The High Court has allowed EBS DAC’s appeals against Circuit Court approval of personal insolvency arrangements proposed by a married couple from Drumalee, Co. Cavan, finding that the arrangements were premature and unfairly prejudicial to the bank. The precise orders will be considered at a later court mention.
Mr Justice Mark Sanfey ruled that the couple had not shown they were unable to meet their current liabilities to the bank. They had continued to make the monthly payments required under a 2014 restructured home loan, which included a live balance and a warehoused amount due at the end of the term, expected in 2041.
The couple’s proposed arrangements would have reduced the mortgage balance to the stated €320,000 value of their home and written off the warehoused amount of about €97,979. The bank objected, arguing that the couple could afford the existing repayments and that their proposals did not reflect their means. It also pointed to land surrounding the home as a possible source of funds.
The judge said there was no evidence that the couple’s current repayments were likely to become unaffordable. Although their expenses could rise as their children grew older, the court had no basis to conclude that this would prevent them from maintaining the existing repayments. Their claimed inability to repay a sum falling due in about 20 years depended on future circumstances that the court could not reliably predict. The judge therefore found the applications premature.
The court also addressed the couple’s expected pension lump sums, which were due outside the seven-and-a-half-year period in section 51 of the Personal Insolvency Acts. It held that those entitlements could not be treated as assets or counted in assessing affordability under section 115A. That ruling did not change the outcome: the judge allowed the bank’s appeals on the other grounds.
The judge noted that the loan agreement provided for reviews every five years and said the couple could make a fresh application if later circumstances created difficulties, subject to meeting the eligibility requirements. He also said some surrounding land might be capable of sale, though any sale would require negotiations with the bank over its security.
The judgment directs that each appeal be allowed and that the cases be listed for mention in the next personal insolvency list, where the parties may address the orders to be made.