The High Court ordered personal insolvency practitioner Daniel Rule to pay objecting creditor Tanager DAC €6,000 plus VAT, if applicable, after finding that misleading affidavit evidence and the pursuit of an unsustainable appeal justified a costs order against him.
The costs application followed an unsuccessful appeal from a Circuit Court refusal to confirm a proposed personal insolvency arrangement for Ciprian Varvari. The High Court had indicated in September 2019 that the appeal would be dismissed because the arrangement was not sustainable. The January 2020 judgment concerned the separate question of costs against the practitioner.
The arrangement relied on household income of €3,218 a month. But Varvari’s 2017 tax return showed combined gross income for him and his wife of €24,276 for the year, or about €2,023 a month. Their 2018 taxable income equated to €2,797 a month; after tax, the court calculated net monthly household income at about €2,564. Both figures were below the amount used to support the arrangement.
The court found that Rule had not taken the steps required by the 2015 Protocol to verify Varvari’s self-employed income. The material he relied on included a brief accountant’s letter estimating future income, a prescribed financial statement and no relevant accounts or tax returns before the arrangement was proposed. The judge said the practitioner’s June 2018 affidavit gave the misleading impression that household income had been actively assessed and verified. By then, the 2017 tax return had been filed with Revenue.
The court also found the appeal should have been withdrawn after the tax returns were produced in February 2019. They showed that the household income underpinning the arrangement was insufficient, yet the practitioner continued with the appeal. The judge described its pursuit as vexatious and said it exposed the practitioner to costs.
The judge considered the practitioner’s remorse, his frankness from October 2019 and the fact that he had disclosed the tax returns. Those factors did not prevent a costs order, but informed its amount. The €6,000 award represented two thirds of the fees, excluding VAT, the practitioner would have earned if the arrangement had been confirmed. The court said it would hear the parties on the time allowed for payment. It noted that Tanager’s actual costs were substantially higher and said the award should not be treated as a precedent for future cases.