The High Court ruled that a bank could not prove for interest accruing after a protection order in bankruptcy arrangement proceedings concerning Siobhan Mullee. It also directed how property valuations were to be treated and declined to reduce estimated litigation costs.
In a judgment delivered on 3 February 2012, Mr Justice Gilligan addressed three issues left after an earlier judgment on 14 December 2011. The proceedings concerned a petition for arrangement by Mullee, of Newton, Ballindine, County Mayo. Her husband, Dominic Mullee, had a related petition under a separate record number.
On interest, the arranging debtor argued that interest on guaranteed debts stopped accruing when the protection order was made on 22 March 2010. The bank argued that its contractual right to interest had accrued before changes to the Bankruptcy Act took effect on 2 August 2011, and that the amended provision did not apply retrospectively.
The judge preferred the debtor’s submissions. He said interest was calculable only up to the protection order and held that the bank was not entitled to prove for interest in the bankruptcy proceedings from that date. The debtor had estimated that the disputed additional interest was about €130,000, but the judgment gave no exact figure.
The court also considered the bank’s later security valuations. The bank had submitted valuations in November 2010 and obtained further reports in April, June and September 2011. The judge said an amendment to a valuation required a bona fide mistaken estimate and either court approval on terms set by the court or permission from the Official Assignee.
No general case had been made that the November 2010 valuation of finished and unfinished houses was based on a bona fide mistake, and no amendment had been approved. The bank therefore had to rely on that valuation for those houses. However, the November valuation omitted a significant number of fully serviced sites that appeared in the September 2011 report. The judge treated that omission as a bona fide mistake and directed that the sites be valued using the appropriate November 2010 valuation.
The debtor did not dispute the estimated litigation costs, though counsel suggested they might be somewhat high. The court declined to interfere with the amount claimed. The judge said the parties should reach agreement in line with the court’s directions and findings so the matter could proceed to a conclusion.