Tipp FM Legal Slot – 20th May 2015 – Monthly Wrap Up -Insolvency, Repossession and Actions of the Bank[soundcloud id=’207805206′]
John Lynch spoke to Seamus Martin on Tipp FM about interesting developments and cases in the area of Repossession and Insolvency.
Boyle and Anor v Coyle involved an application by the owners of two properties (one in West Cork, one in Dublin) where a receiver had been appointed.
The applicants sought an injunction preventing the receiver from selling the properties on the basis that the owners had made a complaint to the Financial Services Ombudsman which had not been dealt with when the matter came before the courts.
The case revolved around the bank’s handling of the debtors restructuring proposals. The debtor argued that the bank did not provide all information they had asked for and made a complaint to the Ombudsman under the Consumer Protection Code. The Consumer Protection Code holds that a resolution in these types of situations should be found if possible.
The bank however, took the view that although they delayed in dealing with some queries they had dealt with all requests sufficiently.
Interestingly the case was taken against the Receiver and not the Bank.
The court ruled that the Receiver could continue and would not grant an injunction on the basis if granted, the effective contest between the parties is likely to have been finally decided summarily and that there was a very great likelihood that this would effectively preclude the respondent from the opportunity of having his rights determined at trial.
Relief where banks do not comply with proper procedure
ICS Building Society v Lambert involved an appeal against a Court decision to grant repossession to the bank on the basis that the bank did not follow the relevant procedure set out in the Central Bank’s code of conduct to deal with those in mortgage arrears – the Mortgage Arrears Resolution Process.
The debtor here was a solicitor who had bought investment property and fallen into arrears of over €10,000 and the bank issued proceedings for repossession.
The Court ruled that the bank were within their rights to issue the proceedings and the debtor was wrong in not giving the bank a full picture of his financial position with them.
This case highlights the importance of communicating effectively with the bank and providing all information to them on your financial position.
The Bank Veto – How new proposals may change outcome in the courts.
The case of O’Callaghan [A Bankrupt] involved a debtor seeking bankruptcy on the basis that he had first tried to enter a Personal Insolvency Arrangement (PIA) to restructure the debt but was blocked by the Bank.
The PIA proposed by the Personal Insolvency Practitioner (PIP) involved restructuring the mortgage debt so as to ensure that there was a sustainable monthly repayment due in respect of secured debt and in effect writing off the excess of that sum as an unsecured debt.
The Personal Insolvency Act manadates that the courts, in deciding whether to grant bankruptcy, should have regard to whether a PIA would work.
In reaching its decision, however, the court held that it was not entitled to oblige a creditor to vote in favour of a PIA and whether their refusal was unreasonable was not a matter for court decision.
This case has now been superseded to some extent by proposals to allow an appeal of an unreasonable decision to be determined by the courts thus lessening the bank’s possible veto and assisting those who which to avail of PIA’s and return to long term solvency.