • Ireland
    • High Court
    • 17 December 2018
    ...service of the originating notice of motion. The judgments of Baker J. 5 On 5th October, 2017, Baker J. gave judgment in Darren Reilly [2017] IEHC 558 in which she carefully considered the provisions of s. 115A in the context of an appeal from the Circuit Court. The appeal in that case had ......
  • Request a trial to view additional results
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