The High Court has dismissed a debtor’s appeal over a valuation used in a proposed personal insolvency arrangement, ruling that the statutory process had not been followed and the valuation was not binding.
The appeal concerned a Circuit Court decision of 20 April 2017 dismissing an application under section 115A of the Personal Insolvency Acts. The Circuit Court had upheld an objection by secured creditor Start Mortgages DAC that the personal insolvency practitioner (PIP) had not followed the required steps for obtaining a valuation. The High Court judgment, delivered by Ms Justice Baker on 3 July 2017, also addressed an identical appeal in an interlocking application by James McDonnell.
Start put the property’s value at €230,000, while the independent expert appointed by the Insolvency Service of Ireland (ISI) valued it at €180,000. Start initially declined to provide its written valuation report, despite the PIP’s request. The judge said sharing an available report would generally be good practice and found Start’s refusal indicated a lack of good faith or meaningful engagement in agreeing the market value.
However, the judge also found that Start had offered to work towards an agreed independent valuation and had not insisted that the valuer come from its own panel. The PIP moved too quickly to ask the ISI to appoint an expert, without first properly engaging with Start’s proposal or suggesting an expert of his own.
Section 105 requires the parties to attempt to agree a market value, then to agree an independent expert if they cannot agree on the value. Only if they cannot agree on the expert may a party refer the matter to the ISI for an appointment. The court held these stages were mandatory and that the ISI’s appointment did not itself establish that the statutory conditions for its involvement had been met.
The judge said the valuation obtained through the ISI was not binding because the required process had not been completed. Without a binding valuation, the Circuit Court could not exercise its jurisdiction under section 115A in the circumstances. The High Court concluded that the Circuit Court had taken the correct approach and dismissed the appeal. It did not determine the property’s correct market value or the underlying section 115A application.