The High Court dismissed Sarah Hill’s appeal against a Circuit Court decision refusing to approve a personal insolvency arrangement rejected by her creditors. Ms Justice Baker held that the court’s power to override the creditors’ vote was not available because Ms Hill did not have a “relevant debt” as defined by the Personal Insolvency Acts.
The appeal concerned a single threshold issue: whether Ms Hill had the required type of mortgage debt when the insolvency process began. The court was not deciding whether to approve the proposed arrangement on its merits. It concluded that the statutory gateway to that decision had not been met.
Ms Hill’s total debts were €166,643.71, including €150,976.66 secured on her principal private residence in Cashel. The property was estimated to be worth €55,000. Her proposal included restructuring the mortgage, writing off part of the debt and allowing her to remain in the home. Affinity Credit Union voted in favour; secured creditor Pepper Finance Corporation (Ireland) DAC objected. At the creditors’ meeting on 17 June 2016, the proposal was rejected. The Circuit Court upheld Pepper’s objection on 19 October 2016.
The legislation defined a relevant debt as one secured on a debtor’s principal private residence where the debtor was in arrears on 1 January 2015, or had previously been in arrears and entered into an alternative repayment arrangement with the secured creditor. It was common ground that Ms Hill was not in arrears on the specified date.
Her case was that she had been in arrears on five occasions in 2014 and had entered into an alternative arrangement with her lender. The judgment describes late payments in May, June, July, September and October. Ms Hill contacted the bank about financial difficulties, and on each occasion the lender accepted payment a few days late or by a different method. The court recognised her diligence and the lender’s forbearance.
But Justice Baker found no agreement changing the mortgage’s repayment terms. There was no agreed reduction in payments, interest-only period or moratorium. The bank’s acceptance of individual late payments amounted to ad hoc forbearance, not an alternative repayment arrangement that Ms Hill could rely on as amended mortgage terms.
The court said the scheme required an agreed change to the repayment obligations, whether temporary or permanent. Since Ms Hill had neither arrears on 1 January 2015 nor the required prior arrangement, the court held that she had no relevant debt for the purposes of section 115A. The appeal was dismissed and the court could not proceed to consider confirming the rejected arrangement under that section.