The High Court set aside Circuit Court orders refusing personal insolvency arrangements for a married couple and confirmed both arrangements under the Personal Insolvency Acts.
Mr Justice Mark Sanfey delivered the judgment on 12 October 2022 in appeals by Eugene Power and Mary Power. The Circuit Court had refused the applications on 6 May 2021. The High Court heard the appeals in November 2021. The creditor’s objections at the appeal focused on whether the couple’s finances were adequately supported by evidence, whether the arrangements were sustainable, and whether they unfairly prejudiced the creditor.
The couple live with their five children in their home in Youghal, County Cork. Their proposed arrangements restructure the mortgage over 324 months and provide for monthly payments towards a Bank of Ireland judgment mortgage. The court noted that the couple had made payments since receiving a protective certificate and that the arrangements offered unsecured creditors a marginally better return than bankruptcy.
The creditor argued that the family would face monthly deficits of €346 rising to €558.79 as the children moved through school, making the arrangements unsustainable. The judge found significant inconsistencies in the parties’ cost calculations. Using the figures in the arrangements, the court calculated that the worst projected shortfall would be €268.27 a month for three years, while noting that the calculation did not account for €700 in monthly children’s allowances.
The judge said the couple’s evidence about managing a shortfall and increasing income was vague and lacked supporting detail, including evidence about the effect of extra earnings on income supports. But the court also considered their payment record, the support of friends who would provide a €5,000 lump sum for fees, and the prospect that Mr Power could take on additional work. It concluded that the couple had shown they could arrange their finances to maintain a reasonable standard of living during the projected period below the Insolvency Service of Ireland’s reasonable living expense guidelines.
The court therefore set aside the Circuit Court orders and confirmed the proposed arrangements in both cases. It did not accept the creditor’s higher projected shortfall; its decision was based on the lower shortfall calculated from the figures in the arrangements.