The High Court delivered judgment yesterday 05 October 2017, in one of two keenly awaited cases concerning the manner in which Section 115A Appeals are commenced and appealed to the High Court. The High Court has held that the correct and only party to bring such an appeal is the PIP and not the Debtor.
The instant case was determined in the Circuit Court in June, in favour of the Objecting Creditor. The Debtor then appealed this decision to the High Court. In the course of this Appeal the Objecting Creditor had made a preliminary objection that the Appeal to the High Court from the Circuit had not been properly constituted as it had not been brought by the PIP, but had instead been brought by the Debtor himself. The PIP was the moving party of the application in the Circuit Court. However, in respect of the appeal to the High Court itself, the Debtor was the moving party.
Rationale of the Court
In coming to this decision; the Court first examined how the Section 115A process is initiated. Section 115A (1) states; “ where- (a) a proposal for a Personal Insolvency Arrangement is not approved in accordance with this Chapter, and (b) the debts that would be covered by the proposed Personal Insolvency Arrangement include a relevant debt, (c) the personal insolvency practitioner may, where he or she considered that there are reasonable grounds for the making of such an application, and make an application on behalf of the debtor to the appropriate court for an order under subsection (9)”. Ms Justice Baker stated “the language of 115A(1) is clear and vests in a PIP the power to make an application to the Court for a review under subsection (9). Counsel for the Debtor argued that the benefit of the application is to the Debtor and not the PIP. The Court acknowledged this but rejected the argument that the PIP’s role is “merely procedural”. The question posed in this case, is whether the Debtor has an independent or “free standing” right of appeal to the decision of the lower Court.
The Court went through some case law on similar provisions from corporate insolvency, where legislation provides who may or may not bring certain applications. This case law stated fairly unambiguously that a Court did not enjoy a discretion to extend locus standi, to parties not specified in the legislation. Ms. Justice Baker followed that rationale today and stated the High Court, albeit obiter, that “in light of those authorities, and also noting the clear and unequivocal language in s.115A(1) itself, that an application for review by the court under s115A must be commenced by a PIP on behalf of a debtor, and may not be brought or instituted by a debtor himself or herself. A debtor is not an appropriate applicant.”
Having thus concluded that the PIP is the correct party to bring a Section 115A Application to the Circuit Court or Court of first instance, the Court then addressed who is the correct party to bring an appeal from a decision made in the Circuit Court. The Court initially examined an amendment to section 37 of the Courts of Justice Act 1936 which was brought about specifically for such appeals. That amended section states “an appeal shall lie to the High Court sitting in Dublin from every judgment given or order or decision made…by the Circuit Court…”. This amendment does not state the mode of such an appeal. It is silent on the point. It was on this silence that the Debtor’s hopes rested.
The Court then emphasised that its Jurisdiction to hear Circuit Court appeals was constrained by statute, and it was not hearing these appeals with its full original jurisdiction, as set out in the Constitution, but rather obliged to hear the appeals within the statutory confines of the Personal Insolvency legislation. The Court held that it “cannot hear and determine an appeal other than one which complies with the statutory procedural rules for the bringing of the decision under appeal…accordingly, I am of the view that in order to be properly constituted an appeal from a decision of a review by the court must, in accordance with the statutory provisions…be an application by a PIP.” The Debtor’s legal representatives submitted legal arguments around, the fact the legal aid board issues legal aid certificates to the Debtor and not the PIP. The Debtor’s counsel also submitted that there were constitutional arguments why the Debtor can bring the appeals to the High Court. Neither of these arguments were accepted by Ms. Justice Baker. The Court while accepting that access to the Courts was a constitutional right, highlighted that the Oireachtas is entitled to regulate how that access to the courts is effected. In short, it is entitled to specify how and by who, certain proceedings are brought.
The High Court held that the Debtor has no statutory standing to initiate a section 115A appeal Therefore the Debtor has no standing to bring an appeal from a Circuit Court decision to the High Court, as it is constrained by its jurisdiction.
The Court dismissed the Debtor’s appeal solely on this point. Finally the Court, did go some way to assuage the worries of PIPs that they would be liable to costs orders in cases where the PIP was unsuccessful. The Court stated that where a PIP lost a case, “it seems unlikely that a PIP would be subject to an award of costs, and the usual order which has been sought by successful creditors is that an order be made against the Debtor”. In stating this the Court highlighted that, the issue of costs was a matter exclusively within the discretion of the Court. Whether this will give enough reassurance to PIPs to bring these applications remains to be seen.
A further decision of the High Court on locus standi is awaited next week, while the Court also stated that it was open to hear submissions on substituting the PIP into the Appeal.
For more information please contact Andrew Croughan in our Personal Insolvency Department.