The High Court has dismissed Pepper Finance Corporation (Ireland) DAC’s appeal against a Circuit Court order confirming a personal insolvency arrangement for Mark Fay, affirming the arrangement while excluding an affidavit that had been improperly exhibited.
The arrangement reduces the secured debt owed to Pepper from €482,149 to €210,000, extends the mortgage term to 240 months and provides a return of 44 cents in the euro. The judgment said the bankruptcy comparison showed a return of 37 cents in the euro. Pepper had argued that the arrangement did not meet statutory requirements, including those concerning Fay’s home and the retention of a commercial unit attached to it.
The High Court found, on the balance of probabilities, that two documents attached as exhibits to Fay’s affidavit were created after it was sworn in May 2018. The court excluded that affidavit from consideration. Fay later swore a replacement affidavit, which the court considered. The judge concluded that Fay, as a lay client relying on professional advisers, could not personally be blamed for the handling of the exhibits and that the arrangement should not be dismissed solely on that ground.
The judge also found an unexplained inconsistency in Fay’s evidence about whether the commercial unit was on a separate folio and whether its loan had been repaid. Those parts of his evidence were disregarded. However, the court concluded that the home and commercial unit were not severable, relying on the available property material and the absence of evidence valuing the unit separately. It also found that selling the unit could undermine the income needed to meet mortgage payments and living costs.
The court was satisfied that the arrangement had been formulated in accordance with the statutory requirements and that the costs of allowing Fay to remain in his home were not disproportionate. It cited the mortgage payment, the cost of alternative accommodation, household contributions and the security of home ownership. The court also found that Pepper would not be unfairly prejudiced, noting the better projected return under the arrangement than in bankruptcy.
The appeal was dismissed and the Circuit Court decision affirmed. Separately, the court ordered Ashtown Gate solicitors to pay €6,000 plus VAT to Pepper’s solicitors, or donate €6,000 to a charity chosen by Pepper, for wasted costs arising from the affidavit failures. The court directed Pepper and the practitioner to confer on their costs between themselves; if they could not agree, they were to submit short written arguments for a later ruling.