The High Court has found that Edward and Nuala McCarthy can afford proposed personal insolvency arrangements to repay their mortgage while remaining in their adapted home near Wexford. It concluded that the arrangements met the relevant statutory requirements, including the requirement that the cost of remaining in their principal private residence was not disproportionately large.
The judgment, delivered by Mr Justice Alexander Owens on 25 May 2023, concerned appeals from Circuit Court decisions on applications under section 115A of the Personal Insolvency Act 2012 to 2015. The proposed arrangements would restructure the mortgage over 13 years, with monthly payments initially calculated at €364.77. The couple had been paying the bank €341 a month since obtaining a protective certificate in 2020.
The court accepted that the couple could make the proposed payments and maintain a reasonable standard of living, provided they curtailed some spending. It considered their payment history relevant evidence of their capacity and willingness to meet the commitments. The judgment also noted that Nuala McCarthy uses a wheelchair, is in poor health, and that the house had been modified to accommodate her disability.
The bank had submitted that updated living-cost guidance made the proposal unsustainable and that the couple’s claimed savings were not supported by evidence. It also wanted them to trade down and use the proceeds and an incentive payment to buy another home. The court found that the couple had considered alternatives, including trading down and rental accommodation, but that these were unsuitable. A replacement home would need to be single-storey and modified for wheelchair access. The court found the existing house was not extravagant and that retaining it was not disproportionate to their circumstances.
The court said future illness or the death of one borrower would not automatically show that the couple were unlikely to comply. They might decide to sell the home and repay the bank if circumstances changed; that would not itself breach the proposed arrangements. The judgment also cautioned that substantial home equity may, in some cases, make trading down appropriate.
The court was not given the current mortgage balance or the payment needed to repay it over 13 years at the prevailing interest rate. It said an immediate payment might be needed if the balance had risen above the €42,782 starting figure in the proposals. The appeals were listed for mention in the next Monday personal insolvency list on 12 June 2023 for formal orders.