The Court of Appeal has refused to annul the bankruptcy adjudication of a woman whose mortgage lender later acknowledged that it had overcharged interest and that this contributed to her losing her home.
The appeal concerned a High Court decision refusing her application under section 85C of the Bankruptcy Act 1988. The Court of Appeal agreed with the refusal. It also held that section 135 did not remove the court’s jurisdiction to consider annulment after an automatic discharge. The woman had been discharged by operation of law, but her bankruptcy estate remained under administration.
The woman borrowed €135,200 from Bank of Ireland Mortgage Bank in 2005 to buy her family home in Killala, County Mayo, and took a further €22,000 loan in 2007. After losing her business in 2008, she struggled to meet repayments. The bank later sought possession, and she surrendered the property in 2017. She petitioned for bankruptcy and was adjudicated on 23 October that year.
In 2019, the bank told her it had failed to provide a tracker rate when she was entitled to one. It apologised and accepted that the error was a factor in her losing ownership of the property. The bank calculated an interest refund of €23,529.89 and other compensation. It withdrew its claim in the bankruptcy estate, while the Official Assignee sought €60,672.72 for the benefit of other creditors. The bank later sent her a draft for €36,000, described as the balance payable to her.
She argued that the bank’s earlier figures overstated what she owed and that, with accurate information, she would not have petitioned for bankruptcy. The Court of Appeal accepted that the bank had overstated its claim, but said the correction did not establish that she ought not to have been adjudicated bankrupt. Even after adjusting the figures, the court found she was insolvent: she had substantial debts to the bank as well as admitted debts to AIB and the Revenue Commissioners.
The court said annulment required extremely compelling reasons and that the decision had to account for all creditors, not only the bank. It concluded annulment would not be just and reasonable, and dismissed the appeal. It made no order as to costs.