The Court of Appeal has dismissed Promontoria Aran Limited’s appeal against an order confirming a proposed Personal Insolvency Arrangement for David Langan. The judgment, delivered on 13 February 2024, leaves the High Court’s confirmation in place. The appeal court did not determine Promontoria’s separate claim that it held an equitable mortgage over a Wexford property.
Promontoria argued that Mr Langan had given a preference by granting his solicitor a first legal charge over the property to secure unpaid legal fees. The charge was agreed in November 2018 and formally given in January 2019. The fees, including VAT, were about €236,800.
The appeal court agreed with the High Court’s interpretation of “preference” under the Personal Insolvency Acts. It held that the term requires a qualitative assessment of the debtor’s conduct, rather than treating every transaction that reduces assets available to creditors as a preference. The High Court had found that the charge was given for legal work already carried out, after Mr Langan had agreed to sell the property to pay the fees. The appeal court upheld that conclusion.
Promontoria also contended that the arrangement unfairly prejudiced it by recognising the solicitor’s charge while treating Promontoria’s debt as unsecured. Promontoria claimed an equitable mortgage and had brought separate proceedings seeking relief over the property. In the insolvency process, its proof of debt referred to a lis pendens but did not set out details of an equitable mortgage. The practitioner sought clarification, and Promontoria did not respond. The solicitor’s application to prove his debt was served on Promontoria, which did not appear at the hearing.
The Court of Appeal said the arrangement-confirmation proceedings were not the forum to decide whether Promontoria’s alleged equitable mortgage was valid. It upheld the treatment of the debt as unsecured for the purpose of the practitioner’s application, under the statutory process followed. The solicitor’s charge had been proved in court before the creditors’ meeting; it was later registered.
Promontoria further argued that Mr Langan’s secured debts exceeded the Acts’ €3 million eligibility limit. The court noted that the objection had not been included in Promontoria’s formal notice of objection. The evidence before the High Court supported its conclusion that the point had no merit: Promontoria’s proof referred to about €638,000 and identified a lis pendens, which the parties accepted was not security. The court also found that the undertaking relied on by Promontoria did not amount to security for €3 million or more.
The appeal was dismissed. The court gave a provisional view that Promontoria should pay the respondent’s costs, with 14 days for either party to request a different order. If no request is made, the proposed costs order is to be perfected.