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Cite as: [2019] IEHC 659

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THE HIGH COURT

CIRCUIT APPEAL

[2019] IEHC 659

2019 No. 392 CA

BETWEEN

TANAGER DESIGNATED ACTIVITY COMPANY

AND

RONAN RYAN

PAMELA FLOOD

JUDGMENT of Mr Justice Garrett Simons delivered on 7 October 2019.

PLAINTIFF

DEFENDANT

NOTICE PARTY

SUMMARY

1. The underlying dispute between the parties to this appeal centres on the entitlement, if

any, of the Defendant to avail of a protective certificate under the Personal Insolvency Act

2012 (as amended) (“the Personal Insolvency Act”). As explained presently, this dispute

has given rise to two separate appeals to the High Court from orders of the Circuit Court.

The first of these appeals came on for hearing before me on 16 September 2019. The

second appeal is listed, for mention only, in the High Court Personal Insolvency List

before McDonald J. on 14 October 2019.

2. Notwithstanding this complex procedural history, the compass of the dispute between the

parties is actually very narrow. The Plaintiff, Tanager DAC (“Tanager”), is a secured

creditor of the Defendant, Mr Ronan Ryan (“the Debtor”). Tanager holds a charge over

the Debtor’s interest in a dwelling house in Clontarf, Dublin. The Debtor had consented in

March 2019 to the making of an order for possession in respect of the dwelling house,

subject to a four month stay on execution. The Debtor, and his spouse, were to have

delivered up possession of the dwelling house on 9 July 2019. In the event, the Debtor

instead instituted proceedings under the Personal Insolvency Act and obtained a

protective certificate from the Circuit Court on 25 June 2019. This certificate prevents

Tanager from executing the order for possession pending the determination of an

application for approval of a personal insolvency arrangement.

3. Tanager submits that it would be “fundamentally unfair” if the existence of the protective

certificate were permitted to “derail and undermine” the efficacy of the order for

possession. The Debtor should not be permitted to “go behind” the consent which he

gave to the making of the order for possession in March 2019. It is further submitted

that—as a consequence of the making of the order for possession—the Debtor no longer

holds an interest in the dwelling house amenable to protection under the Personal

Insolvency Act.

4. Tanager also maintains that the Debtor’s conduct in making an application for a protective

certificate represented an abuse of process. In particular, it is said that the failure on the

part of the Debtor to disclose the existence of the order for possession breached the duty

of candour which an applicant owes to a court when making an ex parte application.

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5. In response, it is submitted on behalf of the Debtor that there has been no material non-

disclosure, and that notwithstanding the existence of the order for possession, the Debtor

met the eligibility criteria for a protective certificate.

6. The principal relief sought in the appeal the subject of this judgment is to allow Tanager

to enforce the order for possession and to exercise its power of sale over the dwelling

house, notwithstanding the issuance of the protective certificate. This application has

been made pursuant to Section 96(3) of the Personal Insolvency Act.

7. For the reasons set out herein, I have concluded that this is not an appropriate case to

grant such relief. Whereas it is unsatisfactory that the information provided at the time of

the application for the protective certificate did not disclose the existence of the order for

possession, the omission does not constitute a material non-disclosure. Even if the

existence of the order for possession had been disclosed—as it should have been—this

would not have affected the outcome of the application for a protective certificate. The

Debtor met the eligibility criteria under section 91 of the Personal Insolvency Act in any

event.

8. The existence of an order for possession—whether obtained by consent or following an

adjudication by the court—is not a bar to the restructuring of the secured debt by way of

a personal insolvency arrangement. The Personal Insolvency Act envisages that the

principal sum of a secured debt may be reduced to an amount not less than the market

value of the security as part of a personal insolvency arrangement. The balance will then

rank as an unsecured debt. The possibility of such debt reduction persists for so long as

the secured debt remains undischarged and the asset upon which the debt is secured

remains in the ownership of the debtor. Thus, the mere fact that Tanager has the benefit

of an (unexecuted) order for possession does not preclude the possibility of debt

restructuring.

9. It would be disproportionate to the gravity of the non-disclosure to sanction the Debtor by

allowing Tanager to enforce its security pending the determination of the application for a

personal insolvency arrangement. It would also be inconsistent with one of the

underlying objectives of the amended legislation. The Personal Insolvency Act, as a result

of amendments introduced under the Personal Insolvency (Amendment) Act 2015, now

makes special provision for a debtor’s principal private residence, and, in particular,

allows for the possibility of court approval of measures which enable a debtor (i) not to

dispose of an interest in, or (ii) not to cease to occupy, all or a part of his or her principal

private residence. The dwelling house in Clontarf represents the Debtor’s principal private

residence, and is occupied by the Debtor, his spouse and four minor children. An

application pursuant to Section 115A is pending before the Circuit Court. It would be

inconsistent with the legislative regime to seek to sanction the Debtor for his omission by

denying him an opportunity to have his application for court approval of a personal

insolvency arrangement heard and determined on its merits.

10. There will, of course, be cases where the setting aside of a protective certificate will be

justified because of a material non-disclosure. It would undermine the objective of

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expedition which underlies the legislation, however, if creditors were, as a matter of

routine, to make applications to set aside orders based on inaccuracies or omissions

which are immaterial. A proliferation of such applications would take up scarce court time

unnecessarily, and ultimately delay the final determination of the insolvency process. The

Personal Insolvency Act provides ample safeguards for creditors at the stage of an

application to confirm or approve a personal insolvency arrangement. The existence of

these protections will, in most cases, make a separate application to set aside a

protective certificate unnecessary.

THE LEXICON OF PERSONAL INSOLVENCY

11. It may assist readers who are not familiar with the personal insolvency legislation to

pause at this point, and to provide a very brief outline of some of the key concepts

relevant to the dispute between the parties. This outline should, hopefully, allow for a

better understanding of the legal issues addressed in the balance of this judgment.

12. The concept of most immediate relevance is that of a “protective certificate”. The grant

of a protective certificate represents the first formal involvement of a court in an

application for a personal insolvency arrangement. The grant of a protective certificate,

in simple terms, affords a debtor a breathing space in which he or she can formulate a

proposal for a personal insolvency arrangement. The legal effect of the grant of the

protective certificate is that creditors are precluded from enforcing their debt for an

(initial) period of seventy days.

13. A debtor is not normally required to put his or her creditors on notice of the making of an

application for a protective certificate. To this extent, the application can be

characterised as an ex parte application. This is so notwithstanding that the application is

made with the involvement of a third party, namely the Insolvency Service.

14. The Personal Insolvency Act provides two procedures by which a creditor may seek to

mitigate—to use a neutral term—the effect of the grant of the protective certificate, as

follows.

15. Section 96(3) allows a creditor to apply to court for leave inter alia to execute against the

debtor or his or her property notwithstanding the existence of a protective certificate.

There are no express statutory criteria prescribed by reference to which such an

application is to be determined.

16. Section 97 allows an aggrieved creditor to apply for an order directing that the protective

certificate shall not apply to that creditor. The criteria by which such an application is to

be determined are set out as follows at sub-section 97(3).

“(3) In determining an application under this section the court shall not make an order

directing that the protective certificate shall not apply to that creditor unless it is

satisfied that—

(a) not making such an order would cause irreparable loss to the creditor which

would not otherwise occur, and

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(b) no other creditor to whom notice of the protective certificate has been given

would be unfairly prejudiced.”

17. As explained under the next heading below, Tanager has sought to invoke both Section

96 and Section 97. This judgment is, however, confined to an appeal in respect of the

application under Section 96.

18. During the seventy-day period of a protective certificate, a debtor with the assistance of

his or her personal insolvency practitioner may put a proposed personal insolvency

arrangement to a creditors’ meeting. If, as occurred on the facts of the present case, a

proposed arrangement is rejected at a creditors’ meeting, then the debtor may, in certain

circumstances, make an application to the court for the approval of a personal insolvency

arrangement which involves his or her principal private residence. The effect of making

such an application, if made within time, is that the period of protection is extended

beyond the original seventy days.

19. It may be helpful to say something more about such applications for court approval. As a

result of amendments introduced under the Personal Insolvency (Amendment) Act 2015,

a debtor who has failed to have a personal insolvency arrangement approved by a

creditors’ meeting can make an application to the court for approval under a new section,

Section 115A. This is contingent on the debts that would be covered by the proposed

arrangement including a debt secured on the debtor’s principal private residence.

20. For present purposes, it is to be noted that one of the grounds upon which a creditor can

object to court approval is that a “material inaccuracy or omission” exists in the debtor’s

statement of affairs. This would appear to allow a creditor to raise, in the context of an

application for approval under Section 115A, any alleged inaccuracies or omissions in the

statement of affairs or prescribed financial statement grounding the ex parte application

for a protective certificate.

21. Finally, the insolvency legislation also introduced the concept of “specialist judges” of the

Circuit Court. The role and status of a specialist judge has been described as follows by

the High Court (Baker J.) in Re Nugent (A Debtor) [2016] IEHC 127, [21].

“[…] The specialist judges exercising their statutory function under the [Personal

Insolvency Act 2012] are constrained by the powers and functions conferred by the

Act of 2012, and do not exercise the full powers of a Circuit Court judge under the

Courts Acts or under the Constitution. The specialist judges for example do not

seem to have any power to engage principles of equity, or common law provisions

outside those powers expressly conferred. The specialist judge, while the role is

not merely an administrative one, does not act with full judicial powers.”

22. As discussed under the next heading below, the specialist judge who issued the protective

certificate in the present case has since taken the view that her jurisdiction to set aside

that certificate is confined to that provided for under Section 97.

PROCEDURAL HISTORY

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23. This matter has come before the High Court by way of an appeal against an order made

by the Circuit Court (Judge Linnane) in the context of the within possession proceedings.

As explained presently, there is a second appeal pending before the High Court (McDonald

J.) in the context of separate insolvency proceedings (High Court 2019 No. 355 CA).

24. The possession proceedings had been instituted before the Circuit Court by way of a Civil

Bill for Possession issued on 25 February 2016. The principal relief sought in those

proceedings was an order for possession of a dwelling house in Clontarf, Dublin. This

relief was sought pursuant to Order 5B of the Rules of the Circuit Court. The application

had been predicated upon a deed of mortgage and charge dated 5 February 2007 (“the

Mortgage”). The Mortgage had been entered into between the Debtor and Bank of

Scotland (Ireland) Ltd. The affidavit grounding the application for an order for possession

explains that Tanager has since succeeded to the mortgagee’s interest under the

Mortgage. More specifically, it is explained that Tanager acquired the Mortgage in April

2014 as part of a larger transaction involving the transfer of numerous securities to it.

There is no dispute between the parties as to the validity of this transfer.

25. An agreement was ultimately reached between the parties whereby the possession

proceedings were to be settled on terms. The terms of settlement were executed by the

parties and the Circuit Court made an order on consent that the settlement be received

and made a rule of court. The settlement was filed with, and deemed to be part of, the

order.

26. The Circuit Court order is dated 8 March 2019. The terms of the consent order read as

follows. (The references to “the Defendant” are to Mr Ronan Ryan, who is described for

the purposes of this judgment as “the Debtor”).

“1. An Order for Possession of the property the subject of these proceedings and

known as ALL THAT AND THOSE the dwellinghouse and premises known as [Details

redacted] (the ‘Property’) and more particularly described in the Schedule to the

Civil Bill for Possession herein;

2. A stay on the execution of the Order for Possession for a period of four months;

3. An Order directing the Defendant, the Notice Party and any other person in

possession of the Property to deliver up vacant possession of the Property to the

Plaintiff’s nominated agent on or before 9 July 2019 together with all keys, fobs,

other electronic access devices, access codes and alarm codes in their possession,

power and/or procurement of the Property;

4. An Order restraining the Defendant, the Notice Party and any other person on

notice of this Order from damaging the Property and/or removing any fixtures and

fittings from the Property pending the delivery up of vacant possession to the

Plaintiff or its nominated agent on or before 9 July 2019;

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5. An Order directing the Defendant and the Notice Party to facilitate the Plaintiff’s

nominated auctioneer to carry out an inspection of the Property at a time to be

agreed within a period of two weeks from the date hereof;

6. Subject to the Defendant’s and Notice Party’s compliance with the terms above, an

Order that the Defendant’s indebtedness to the Plaintiff the subject matter of these

proceedings be limited to the sum recovered by the Plaintiff from the sale of the

Property;

7. No Order as to the Costs of these Proceedings.”

27. The possession proceedings were then adjourned and listed for mention before the Circuit

Court on 12 July 2019. This date fell a number of days after the date by which the

Debtor was to have delivered up vacant possession of the dwelling house (9 July 2019).

28. It seems that very shortly after his having agreed to the terms of settlement and consent

order, the Debtor began to take steps in preparation for the making of an application for a

personal insolvency arrangement. (See affidavit of Eugene Carley Solicitor dated 25 July

2019 filed herein on behalf of the Debtor).

29. This volte face occurred without the giving of any express notice to Tanager. This was so

notwithstanding that the Debtor had been in contact with Tanager’s servicing agent

during this period. As explained in the affidavit of 23 July 2019 sworn by Mr Geoffrey

Rooney, Solicitor, on behalf of Tanager, the Debtor had telephoned Tanager’s servicing

agent, Pepper Finance Corporation (Ireland) DAC in March 2019, and had requested

details of the bank account into which he could make payments to the credit of the

mortgage account. This action on the part of the Debtor appears to have been intended

to address one of the issues relevant to an application for approval of a personal

insolvency arrangement under Section 115A, namely, the payment history of a debtor

within the two years prior to the issue of a protective certificate.

30. Certainly, the resumption of mortgage repayments in March 2019—after a period of non-

payment of almost nine years—made no sense if viewed solely through the lens of the

terms of settlement and consent order wherein, as noted above, the balance of the debt

over and above the proceeds of a sale of the dwelling house was, in effect, to be written

off.

31. At all events, an application for a protective certificate was made to a specialist judge of

the Circuit Court (Judge Lambe) on behalf of the Debtor, and a protective certificate

issued on 25 June 2019. There is no requirement under the Rules of the Circuit Court to

put creditors on notice of the making of such an application. Tanager was subsequently

informed of the making of the order by letter received on 1 July 2019.

32. There is no reference to the existence of the order for possession in the paperwork

accompanying the application for the protective certificate. In particular, it is not included

as a “comment” on the prescribed financial statement. It should be noted that an

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amended prescribed financial statement was filed on 27 August 2019 . I will return to

discuss the precise mechanics of the making of an application for a protective certificate

in detail at paragraph 100 below.

33. Tanager sought to set aside the protective certificate. The first attempt to do so took the

form of an application in the context of the insolvency proceedings. More specifically,

Tanager issued a notice of motion on 8 July 2019 seeking to have the protective

certificate set aside. This application was put forward on a number of different bases as

follows: Tanager expressly invoked (i) Section 97(1) of the Personal Insolvency Act; (ii)

Order 73, rule 27(1) of the Rules of the Circuit Court; and (iii) the inherent jurisdiction of

the Circuit Court. In the alternative, an order was sought pursuant to Section 96(3) of

the Personal Insolvency Act granting Tanager liberty to take steps to secure physical

possession of the dwelling house on foot of the consent order for possession dated 8

March 2019.

34. This (omnibus) application came on for hearing before a specialist judge of the Circuit

Court (Judge Lambe). Judge Lambe delivered an ex tempore ruling on 22 July 2019. An

agreed counsel’s note of this judgment has been exhibited as part of the application

before me. It appears therefrom that Judge Lambe made three principal findings as

follows. First, the failure to disclose the existence of the order for possession as part of

the application for the protective certificate represented a breach of the requirements of

Section 118 of the Personal Insolvency Act. This section, in brief, requires a debtor to

make full disclosure of all circumstances that are reasonably likely to have a bearing on

the ability of the debtor to make payments to his or her creditors.

35. Secondly, the jurisdiction of a specialist (insolvency) judge to set aside a protective

certificate is confined to the statutory jurisdiction under Section 97 of the Personal

Insolvency Act. A specialist judge does not have an inherent jurisdiction to sanction a

breach of Section 118.

36. Thirdly, the criteria for setting aside a protective certificate under Section 97(3), as

interpreted by the Court of Appeal in Re McManus (A Debtor) [2016] IECA 248, were not

met on the facts of the case.

37. Judge Lambe next confirmed that any application for an order pursuant to Section 96

should be made in the context of the possession proceedings.

38. Having failed in its application before Judge Lambe, Tanager then moved with expedition

to make an application in the context of the possession proceedings. An ex parte

application for short service of notice of motion was made on 23 July 2019, and the

motion was made returnable for 25 July 2019. The principal relief sought in the notice of

motion was an order, pursuant to the inherent jurisdiction of the Circuit Court, setting

aside the protective certificate. In the alternative, an order was sought pursuant to

Section 96(3) of the Personal Insolvency Act granting Tanager leave to enforce and

execute the order for possession.

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39. The application was heard before Judge Linnane on 25 July 2019, and the learned trial

judge delivered a reserved judgment on 15 August 2019. Judge Linnane made an order

pursuant to Section 96(3) of the Personal Insolvency Act giving leave to Tanager to

execute the order for possession.

40. The ratio of the judgment is set out as follows.

“An alternative view of course is that the legislation was not enacted to afford

protection to a debtor who (i) makes no mortgage payment for almost nine years,

(ii) agrees with the benefit of legal advice and after three years of legal proceedings

to an order for possession being made and to vacate the property, (iii) then does a

complete turn around and applies for a Protective Certificate without disclosing the

material fact that a consent order for possession had been made either to the

Insolvency Judge or to his PIP [Personal Insolvency Practitioner] in breach of the

clear obligation imposed by s. 118 of the Act. The granting of the Protective

Certificate resulted in the implementation of the consent order made by the court

being frustrated and undermined.

Taking everything into account, in my view there was a deliberate move by Mr.

Ryan to frustrate and obstruct the implementation of the consent order made on

8th March 2019 . There was also a conscious decision made by him not to disclose

the existence of the consent order in his PFS [Prescribed Financial Statement], to

his PIP, and to Judge Lambe. The purpose of the Insolvency legislation was not to

assist persons behaving in this manner, that would not be in the public interest.

Judges depend on a daily basis, particularly when an application is made on an ex-

parte basis, on full disclosure being made to them. The courts often set aside

orders made on an ex-parte basis if it later transpires that there was non-disclosure

of any material information. I do not accept Mr. Ryan’s excuse that he did not

consider material the existence of the consent order. In any event it was not up to

him to decide or be the judge of what was material or not. As Mr Neuman on

behalf of Tanager has pointed out the consent order is still in full force and binding

on Miss Flood and this application has no bearing on her obligation to comply with

that order.

Accordingly I am granting the application and making an order pursuant to s. 96(3)

of the 2012 Act giving leave to Tanager to execute the order for possession made

on 8th March 2019 against Mr. Ryan.”

41. The position at that stage, therefore, was that Tanager had been refused an order

pursuant to Section 97 by Judge Lambe, but had been granted an order pursuant to

Section 96(3) by Judge Linnane.

42. Each of the parties then brought an appeal against the order in respect of which they had

been unsuccessful. Tanager brought an appeal against the refusal of an order pursuant

to Section 97. That appeal has been made returnable to the High Court Personal

Insolvency List, and is listed, for mention only, before McDonald J. on 14 October 2019.

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43. The progress of the Debtor’s appeal against the grant of an order pursuant to Section

96(3) has been more convoluted. The Circuit Court had refused to grant a stay on its

order, and the Debtor then applied to the High Court for a stay during the vacation

sittings. The application for a stay was listed before me when I was sitting as the Duty

Judge on 10 September 2019. In circumstances where it was apparent that the hearing

of the application for a stay would take almost as long as the hearing of the substantive

appeal, I listed the full appeal for hearing before me on 16 September 2019.

44. The solicitors acting on behalf of Tanager, AMOSS Solicitors, very helpfully arranged to

file a book of pleadings in advance of the hearing date, and counsel for both sides

prepared excellent written legal submissions. The hearing of the appeal duly took place

on 16 September 2019, and judgment was reserved until today’s date.

45. Finally, for the sake of completeness, it should be noted that the position in respect of the

substantive application for a personal insolvency arrangement is as follows. The statutory

creditors’ meeting has taken place and the proposal for a personal insolvency

arrangement has been rejected. The Debtor has since made an application for approval

of an arrangement to the Circuit Court pursuant to Section 115A. The effect of this

application is that the period of the protective certificate continues beyond the original

seventy-day period. (See Re Hickey (A Debtor) [2018] IECA 397. The Court of Appeal

confirmed that the intention of the Oireachtas was that all debtors who lodged a Section

115A application within 14 days of the creditors’ meeting would continue to be protected

between the expiry of the seventy-day life of the certificate and the lodging of that

Section 115A application).

SUBMISSIONS OF THE PARTIES

(i). Tanager’s submissions

46. Counsel of behalf of Tanager, Mr Rudi Neuman, BL, submits that Section 96(3) of the

Personal Insolvency Act confers a “broad” discretion on the court. The general wording of

the section is contrasted with that of Section 97(3) which prescribes specific and limited

criteria against which a decision as to whether to disapply a protective certificate in the

case of a particular creditor is to be made.

47. Counsel then identifies the basis upon which it is said that this court should grant leave

pursuant to Section 96(3) to execute the order for possession. (See paragraph 13 of the

written legal submissions). There are two intertwined strands to this submission. First, it

is submitted that it is “just and appropriate” to permit execution of the order for

possession. It would be “fundamentally unfair” if the existence of the protective

certificate were permitted to “derail and undermine” the efficacy of the order for

possession. Emphasis is placed upon the fact that the order was made on consent, and

upon what counsel characterises as the “sanctity of consent orders”. The judgment of the

Court of Appeal of England and Wales in Brennan v. Bolt Burdon (A firm) [2004] EWCA Civ 1017

, [11] to [13] is cited in this regard.

48. It is submitted that the making of the application for a protective certificate is akin to an

appeal by the Debtor against the consent order. The Debtor is said to be seeking to “go

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behind” his consent. A compromise had been reached between the parties in March

2019, whereby Tanager had agreed to confine its claim to the proceeds of sale and to

“write down” the balance of the mortgage debt, and the Debtor had agreed to deliver up

vacant possession on 9 July 2019. The Debtor cannot now change his mind about the

compromise (which had been agreed to with the benefit of legal advice), and undermine

his obligations under the consent order. If consent orders are not going to be enforced by

the courts, then parties will be reluctant to settle claims. This would not be in the public

interest.

49. Secondly, it is submitted that the making of the application for a protective certificate

amounted to an abuse of process. In particular, it is alleged that the application was so

lacking in candour and accuracy as to warrant an order under Section 96(3). There must,

it is said, be a consequence or sanction for an “offending party” who fails to make full

disclosure as required under Section 118 of the Personal Insolvency Act.

50. Mr Neuman, BL, placed particular emphasis on the following finding of Judge Lambe (as

recorded in the agreed note of her ex tempore judgment).

“Given the binding nature of the March Order, that Ronan Ryan is insolvent in that

there was nothing left for other creditors out of his assets, the non-disclosure of the

March Order in the PFS [Prescribed Financial Statement], which is sworn by

statutory declaration, to not disclose the Order being the most significant and

proximate event to his Application for a Protective Certificate is extraordinary.”

51. Reliance was placed, by analogy, on case law which emphasised the duty of disclosure in

ex parte applications under the Companies Acts. Extracts from the judgments in Re

Bookfinders Ltd. [2015] IEHC 769 and in O’Flynn v. Carbon Finance Ltd. [2014] IEHC 458

were opened to the court.

52. Counsel disputes the characterisation of the non-disclosure as a simple omission to fill in

a “comment box” or “field” in the prescribed financial statement. Counsel draws attention

to the fact that when it came to providing details of the Debtor’s separate debt to the

Governor and Company of the Bank of Ireland, the Debtor had included a note in the

“comment box” indicating that a judgment mortgage had been “placed” on 16 April 2018.

53. Counsel did not dispute that the Debtor had met the eligibility criteria for a protective

certificate as prescribed under Section 91. It is submitted that non-disclosure may

nevertheless represent material non-disclosure notwithstanding that the outcome of the

ex parte application for a protective certificate would inevitably have been the same even

had the existence of the order for possession been disclosed. This court should not, on

this submission, be concerned with what potential effect proper disclosure would have had

on the application. Rather, there has to be a consequence or sanction for the “offending

party” for his breach of Section 118 of the Personal Insolvency Act.

54. Finally, counsel submits that there is no inconsistency in an aggrieved creditor pursuing

both an application under Section 96 and Section 97. Nor does the making of the initial

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application under Section 97 to a specialist judge give rise to an estoppel preventing the

creditor pursuing a subsequent application to another judge of the Circuit Court.

(ii). The Debtor’s submissions

55. In response, Mr Keith Farry, BL, counsel for the Debtor commenced his submission by

suggesting that the principal purpose of Section 96(3) was to allow for the possibility of

an agreed sale of property prior to the completion of the insolvency process. This might

arise, for example, where the creditor and debtor agreed to the sale of a property other

than the principal private residence, e.g. the sale of an investment or “buy to let”

property. An order under Section 96(3) might also be appropriate where property was

held by a debtor jointly with a third party, and that third party was not subject to an

application for a personal insolvency arrangement.

56. Counsel next drew attention to the provisions of Section 49 of the Personal Insolvency Act

which identifies the information which a debtor is required to disclose to a Personal

Insolvency Practitioner (“PIP”) as follows.

“49.— (1) A debtor to whom section 48 applies shall submit to a personal insolvency

practitioner a written statement disclosing all of the debtor’s financial affairs, which

statement shall include—

(a) such information as may be prescribed in relation to—

(i) his or her creditors,

(ii) his or her debts and other liabilities,

(iii) his or her assets, and

(iv) guarantees (if any) given by the debtor in respect of a debt of another

person,

and

(b) such other financial information as may be prescribed.”

57. Counsel submits that the Debtor complied with these requirements. The Debtor is said to

have completed a prescribed financial statement in accordance with Section 49 and the

relevant regulations. The Debtor is said to have provided a complete and accurate

statement of his assets, liabilities, income and expenditure. Counsel also emphasises that

the Debtor meets all of the eligibility criteria prescribed under Section 91.

58. Turning to the affidavit evidence, counsel relies on an affidavit filed by the Debtor (Mr

Ronan Ryan) in the insolvency proceedings dated 17 July 2019 which set out Mr Ryan’s

dealings in the period 2009/2010 with the company servicing Bank of Scotland’s loans in

Ireland, Certus. (This affidavit has been exhibited by Tanager as part of the possession

proceedings). Mr Ryan avers that he was told that if he (Mr Ryan) signed an “assisted

sale order” then he could cease payments on the principal private residence loan and

have the balance written off. Counsel submits that this demonstrates that the Debtor is

not a “strategic defaulter”.

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59. (It should be noted that counsel for Tanager, in his subsequent reply, drew attention to

the fact that the existence of this alleged agreement had not been referred to by the

Debtor in the affidavits filed in the possession proceedings prior to the order of 8 March

2019. Prior to that date, the Debtor had indicated an intention to fully defend the

proceedings).

60. Reliance is also placed on other paragraphs of the affidavit (in particular, paragraphs 25

and 26) where Mr Ryan states that his failure to disclose the full extent of the order for

possession was not done out of any deceit or unwillingness to disclose but rather because

he did not know it was material.

“25. I say that I didn’t disclose to my PIP the full extent of the order as exhibited at

‘KS4’. I did not do this out of any deceit or unwillingness to disclose but rather I

did not know it was material to eligibility or the process. I say that I came to a PIP

with a view to resolving my debt and keeping my home which was the opposite of

the repossession process so I simply believed that it was obvious and did not need

further detail. I apologise for this issue and any lack of disclosure. I say, and as is

known to many, the very fact of the Order and the exact terms were public

knowledge and published extensively in the media. I simply did not know that this

was of material relevance.

26. In order to remedy this, I have completed a new Prescribed Financial Statement

including a comment outlining same in the comment section of the PFS regarding

my Principal Private Residence. I beg to refer to a copy of same when produced.”

61. Counsel suggests that Tanager itself may be culpable of a lack of candour in that the

monthly payments initially demanded by Tanager were overstated by a sum of almost

one thousand euro. Counsel opened the relevant correspondence from March 2018.

62. It was submitted that Tanager’s reliance on case law in respect of the winding up of

companies and the examinership process under the Companies Acts is misplaced. The

Personal Insolvency Act was said to represent a complete and new code. Mr Farry cited

the judgment of the High Court (Baker J.) in Re O’Connors (A debtor) [2015] IEHC 320;

[2015] 3 I.R. 434.

“[51] There is nothing in the legislation that links any of its provisions to the Companies

Acts, although there are a number of express references in the body of the

legislation to the Bankruptcy Act 1988. I consider that the legislation provides a

complete and new code by which an insolvent debtor may make binding

arrangements with his or her creditors, and the Circuit Court, and in limited

circumstances the High Court, has a jurisdiction to give directions with regard to

certain matters, to issue a protective certificate, and ultimately to approve the

coming into effect of a PIA following the approval of a proposal for such an

arrangement by a creditors’ meeting.

Page 13 ⇓

[52] The legislation fully regulates the procedures at a creditors’ meeting. It would be

fair to say that the Act of 2012 and the structures that it creates are, in relative

terms, less complex and burdensome than those found in either the old, and to

some extent the current, bankruptcy regime or those regulating corporate

insolvency. In its form the legislation is intended to be a self-contained and new

insolvency regime, and it is expressly sought that the regime be rational and

orderly. While there is nothing in the legislation that expressly mandates that the

procedure be either cost effective or speedy, the Regulations made under the Act of

2012 prescribe the fees of the PIP, the form of prescribed financial statements, the

power of the Insolvency Service of Ireland to fix levels of reasonable expenditure

etc., and taken together they establish a regime the clear purpose of which is to

facilitate insolvent personal debtors whose means are clearly limited. In that

regard I am fortified by s. 147 of the Act of 2012 by which the court has a

discretion to defer a bankruptcy petition, presumably with the aim of engaging the

less burdensome procedures established by the Act of 2012.”

63. Counsel placed emphasis on the judgments of the High Court and the Court of Appeal in

Re McManus (A Debtor) [2016] IEHC 279; [2016] IECA 248. The matter had come before

the High Court (Baker J.) by way of an application pursuant to Section 97 of the Personal

Insolvency Act. The aggrieved creditor had alleged that the debtor in that case had been

guilty of material non-disclosure in his application for a protective certificate. It was

alleged that the debtor had entered into a family loan arrangement and had registered

charges against the principal private residence immediately after the aggrieved creditor

had obtained judgment against the debtor.

64. The High Court had found that the failure to disclose the existence of the charges and the

family loan agreement to the court on an application for the protective certificate

represented a material non-disclosure. The prescribed financial statement gave a “wholly

wrong impression” that there was a degree of valuable equity in the principal private

residence. The High Court further held that the aggrieved creditor had suffered an

“irreparable loss” within the meaning of Section 97(3), over and above the ordinary

statutory consequence of the issue of the protective certificate. The aggrieved creditor

had suffered a particular prejudice, not by reason of the date of the issue of the

protective certificate in itself, but because of the device that the debtor used to create

two legal charges on his principal private residence in the period leading up to the

application for protection.

65. The Court of Appeal approached the case on a narrower basis. It appears from the

approved note of the ex tempore judgments delivered on 22 June 2016 that the appeal

was determined on the basis that the application had been made to the High Court

pursuant to Section 97 alone and not pursuant to the High Court’s inherent jurisdiction.

See paragraphs [7] and [13] of the judgments of Ryan P. and Finlay Geoghegan J.,

respectively. Applying the criteria under Section 97(3), the Court of Appeal found that

the aggrieved creditor had not suffered any “irreparable loss” over and above the

inevitable consequences which flow from the issuing of a protective certificate.

Page 14 ⇓

66. Counsel submits that notwithstanding the outcome of the appeal to the Court of Appeal,

the approach adopted by the High Court (Baker J.) to material non-disclosure remains

valid. Counsel cites the following passages from the High Court judgment.

“36. The jurisprudence of the High Court and Supreme Court would suggest that the

court may exercise its jurisdiction arising from a material non-disclosure merely on

account of a desire to express displeasure or to effectively punish the person guilty

of non-disclosure. However, the exercise by the court of its jurisdiction to order

that a protective certificate not impact on a named creditor ought to be exercised

cautiously having regard to the long title in the Act which characterised the

legislation as one seen to be in the common good, as it could be said that the court

ought to be positively disposed towards the granting of a protective certificate if

such will permit the continued engagement of a debtor in the economic life of the

State. Further, the provisions of s. 97 are expressed in the negative and therefore

the onus is on the creditor to establish the non-disclosure.

37. I consider in those circumstances that the court would be unlikely, save in

exceptional circumstances, to make an order under s.97 merely on account of its

desire to express its displeasure, and that the court in exercising its jurisdiction

must weigh the various factors, and must also take the interests of all parties into

account. This is the essence of the discretionary power of a court, namely that the

court will not exercise its discretion on rigid grounds but will do so in the context of

all of the factors which it considers to be relevant.”

67. Attention is drawn to the fact that the grounds upon which a personal insolvency

arrangement may be challenged include the following at Section 120 (c).

“(c) a material inaccuracy or omission exists in the debtor’s statement of affairs (based

on the Prescribed Financial Statement) which causes a material detriment to the

creditor”.

68. It is submitted that this supports the argument that there must be material non-

disclosure before a protective certificate could be set aside.

69. It is suggested that, at its height, Tanager’s complaint is that the “comment box” in the

prescribed financial statement did not include a comment or a note in relation to the order

for possession. This did not amount to material non-disclosure.

70. Without prejudice to his primary submission that there was no material non-disclosure,

counsel submits—in the alternative—that even if there had been material non-disclosure,

then it would not be appropriate to “sanction” the Debtor by allowing the order for

possession to be executed pending the determination of the application for a personal

insolvency arrangement.

DETAILED DISCUSSION

71. Tanager’s application for leave to execute the order for possession—notwithstanding the

existence of the protective certificate—is predicated upon two intertwined arguments as

Page 15 ⇓

follows. The first argument is that the “sanctity” of a consent order must be respected.

The Debtor should not be permitted to undermine the order for possession by applying to

enter into a personal insolvency arrangement, and thereby availing of the benefit of a

protective certificate pending the determination of that application. The second argument

is that the Debtor’s failure to disclose the existence of the order for possession at the time

of the ex parte application for a protective certificate represents a material non-

disclosure. It is said that the appropriate sanction for this non-disclosure would be to

deny the Debtor the benefit of the protective certificate as against Tanager.

72. I propose to address each of these two arguments under separate headings below.

(1). ORDER FOR POSSESSION MUST BE RESPECTED

73. The first argument can be disposed of shortly. This is because it is premised on an

apparent unwillingness on the part of Tanager to face up to the reality of the amended

insolvency legislation. The Oireachtas has chosen to put in place a detailed legislative

regime for “orderly and rational” debt resolution. One of the objectives of this regime, as

reflected in the Long Title to the Personal Insolvency Act, is to allow insolvent debtors to

resolve their indebtedness and thereby facilitate “the active participation of such persons

in economic activity in the State”. The regime expressly envisages that “secured debts”,

such as a mortgage on a family home, may be reduced to an amount not exceeding the

market value of the security. Put colloquially, the Personal Insolvency Act allows for the

possibility of “writing down” mortgage debt, and of a debtor remaining in their family

home on the basis of a reduced principal sum. The balance will rank for a dividend, if

any, as an unsecured debt.

74. One of the key features of the legislative regime is the creation of a “breathing space”

whereby a period of time is afforded to a debtor and his or her personal insolvency

practitioner to formulate a proposal for a personal insolvency arrangement. This

breathing space is achieved by the grant of a protective certificate under Section 95 of

the Personal Insolvency Act.

75. The legal consequences of the issuance of a protective certificate are set out as follows at

Section 96(1).

“96.—(1) Subject to subsections (3), (4) and (5), a creditor to whom notice of the issue

of a protective certificate has been given shall not, whilst the protective certificate

remains in force, in relation to a specified debt:

(a) initiate any legal proceedings;

(b) take any step to prosecute legal proceedings already initiated;

(d) execute or enforce a judgment or order of a court or tribunal against the

debtor;

(e) take any step to enforce security held by the creditor in connection with the

specified debt;

Page 16 ⇓

(f) take any step to recover goods in the possession or custody of the debtor,

whether or not title to the goods is vested in the creditor;

(g) contact the debtor regarding payment of the specified debt, otherwise than at

the request of the debtor;

(h) in relation to an agreement with the debtor, including a security agreement,

by reason only that the debtor is insolvent or that the protective certificate

has been issued—

(i) terminate or amend that agreement, or

(ii) claim an accelerated payment under that agreement.

76. The purpose and effect of a protective certificate has been described as follows by the

High Court (Baker J.) in Re Nugent (A Debtor) [2016] IEHC 127.

“5. Section 95 of the Act of 2012 makes provision for the grant of a protective

certificate to a debtor who establishes the statutory proofs. The effect of the grant

of a certificate is that during its currency the debtor is protected from any action or

enforcement proceedings by his creditors, and by virtue of s. 96 of the Act a

creditor to whom notice of the issue of a protective certificate has been given shall

not initiate or continue legal proceedings, nor take any steps to secure or recover

payments or judgment, or on foot of any security. Whilst a protective certificate

remains in force a bankruptcy petition may not be presented, or, in a case where a

petition for bankruptcy has already been presented, may not be processed. The

issuing of a protective certificate is a matter of considerable benefit to a debtor in

that it gives breathing space in which to seek to come to an arrangement with

creditors, and avoid the less benevolent consequences of bankruptcy.”

77. Crucially, the protection against creditors afforded by a protective certificate extends even

to judgments or orders of a court. This is provided for under Section 96(1)(h): a creditor

shall not execute or enforce a judgment or order of a court against the debtor whilst the

protective certificate remains in force.

78. If an application for a personal insolvency arrangement is ultimately successful, the final

arrangement may include provision inter alia for a debtor to retain their principal private

residence and for a reduction in the principal sum. A practical example of this is provided

by the very recent judgment of the High Court (McDonald J.) in Re McNamara (A Debtor)

[2019] IEHC 622. On the facts of that case, a secured creditor (as it happens, Tanager)

had obtained an order for possession against the debtors in respect of their principal

private residence in April 2014. Notwithstanding this, the debtor subsequently made a

successful application for a personal insolvency arrangement. The arrangement was

ultimately approved by the High Court in August 2019 pursuant to Section 115A. As part

of the arrangement, a sum of excess of €1,700,000 was to be written off the mortgage

debt and would rank instead for a dividend as an unsecured debt.

79. Having regard to this legislative regime, the complaint made by Tanager in the present

proceedings, i.e. that it would be “fundamentally unfair” were the protective certificate

permitted to “derail and undermine the efficacy” of the order for possession, rather

Page 17 ⇓

misses the point. The precise purpose of the insolvency legislation is to provide for debt

resolution in the interests of the common good. In some instances, this purpose will have

precedence over other aspects of the common good such as the public interest in

ensuring the finality of litigation and the enforceability of court judgments and orders.

Section 96(1) (cited at paragraph 74 above) is comprehensive in its terms, and ensures

that a protective certificate is sweeping in its effect. Relevantly, it precludes a creditor

who has the benefit of a judgment or order from executing or enforcing that judgment or

order during the period of protection.

80. The fact that the order for possession had been made with the consent of the parties in

March 2019 does not alter the legal analysis. First, Section 96 makes no distinction

between judgments and orders arising following an adjudication on the merits by a court,

and those arising as a result of the consent of the parties. The section refers to

judgments and orders simpliciter. Its provisions thus apply to both types.

81. Nor can such a distinction be “read into” the section. It is clear from the structure and

language of Section 96 that it is intended to be comprehensive in its terms and captures

every conceivable step which a creditor might take to enforce a debt.

82. Secondly, there is no rational justification for distinguishing between (i) orders made

following adjudication, and (ii) orders made on consent. The public interest in ensuring

the finality of litigation and the enforceability of judgments applies with equal force to

both. In each instance, the Oireachtas has ordained that the finality of court orders must

yield in certain circumstances to the common good in ensuring orderly and rational debt

resolution.

83. In summary, Tanager cannot rely on the existence of the order for possession per se as a

ground for avoiding the protective certificate, or more generally, to defeat the application

pursuant to Section 115A which is currently pending before the Circuit Court. (The

separate complaint that the omission of reference to the order for possession in the ex

parte application for a protective certificate represented material non-disclosure is

addressed under the next heading below).

84. Tanager has also sought to rely on what it alleges is the poor payment history of the

Debtor. This allegation that the Debtor had not made payments pursuant to the

mortgage for a period of almost nine years certainly seems to have struck a chord with

the Circuit Court judge (as reflected in the passages from her judgment cited at

paragraph 40 above).

85. Any characterisation of the Debtor as a “strategic defaulter” is challenged by his counsel.

As summarised at paragraphs 58 to 60 above, counsel drew particular attention to the

explanation offered on affidavit for this period of non-payment.

86. It is unnecessary for the purposes of this appeal to make any determination on this issue.

This is because the conduct of a debtor in making or failing to make payments falls to be

determined at a later stage of the insolvency process. More specifically, the issue arises

Page 18 ⇓

for consideration in the context of the application for approval pursuant to Section 115A.

Sub-section 115A(10)(a) provides as follows.

“(10) In considering whether to make an order under subsection (9) , the court shall

have regard to:

(a) the conduct, within the 2 years prior to the issue of the protective certificate

under section 95, of —

(i) the debtor in seeking to pay the debts concerned, and

(ii) a creditor in seeking to recover the debts due to the creditor;”

87. The nature of the consideration required under this sub-section has been discussed in

detail in the judgment of the High Court (McDonald J.) in Re Featherson (A Debtor)

[2018] IEHC 683.

“25. The underlying purpose of the Act must also be borne in mind. As the long title to

the 2012 Act makes clear, the Act was enacted in the interests of the common good

with the objective ( inter alia) to ameliorate the difficulties experienced by debtors

and to enable insolvent debtors to resolve their indebtedness in an orderly and

rational manner without recourse to bankruptcy. While there are obvious limits to

the extent to which this underlying purpose can be taken into account, there may

well be circumstances where a debtor has a poor payment record during the

relevant two year period but who, on the evidence before the court, has

demonstrated a genuine intention to deal with his or her debts under a PIA which

appropriately addresses the payment of the debtor's liabilities, having regard to his

or her means, and which has a real prospect of securing a better outcome for the

debtor’s creditors than the likely outcome on a bankruptcy of the debtor. It would

be wrong, in my view, for a court to take an unduly ‘ box-ticking’ approach and to

dismiss every application under s. 115A where the debtor has a poor payment

record during the relevant two year period. In my view, that is not what s.

115A(10) has in mind.

26. That is not to say that there is not an obligation on the debtor to explain a poor

payment record. As I have sought to emphasise above, there can be no doubt that

there is such an obligation on the debtor. I do not intend to dilute the significance

of that obligation in any way. The practitioner/debtor bears the onus of proof in

applications under s. 115A. It is therefore essential that a poor payment record

should be appropriately explained on affidavit by the debtor. Nonetheless, even in

cases where the explanation may seem unsatisfactory or incomplete, the court

retains a discretion if there are countervailing considerations that apply such as to

persuade a court that, in all of the circumstances of the case, the s. 115A relief

should nevertheless be granted.”

88. These are all issues which can only properly be addressed in the context of an application

under Section 115A. They do not arise in the context of an initial application for a

protective certificate nor in an application for leave to execute pursuant to Section 96(3).

Page 19 ⇓

The complaints made by Tanager in this regard are thus premature, and must await

consideration at the proper time in the context of the pending Section 115A application.

89. Finally, there is no merit in the separate argument that the Debtor, as a consequence of

the order for possession, no longer holds an interest in the dwelling house amenable to

protection under the Personal Insolvency Act. The existence of an unexecuted order for

possession does not have the legal effect of divesting the Debtor of his interest in the

dwelling house. Tanager had not entered into possession prior to the grant of the

protective certificate, still less had it purported to exercise its power of sale. There is no

evidence before the court that Tanager has complied with Section 100 of the Land and

Conveyancing Law Reform Act 2009. In all the circumstances, the ownership of the

dwelling house remains with the Debtor.

(2). MATERIAL NON-DISCLOSURE

90. Tanager’s complaint that the Debtor was culpable of material non-disclosure gives rise to

two potential issues as follows. The first issue is whether or not there has been material

non-disclosure. In the event that this first issue is resolved in favour of Tanager, then

this presents a second issue, namely, what is the appropriate remedy for the material

non-disclosure. This requires consideration both of the procedural route by which the

complaint should be brought before the court—for example, whether by way of an

application pursuant to Section 96, Section 97 or the courts inherent jurisdiction—and the

nature of the substantive remedy to be provided—for example, should the protective

certificate be set aside for all purposes or only insofar as it affects the aggrieved creditor.

91. This second issue, obviously, only arises for consideration if the first issue is resolved in

favour of Tanager, and, for this reason, it is proposed to address the issues in strict

sequence.

(i). Has there been material non-disclosure?

Materiality

92. Before turning to a consideration of the nature of the non-disclosure alleged to have

occurred in the present case, it may be useful to say something about the concept of

“material” non-disclosure. The leading case on non-disclosure in the context of the

Personal Insolvency Act is that of the High Court (Baker J.) in Re Nugent (A Debtor)

[2016] IEHC 127. The judgment reviews the relevant authorities—including, in particular,

Bambrick v. Cobley [2005] IEHC 43; [2006] 1 ILRM 81 and Re Belohn Ltd,

[2013] IEHC 157; [2013] 2 I.L.R.M. 407—with enviable clarity. Baker J. then adopted a test

which emphasises the materiality of the non-disclosure, i.e. in the sense of its objective

potential to have influenced the court’s determination of the relevant ex parte application.

“51. It is not necessary for the purposes of this application that I should take a view as

to whether the PIP, or the debtor, deliberately sought to present the matter to me

in a way that points to a lack of bona fides. As a matter of law the test before me

is whether there was a significant and material failure to disclose matters which

should have been disclosed and the test is an objective one as to what could have

Page 20 ⇓

influenced me in the exercise of my jurisdiction in making the order ex parte. I am

satisfied that the test is met.”

93. A similar approach has been adopted by McDonald J. in Re Halpin (A Debtor) [2019] IEHC 87

wherein the court held that the omission to exhibit certain correspondence was not

“material” in that it did not have the potential to have affected the outcome of the ex

parte application for an extension of the duration of the period of the protective

certificate.

94. (For the sake of completeness, it should be noted that the range of relevant

considerations governing an application for a first or second extension of the period of

protection are broader than those governing the initial application for a protective

certificate. More specifically, on an application for an extension the court must consider

matters such as whether the debtor and the personal insolvency practitioner have acted

in “good faith and with reasonable expedition”, and whether the proposed arrangement is

likely to be accepted by the creditors. It follows as a consequence of the court’s enlarged

discretion on an application for an extension that the range of information which will be

“material” will be greater than in the case of the initial decision to issue a protective

certificate).

95. That non-disclosure must be material before it could provide a basis for setting aside the

grant of a protective certificate is confirmed by a consideration of the role of the court in

confirming or approving a personal insolvency arrangement. In contrast to its limited role

on an application to issue a protective certificate, the court has a significant role to play in

circumstances where either (i) a minority creditor is objecting to an arrangement

approved by a qualified majority at a creditors’ meeting, or (ii) a debtor is applying to

have an arrangement involving his or her principal private residence approved by the

court. Relevantly, in each instance one of the grounds of objection which may be relied

upon by a creditor is that there is a “material” inaccuracy or omission in the debtor’s

statement of affairs. This is provided for under Section 120(c) as follows.

“120. The grounds on which a Personal Insolvency Arrangement may be challenged by a

creditor under section 114 are, without prejudice to section 122, limited to the

following matters:

[…]

(based on the Prescribed Financial Statement) which causes a material

detriment to the creditor;”

96. (Section 120 is applied to an application under Section 115A by sub-section 115A(8)(b)).

97. These provisions confirm that not every inaccuracy or omission in a debtor’s statement of

affairs or prescribed financial statement is to have the consequence of disentitling a

debtor from obtaining a personal insolvency arrangement. Rather, an inaccuracy or

Page 21 ⇓

omission must be “material” and cause a “material detriment” to a creditor before same

will redound against the debtor.

98. These provisions also indicate that the appropriate time at which to raise an objection

that there has been a material inaccuracy or omission is at this stage when an

arrangement comes before the court for confirmation or approval. It can be inferred from

this that such matters should not normally be raised by way of an application to set aside

a protective certificate. This is because the nature of the consideration which the court

gives to the matter, and the actual consequences for a creditor, are less than those

arising at the final stages of the insolvency process.

99. The statutory position might be summarised as follows. The legislation envisages court

involvement both at the commencement of an application for a personal insolvency

arrangement, i.e. at the time of the application for a protective certificate, and at the

conclusion of the process, i.e. at the time of the hearing of objections to, or an application

for the approval of, an arrangement. The procedure governing each type of application,

i.e. ex parte or inter partes, and the range of matters to be considered by the court,

reflect the gravity of the respective decision which the court is making. The legal

consequences of a decision to grant a protective certificate on a temporary basis are less

severe than those of a decision to approve an arrangement which might, as in the

example of Re McNamara (A Debtor) [2019] IEHC 622 referred to earlier, involve the

reduction of a secured debt in excess of one million euro. It is unsurprising, therefore,

that a decision of the latter type should be heard inter partes and require consideration of

a wide range of factors.

100. The point of highlighting this—perhaps obvious—distinction is not to suggest that the

issue of a protective certificate does not impinge on the contractual and property rights of

creditors (especially secured creditors). It plainly does. Rather, the point is to explain

why it is that the hurdle to be met by a debtor in securing a protective certificate is less

than the hurdle at the final stages of the insolvency process. There will, of course, be

cases where the setting aside of a protective certificate will be justified because of a

material non-disclosure. It would undermine the objective of expedition which underlies

the legislation, however, if creditors were, as a matter of routine, to make applications to

set aside orders based on inaccuracies or omissions which are immaterial. A proliferation

of such applications would take up scarce court time unnecessarily, and ultimately delay

the final determination of the insolvency process. The Personal Insolvency Act provides

ample safeguards for creditors at the stage of an application to confirm or approve a

personal insolvency arrangement. These protections will, in most cases, make a separate

application to set aside a protective certificate unnecessary.

Assessment of materiality

101. An assessment of whether or not there has been material non-disclosure in the context of

any particular type of ex parte application necessitates identifying the criteria which

govern the determination of that ex parte application. On the facts of the present case, it

is necessary to rehearse the mechanics of an application for a protective certificate in

order to identify the relevant considerations governing the determination of the

Page 22 ⇓

application. This exercise will, in turn, illuminate the nature of a debtor’s duty of

disclosure.

102. The starting point for this analysis is Section 49. This section regulates the initial

interaction between a debtor and a (prospective) personal insolvency practitioner (“PIP”).

The debtor is required to submit a written statement disclosing all of their (i.e., the

debtor’s) financial affairs. This written statement then provides the basis for an initial

meeting between the PIP and the debtor. The form of written statement is prescribed

under the Personal Insolvency Act 2012 (Written Statement Disclosing All of the Debtor’s

Financial Affairs) Regulations 2015. There is no express requirement under the 2015

Regulations to disclose the existence of court proceedings, orders or judgments.

103. Once the PIP has been appointed under Section 49(3), the debtor is required under

Section 50 to provide information that fully discloses his or her financial affairs. The PIP

can then assist the debtor in completing a prescribed financial statement (“PFS”).

104. The form of a PFS is prescribed under the Personal Insolvency Act 2012 (Prescribed

Financial Statement) Regulations 2014. Again, there is no express requirement to

disclose the existence of court proceedings, orders or judgments.

105. These various provisions should be read in conjunction with Section 118 which sets out

the general duties and obligations of a debtor arising under Chapter 4 of the Personal

Insolvency Act. Relevantly, sub-section 118(1) provides as follows.

“118 (1) A debtor who participates in any process under this Chapter is under an

obligation to act in good faith, and in his or her dealings with the personal

insolvency practitioner concerned to make full disclosure to that practitioner of all

of his or her assets, income and liabilities and of all other circumstances that are

reasonably likely to have a bearing on the ability of the debtor to make payments

to his or her creditors.”

106. The procedure for making the application for a protective certificate is prescribed under

Section 93. One of the unusual features is that the application is made via the Insolvency

Service. The application is submitted by the PIP to the Insolvency Service. The

Insolvency Service examines the application, and, if satisfied that the eligibility criteria

have been met, the Insolvency Service will then refer the application to court for the issue

of a protective certificate.

107. The court—in this case, a specialist judge of the Circuit Court—is required to consider

whether the requirements of Section 91 have been met. These include, in particular,

consideration of the domicile or ordinary residence of the debtor; and confirmation of the

existence of a “secured creditor”; and confirmation that the debtor is insolvent and that

the debtor has completed a prescribed financial statement and has made a statutory

declaration confirming that the statement is a complete and accurate statement of the

debtor’s assets, liabilities, income and expenditure.

Page 23 ⇓

108. In practice, the application is normally determined on the basis of the papers as filed, i.e.

there is no oral hearing. The court does, however, have discretion to hold a hearing

where it requires further information or evidence for the purpose of its arriving at its

decision. Any such hearing is on notice to the Insolvency Service and the personal

insolvency practitioner concerned.

109. There is no requirement to put creditors on notice in advance of the application for a

protective certificate. To this extent, the application can be characterised as an ex parte

application notwithstanding that it involves a third party, i.e. the Insolvency Service. See

the judgment of the High Court (Baker J.) in Re Nugent (A Debtor) [2016] IEHC 127,

[29].

“29. The PIP argues that the application before me for the extension of the period of the

protective certificate was not truly an application ex parte as it was made on notice

to the Insolvency Service of Ireland. The fact that the application was not on notice

to the creditors does not, it is argued, make it an ex parte application. I do not

consider this submission to be well founded, as the application for the extension

may properly be described as ex parte in that the persons affected or likely to be

affected thereby were not on notice. An ex parte application is not merely one to

which no person or body is on notice, but one of which the person whose interests

are impacted is not on notice. I accept that the legislation and the Rules providing

for the making of an application were formulated in a way that permitted, or

perhaps even required, the application to be made ex parte to the court, but the

jurisprudence which I have referred to leads me to the inevitable conclusion that

any person whose interests are affected by the order may have a right to seek to

set aside such an order, even if that person might not be required by the statute or

the rules to be on notice. This result flows from the approach identified by Hogan J.

in Re Belohn Limited and Merrow Limited, where he held that the making of an

order ex parte without the availability of a remedy to set aside could not be

constitutionally sanctioned.”

110. See to similar effect the judgment of the High Court (McDonald J.) in Re Halpin (A

Debtor) [2019] IEHC 87, [79].

111. The allegation of material non-disclosure in the present case centres largely on the

manner in which the section of the prescribed financial statement headed “Liabilities –

Detail” had been completed on behalf of the Debtor. The form is prescribed under the

2014 Regulations.

112. Relevantly, there are a series of “fields” to be completed in respect of the “Principal

Private Residence Lender” as follows.

1. 1 Account number

1. 2 Account name

1. 3 Contact details (note 2)

1. 4 Current monthly payment to

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1. 5 Monthly repayments – actual

1. 6 Remaining term (months)

1. 7 Balance outstanding

1. 8 Is the liability joint and several?

1. 9 If no, state % liability

1. 10 Amount of debtor’s liability (derived field)

1. 11 Restructured? If yes, please provide details

1. 12 Current interest rate

1. 13 Comment

113. The prescribed financial statement filed in advance of the June 2019 application for a

protective certificate identifies an outstanding balance on the Mortgage of €1,250,457,

and a current market value of the dwelling house of €800,000. It also recites monthly

repayments of €3,777.

114. The complaint made by Tanager is that there is no reference at all to the fact that

proceedings had issued and an order for possession had been granted on consent by the

Circuit Court in March 2019. (As it happens, the non-disclosure extended to a factor

which might be thought to be in favour of the Debtor, i.e. the agreement on the part of

Tanager to “write down” the balance over and above the proceeds of any sale).

115. As appears from the earlier summary of the content of a prescribed financial statement as

per the 2014 Regulations, there is no express requirement upon a debtor to provide

information in respect of the existence of legal proceedings, judgments or orders relating

to his or her indebtedness. It is submitted on behalf of Tanager, however, that this

information should have been included as part of the “comment” field. Attention is drawn

to the fact that, within the same prescribed financial statement, the Debtor disclosed the

existence of a judgment mortgage in favour of Bank of Ireland. The court is invited to

draw the inference from this that the Debtor understood that the existence of court orders

and judgments should be disclosed.

Findings of the court on alleged material non-disclosure

116. For non-disclosure to be material, it must be capable of influencing the determination of

the ex parte application. The principal matter to be considered by the specialist judge of

the Circuit Court in determining the application in this case was whether the eligibility

criteria under Section 91 had been met. It is accepted by Tanager that these criteria

were met. In particular, it is accepted that the Debtor is “insolvent” and that there is a

“secured debt” (as defined).

117. Had the existence of the order for possession been disclosed, therefore, this could not

have affected the outcome of the application for the protective certificate. As explained in

detail at page 22 et seq. above, a personal insolvency arrangement can prevail over

existing judgments and orders. The existence of the order for possession per se is not,

therefore, fatal to the Debtor’s application for a protective certificate, nor, ultimately, to

his application for the approval of a personal insolvency arrangement pursuant to Section

115A. Strictly speaking, the existence or otherwise of a judgment or order is not a

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relevant consideration for the purposes of an application for a protective certificate. In

the circumstances, it cannot be said that there had been material non-disclosure.

118. It would be disproportionate in the absence of material non-disclosure to accede to

Tanager’s application for leave to execute the order for possession. The omission to

disclose the existence of the order for possession did not result in the Debtor obtaining a

benefit, namely the protective certificate, to which he was not otherwise properly entitled.

It is common case that the Debtor does, in fact, meet all of the eligibility criteria under

Section 91. The only purpose which granting leave to execute would fulfil would be to

sanction or punish the Debtor for his omission.

119. For reasons similar to those identified by the High Court (Baker J.) in Re McManus (A

Debtor) [2016] IEHC 279 (cited at paragraph 66 above), a court should be slow to punish

a debtor in this way. This reflects the public interest, as identified by the Oireachtas

under the personal insolvency legislation, in providing for “rational and orderly” debt

resolution, and the retention where reasonably practicable of the family home. It also

reflects the impact on innocent third parties, including, in this case, the Debtor’s four

minor children, and other creditors who might fare better in a personal insolvency

arrangement than in bankruptcy.

120. To grant leave to execute would result in a potential windfall to Tanager which is not

justified by the conduct of the Debtor. It is obvious from the approach adopted by

Tanager to these proceedings that it has a preference to realise its investment by way of

an immediate sale of the mortgaged property rather than to recoup its investment over

time by way of the receipt of monthly repayments in accordance with an approved

personal insolvency arrangement. There may well be good commercial reasons which

would justify such an approach. However, it is not necessarily the result envisaged by the

insolvency legislation. The Personal Insolvency Act, as amended in 2015, put in place a

legislative regime which allows for the possibility of a debtor seeking court approval of a

personal insolvency arrangement which would facilitate the retention of his or her

principal private residence. It is not a matter for this court to determine in the context of

the appeal under Section 96(3) whether, in the particular circumstances of this case, such

an arrangement is justified. The function of this court, in hearing this appeal, is confined

to the narrow question of determining whether the Debtor is entitled to the benefit of the

protective certificate pending the determination of the insolvency proceedings.

121. For the reasons outlined, I am satisfied that the omission of any reference to the order for

possession does not disentitle the Debtor to the interim protection provided by the

protective certificate. Nor does it disentitle him to the opportunity to have a

determination on the merits of his application under Section 115A, which application is

currently pending before the Circuit Court. Tanager will have an opportunity, if it so

wishes, to object to the proposed personal insolvency arrangement. Its grounds of

objection can, in principle, include complaint as to the manner in which the Debtor dealt

with his obligations in accordance with Section 115A(10).

(ii). Jurisdictional issues

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122. Given my finding that the Debtor was not culpable of material non-disclosure, it is not,

strictly speaking, necessary for the purposes of this judgment to address the jurisdictional

issues which arise. For the sake of completeness, however, I should record my

agreement with the approach adopted by the High Court in Re Nugent (A Debtor)

[2016] IEHC 127, [22]. More specifically, I agree that the High Court would have an inherent

jurisdiction to set aside a protective certificate which had been granted on the basis of

material non-disclosure. Alternatively, the court could exercise its statutory jurisdiction

under Section 96(3) to allow a particular creditor to enforce its security notwithstanding

the existence of the protective certificate. I reiterate that the non-disclosure complained

of on the facts of the present case comes nowhere close to justifying such a course of

action.

BREACH OF SECTION 118

123. Notwithstanding my finding that there has been no material non-disclosure, it is

nevertheless a cause of concern that the Debtor did not disclose the existence of the

Circuit Court proceedings and the order for possession to his personal insolvency

practitioner prior to the making of the application for the protective certificate. These

matters should have been brought to the express attention of the practitioner. The failure

to do so represents a breach of the Debtor’s obligations under Section 118. This section,

it will be recalled, imposes an obligation to disclose to a PIP “all other circumstances that

are reasonably likely to have a bearing on the ability of the debtor to make payments to

his or her creditors”. Had the Debtor disclosed this information to the PIP, then it seems

almost inevitable that the PIP would have ensured that reference to same was included as

part of the prescribed financial statement submitted in support of the application for the

protective certificate.

124. The appeal before me is confined to the question of whether the protective certificate

should, in effect, be set at naught by granting Tanager leave to execute the order for

possession. The observation below is therefore strictly by way of obiter dicta.

125. It would be unsatisfactory if there were to be no adverse consequences for a breach of

Section 118. Yet an order setting aside a protective certificate would be disproportionate

in the case of a non-disclosure which is not material. Perhaps a breach might be

addressed by way of an appropriate costs order. It might also be something which the

court might consider in the exercise of its discretion under Section 115A.

PROCEDURAL COMPLEXITY

126. Finally, I wish to say something as to the procedures adopted by the parties in the

present case. As appears from the procedural history set out at the beginning of this

judgment, Tanager’s complaint as to the manner in which the application for a protective

certificate was made has spawned a series of applications and appeals. The upshot of this

is that the complaint will, ultimately, have been considered by two judges at the Circuit

Court level and two judges at the High Court level.

127. Matters were further complicated by the refusal of the Circuit Court (Judge Linnane) to

grant a stay on her order of August 2019, and the subsequent refusal of Tanager to

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consent to a stay before the High Court. This resulted in the necessity of an application

to the High Court for a stay during the August vacation sittings. This could have been

avoided had Tanager taken a more reasonable approach to the application for a stay. It

is difficult to understand how there could have been any valid objection to a stay in

circumstances where (i) there were self-evidently good grounds of appeal; (ii) the Debtor

continued to make monthly repayments pursuant to the Mortgage; and (iii) the related

appeal had an early listing (14 October 2019), and the present appeal could have been

adjourned to that date to be case managed in the High Court Personal Insolvency List.

128. It is inconsistent with the objectives of the insolvency legislation that what was, in truth,

a net point of law, should give rise to such procedural complexity. As explained by the

High Court (Baker J.) in Re O’Connors (A Debtor) [2015] IEHC 320; [2015] 3 I.R. 434, it

is implicit in the legislative scheme that it be cost effective and expeditious. What

occurred in this case is the antithesis of that.

CONCLUSION AND PROPOSED ORDER

129. The appeal against the judgment and order of the Circuit Court of 15 August 2019 is

allowed in full. The order granting leave to execute the order for possession of 8 March

2019 will be set aside. The protective certificate continues in force.

130. I will hear counsel as to the appropriate costs order to be made.