Tanager Dac v Ryan
| Jurisdiction | Ireland |
| Judge | Mr Justice Garrett Simons |
| Judgment Date | 07 October 2019 |
| Neutral Citation | [2019] IEHC 659 |
| Court | High Court |
| Docket Number | 2019 No. 392 CA |
| Date | 07 October 2019 |
[2019] IEHC 659
THE HIGH COURT
CIRCUIT APPEAL
Garrett Simons
2019 No. 392 CA
Order for possession – Power of sale – Protective certificate – Plaintiff seeking to enforce an order for possession – Whether the failure to disclose the existence of an order for possession constituted a material non-disclosure
Facts: The plaintiff, Tanager DAC, sought an order, pursuant to the inherent jurisdiction of the Circuit Court, setting aside a protective certificate under the Personal Insolvency Act 2012. In the alternative, an order was sought pursuant to s. 96(3) of the Personal Insolvency Act granting Tanager leave to enforce and execute an order for possession. The application was heard before Judge Linnane on 25 July 2019, and the trial judge delivered a reserved judgment on 15 August 2019. Judge Linnane made an order pursuant to s. 96(3) giving leave to Tanager to execute the order for possession. The principal relief sought in the appeal the subject of this judgment was to allow Tanager to enforce the order for possession and to exercise its power of sale over the dwelling house, notwithstanding the issuance of the protective certificate.
Held by the High Court (Simons J) that this was not an appropriate case to grant such relief. Simons J held that, whereas it was unsatisfactory that the information provided at the time of the application for the protective certificate did not disclose the existence of the order for possession, the omission did not constitute a material non-disclosure. Even if the existence of the order for possession had been disclosed—as it should have been— Simons J held that this would not have affected the outcome of the application for a protective certificate. Simons J held that the defendant, Mr Ryan (the debtor), met the eligibility criteria under s. 91 of the Personal Insolvency Act in any event.
Simons J held that the appeal against the judgment and order of the Circuit Court of 15 August 2019 would be allowed in full, that the order granting leave to execute the order for possession of 8 March 2019 would be set aside and that the protective certificate would continue in force.
Appeal allowed.
The underlying dispute between the parties to this appeal centres on the entitlement, if any, of the Defendant to avail of a protective certificate under the Personal Insolvency Act 2012 (as amended) ( “the Personal Insolvency Act”). As explained presently, this dispute has given rise to two separate appeals to the High Court from orders of the Circuit Court. The first of these appeals came on for hearing before me on 16 September 2019. The second appeal is listed, for mention only, in the High Court Personal Insolvency List before McDonald J. on 14 October 2019.
Notwithstanding this complex procedural history, the compass of the dispute between the parties is actually very narrow. The Plaintiff, Tanager DAC ( “Tanager”), is a secured creditor of the Defendant, Mr Ronan Ryan ( “the Debtor”). Tanager holds a charge over the Debtor's interest in a dwelling house in Clontarf, Dublin. The Debtor had consented in March 2019 to the making of an order for possession in respect of the dwelling house, subject to a four month stay on execution. The Debtor, and his spouse, were to have delivered up possession of the dwelling house on 9 July 2019. In the event, the Debtor instead instituted proceedings under the Personal Insolvency Act and obtained a protective certificate from the Circuit Court on 25 June 2019. This certificate prevents Tanager from executing the order for possession pending the determination of an application for approval of a personal insolvency arrangement.
Tanager submits that it would be “fundamentally unfair” if the existence of the protective certificate were permitted to “derail and undermine” the efficacy of the order for possession. The Debtor should not be permitted to “go behind” the consent which he gave to the making of the order for possession in March 2019. It is further submitted that—as a consequence of the making of the order for possession—the Debtor no longer holds an interest in the dwelling house amenable to protection under the Personal Insolvency Act.
Tanager also maintains that the Debtor's conduct in making an application for a protective certificate represented an abuse of process. In particular, it is said that the failure on the part of the Debtor to disclose the existence of the order for possession breached the duty of candour which an applicant owes to a court when making an ex parte application.
In response, it is submitted on behalf of the Debtor that there has been no material non-disclosure, and that notwithstanding the existence of the order for possession, the Debtor met the eligibility criteria for a protective certificate.
The principal relief sought in the appeal the subject of this judgment is to allow Tanager to enforce the order for possession and to exercise its power of sale over the dwelling house, notwithstanding the issuance of the protective certificate. This application has been made pursuant to Section 96(3) of the Personal Insolvency Act.
For the reasons set out herein, I have concluded that this is not an appropriate case to grant such relief. Whereas it is unsatisfactory that the information provided at the time of the application for the protective certificate did not disclose the existence of the order for possession, the omission does not constitute a material non-disclosure. Even if the existence of the order for possession had been disclosed—as it should have been—this would not have affected the outcome of the application for a protective certificate. The Debtor met the eligibility criteria under section 91 of the Personal Insolvency Act in any event.
The existence of an order for possession—whether obtained by consent or following an adjudication by the court—is not a bar to the restructuring of the secured debt by way of a personal insolvency arrangement. The Personal Insolvency Act envisages that the principal sum of a secured debt may be reduced to an amount not less than the market value of the security as part of a personal insolvency arrangement. The balance will then rank as an unsecured debt. The possibility of such debt reduction persists for so long as the secured debt remains undischarged and the asset upon which the debt is secured remains in the ownership of the debtor. Thus, the mere fact that Tanager has the benefit of an (unexecuted) order for possession does not preclude the possibility of debt restructuring.
It would be disproportionate to the gravity of the non-disclosure to sanction the Debtor by allowing Tanager to enforce its security pending the determination of the application for a personal insolvency arrangement. It would also be inconsistent with one of the underlying objectives of the amended legislation. The Personal Insolvency Act, as a result of amendments introduced under the Personal Insolvency (Amendment) Act 2015, now makes special provision for a debtor's principal private residence, and, in particular, allows for the possibility of court approval of measures which enable a debtor (i) not to dispose of an interest in, or (ii) not to cease to occupy, all or a part of his or her principal private residence. The dwelling house in Clontarf represents the Debtor's principal private residence, and is occupied by the Debtor, his spouse and four minor children. An application pursuant to Section 115A is pending before the Circuit Court. It would be inconsistent with the legislative regime to seek to sanction the Debtor for his omission by denying him an opportunity to have his application for court approval of a personal insolvency arrangement heard and determined on its merits.
There will, of course, be cases where the setting aside of a protective certificate will be justified because of a material non-disclosure. It would undermine the objective of expedition which underlies the legislation, however, if creditors were, as a matter of routine, to make applications to set aside orders based on inaccuracies or omissions which are immaterial. A proliferation of such applications would take up scarce court time unnecessarily, and ultimately delay the final determination of the insolvency process. The Personal Insolvency Act provides ample safeguards for creditors at the stage of an application to confirm or approve a personal insolvency arrangement. The existence of these protections will, in most cases, make a separate application to set aside a protective certificate unnecessary.
It may assist readers who are not familiar with the personal insolvency legislation to pause at this point, and to provide a very brief outline of some of the key concepts relevant to the dispute between the parties. This outline should, hopefully, allow for a better understanding of the legal issues addressed in the balance of this judgment.
The concept of most immediate relevance is that of a “protective certificate”. The grant of a protective certificate represents the first formal involvement of a court in an application for a personal insolvency arrangement. The grant of a protective certificate, in simple terms, affords a debtor a breathing space in which he or she can formulate a proposal for a personal insolvency arrangement. The legal effect of the grant of the protective certificate is that creditors are precluded from enforcing their debt for an (initial) period of seventy days.
A debtor is not normally required to put his or her creditors on notice of the making of an application for a protective certificate. To this extent, the application can be characterised as an ex parte application....
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