Matthews (A Debtor) Insolvency Act [2019] IEHC 750 (11 November 2019)

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IN THE MATTER OF THE PATRICK MATTHEWS (A DEBTOR)

AND IN THE MATTER OF THE PERSONAL INSOLVENCY ACTS, 2012 TO 2015

JUDGMENT of Mr. Justice Denis McDonald delivered on 11 November, 2019

1. This is an appeal from an order of the Circuit Court made on 11th January, 2019 refusing

an application made by Cormac Mohan, personal insolvency practitioner (“the

practitioner”) on behalf of the above named debtor Mr. Patrick Matthews for an order

pursuant to s. 115A of the Personal Insolvency Acts, 2012 (“the 2012 Act”) as amended

by the Personal Insolvency (Amendment) Act, 2015 (“the 2015 Act”) approving a

proposed personal insolvency arrangement on behalf of Mr. Matthews. The application

before the learned Circuit Court judge and the appeal to this Court were both opposed by

an objecting creditor namely Mars Capital Ireland No. 2 DAC (“Mars Ireland”).

2. While a number of issues were debated in the course of the hearing of the appeal, the

principal issue which falls for consideration in this case relates to the way in which the

proposed arrangement deals with a property of Mr. Matthews owned by him jointly with

his ex-wife which is subject to a mortgage in favour of Mars Ireland.

3. Mr. Matthews is a self-employed builder. He currently resides in a three bedroomed

detached property in County Louth (which I shall refer to as his family home). The

practitioner contends that, for the purposes of s. 115A, the family home constitutes the

principal private residence of Mr. Matthews. He has two dependent children and he

shares custody of those children with his ex-wife who lives (as described further below) in

Balbriggan. Before building his family home, he previously resided at a property he owns

at Riverbanks Drogheda (which I shall refer to as the Drogheda property). According to

an affidavit sworn by Mr. Matthews in the course of the proceedings before the Circuit

Court, the Drogheda property is no longer appropriate as a family home in circumstances

where it is well out of town and inaccessible for young children. Mr. Matthews explains

that it is a duplex property which has approximately thirteen large concrete steps leading

to the front door of the property. He says that his younger son is autistic and that, as a

consequence, he has severe difficulties in trying to balance himself. Mr. Matthews is

concerned that his younger son would find it difficult to cope with the flight of steps.

Along with his former wife, Mr. Matthews also owns a third property at Balbriggan County

Dublin (which I will refer to as “the Balbriggan property”). The former wife of Mr.

Matthews lives at the Balbriggan property together with her two children (when not

residing with Mr. Matthews).

4. The family home of Mr. Matthews is subject to a mortgage in favour of Mars Ireland. The

amount due on foot of that mortgage is €639,462.70. The current market value of the

family home is €220,000.00. On 10th April, 2017, Mars Ireland obtained an order for

possession of the family home. However, possession has not yet been recovered.

5. The Drogheda property is subject to a security in favour of Ulster Bank Ireland Plc (“Ulster

Bank”). The amount owed on foot of that security is the sum of €162,527.27. The value

of the Drogheda property is €175,000. The amount due by Mr. Matthews to Ulster Bank

6. In the case of the Balbriggan property, it is subject to a mortgage in favour of Mars

Ireland. As noted above, it is valued at €230,000. The loan in respect of that property is

not in arrears. The amount due on foot of that loan is €181,146. The loan is currently

subject to an interest only arrangement and, according to the material before the court, is

being serviced by payments made by the former wife of Mr. Matthews.

7. There is also a debt due to Bank of Ireland which is secured by a judgment mortgage over

Mr. Matthews’ family home. The amount due to Bank of Ireland is €90,732.01. There is

also a debt of €11,844.25 due to a management company in respect of management fees

and service charges in respect of the Drogheda property.

8. The key features of the proposed arrangement are as follows:-

(a) The principal sum due on foot of the mortgage in favour of Mars Ireland secured

over the family home is to be reduced to market value namely €220,000. The

balance of the sum due on foot of that mortgage is to be treated as an unsecured

debt and a dividend paid to Mars Ireland accordingly.

(b) The reduced principal sum due to Mars Ireland is to be repaid over an extended

term of 21 years at a five year fixed rate of 2.99% for years 2-6 of the

arrangement after which the rate applicable will be the market standard variable

home loan rate. There will, however, be a moratorium on mortgage repayments

for the first twelve months of the arrangement when an interest rate of 0% will also

the arrangement. If it is unsold after a period of six months, it will be surrendered

(d) The debt due to Bank of Ireland will be treated as an unsecured debt in the

arrangement and the dividend paid to Bank of Ireland on that basis;

(e) The debt due to the management company is an excludable debt within the

meaning of the 2012-2015 Act. It will be paid from the proceeds of sale of the

(f) In the case of the Balbriggan property, Mr. Matthews is to transfer his beneficial

interest in that property to his ex-wife who is a joint borrower. According to the

proposed arrangement in this case, she is not willing to sell the property and the

practitioner believes that to force a sale “could be a drawn out process resulting in

legal costs and no material benefit to Mr. Matthews creditors”.

The objection of Mars Ireland

9. Mars Ireland advances a number of grounds of objection as follows:-

(a) Mars Ireland contends that the proposed treatment of the secured debt owed to it

by Mr. Matthews in respect of the Balbriggan property is contrary to the provisions

of s. 103 (2) of the 2012 Act. That subsection prohibits the reduction of the

principal sum due in respect of a secured debt to less than the value of the security

in cases where the relevant security is not to be sold but instead is to be retained.

(b) Mars Ireland also submits that the arrangement is unfairly prejudicial to it contrary

to the provisions of s. 115A (9) (f) of the 2012 Act. In this context, Mars Ireland

draws attention to the effect of the arrangement insofar as the Balbriggan property

is concerned. While the loan in respect of that property is not currently in arrears,

Mars Ireland submits that it cannot be compelled to accept what is, in effect, a 50%

reduction in the parties liable to it on foot of the Balbriggan facility. In addition, it

is contended that the restructure of the loan in relation to the family home is unfair

to Mars Ireland as a consequence of the moratorium on payments for one year

while at the same time no interest is to accrue on the relevant loan. It is

contended that this is particularly unfair in circumstances where, at the same time,

it is proposed to write down the principal sum due in respect of that loan to the

market value of the family home namely €220,000. Mars Ireland also complains

that the interest rate will be reduced from the present variable rate of 4.7% to just

2.99% for five years following the expiration of the moratorium period. According

to para. 27 of the affidavit of Joe Carter sworn on behalf of Mars Ireland in the

course of the Circuit Court proceedings, the reduced rate of interest for this period

is “commercially unviable and would certainly prove loss making to the Creditor and

it is not one which is fair when one considers the uncertainty of the market going

arrangements as required by s. 115A (9) (g). Mars Ireland contests the suggestion

made by the practitioner in his certificate as to the result of the vote taken at the

creditors’ meeting that Ulster Bank and Bank of Ireland (who both voted in favour

of the arrangement) should be regarded as separate classes of creditor for this

(d) It is also alleged by Mars Ireland that, contrary to the requirements of s. 115A (9)

(d) of the 2012 Act, the costs of enabling Mr. Matthews to continue to reside in the

family home are disproportionately large given his circumstances and the

alternative accommodation options open to him including the option of retaining the

Drogheda property in place of the family home.

(e) Mars Ireland also makes the case that the arrangement is contrary to the

provisions of the 2012-2015 Acts in circumstances where the arrangement will

require Mr. Matthews to live below the minimum reasonable living expenses

prescribed by the guidelines issued by the Insolvency Service (“the ISI”).

(f) It is also suggested by Mars Ireland that Mr. Matthews failed to cooperate with it for

a period of six months prior to the Protective Certificate and that his repayment

history within a two year period prior to the issue of that certificate was so poor

that it does not display a capacity to comply with the terms of the proposed

(g) Mars Ireland also draws attention to the submission made by it to the practitioner

which envisaged the retention of a principal residence. Mars Ireland submits that

its proposal in this regard ought to have been considered by the practitioner.

10. Of the objections listed in para. 9 above, the question which occupied most time at the

hearing was that related to s. 103 (2) of the 2012 Act. I will therefore address that

question first. To the extent that it is necessary to do so, I will then address any of the

remaining issues to the extent that they require to be determined.

Section 103 (2) of the 2012 Act

11. Section 103 of the 2012 Act sets out a number of protections available for secured

creditors in personal insolvency arrangements. Section 103 (1) deals with circumstances

where an arrangement proposes the sale or disposal of property which is subject to a

security in favour of a secured creditor. It requires that, in such cases, the arrangement

must include a term providing for the payment to the secured creditor of an amount

which is at least equal to the value of the security (determined in accordance with s. 105)

or the amount of the debt (whichever is the lesser).

12. Section 103 (2) deals with circumstances where, under a proposed arrangement, there is

not to be any sale or disposal of a secured asset. Section 103 (2) is in the following

“(2) A Personal Insolvency Arrangement which includes terms providing for—

(a) retention by a secured creditor of the security held by that secured creditor, and

(b) a reduction of the principal sum due in respect of the secured debt due to that

secured creditor to a specified amount,

shall not, unless the relevant secured creditor agrees otherwise, specify the amount of

the reduced principal sum referred to in paragraph (b) at an amount less than the

value of the security determined in accordance with section 105.”

13. In order to properly understand s. 103 (2) it is necessary to have regard to a number of

definitions within s. 2 of the 2012 Act. In particular, it is necessary to have regard to the

definitions of “secured creditor” and “secured debt”. In the case of “secured creditor”,

that term is defined in s. 2 (1) of the 2012 Act as follows:-

“’secured creditor’, in relation to a debt, means a creditor of the debtor who holds, in

respect of his or her debt, security … in or over property of the debtor”. (emphasis

14. It seems to me to be very clear from this definition that, when the 2012 Act speaks of a

“secured creditor”, it is specifically referring to such a creditor of the debtor. That seems

to me to follow from the very plain words of the definition and in particular from the

words which I have highlighted in the definition set out in para. 13 above. Thus, when s.

103 (2) refers to a “secured creditor”, it is referring to a creditor of the debtor (in this

case Mr. Matthews). In turn, this has implications for the language used in para. (b) of s.

103 (2) which refers to “a reduction of the principal sum due in respect of the secured

debt due to that secured creditor to a specified amount”. In my view, that paragraph is

clearly referring to a reduction in the principal sum due in respect of a secured debt of the

debtor (in this case Mr. Matthews) due to the secured creditor (in this case Mars Ireland).

15. For completeness, the definition of “secured debt” in s. 2 (1) should also be noted.

There, a secured debt is defined as meaning: -

“a debt the payment for which is secured by security in or over any asset or property of

16. There is nothing in the definition of “secured debt” which would cause me to form any

different view as to the meaning and effect of s. 103 (2) (b) to that set out in para. 14

above. Having regard to the definition of “secured creditor”, it seems to me that the

reference in s. 103 (2) to a secured creditor must be a secured creditor of the debtor (in

this case Mr. Matthews). In the case of the Balbriggan property, the debt currently owed

by Mr. Matthews (along with his former wife) to Mars Ireland is a secured debt. Mars

Ireland is a secured creditor of Mr. Matthews in respect of that debt. Against that

backdrop, the question which falls to be determined is whether it can be said that the

proposed arrangement in this case contravenes s. 103 (2).

17. As noted above, the proposed arrangement in this case provides that Mr. Matthews

agrees to transfer his beneficial interest in the Balbriggan property to his former wife.

The practitioner said on p. 12 of the proposed arrangement that Mr. Matthews’ former

wife is not willing to sell the property and “I feel that to force this sale could be a drawn

out process resulting in legal costs and no material benefit to Mr. Matthews’ creditors”.

Mars Ireland contends that, in effect, this involves the writing down of the debt owed by

Mr. Matthews to Mars Capital on the security of the Balbriggan property to zero. In the

written submissions delivered on behalf of the practitioner, it is expressly stated that the

liability of Mr. Matthews to Mars Capital secured on the Balbriggan property will be

extinguished and that he will surrender his interest in the Balbriggan property to his

former wife. Nonetheless, an attempt is made in the submissions to distinguish the

“liability” of Mr. Matthews to Mars Ireland from a “debt” due to Mars Capital. However, I

do not understand how “liability” and “debt” can be distinguished in the manner

suggested. In essence, a liability to make a payment to a creditor constitutes a debt. In

the absence of some bar to recovery of a debt, there cannot be a “debt” without a

corresponding liability to make a payment to the extent of the debt.

18. The case is also made in the written submissions delivered on behalf of the practitioner

that the proposal in relation to the Balbriggan property makes practical, logical and

commercial sense. It was also submitted on behalf of the practitioner that the loan in

respect of the Balbriggan property is not in arrears. All payments that are contractually

due are being met in full and on time. The practitioner also draws attention to the fact

that the value of the Balbriggan property at €230,000 is more than the extent of the

liability (namely €181,146). The practitioner uges that Mars Ireland is not at risk in

respect of the property or the loan in those circumstances. The practitioner also contends

that the outcome for Mars Ireland would be no different in the event that Mr. Matthews

was adjudicated a bankrupt. The existence of these factors assists in explaining how the

practitioner came to make the proposal contained in the proposed arrangement in relation

to the Balbriggan property. However, while I can see that these considerations, at a

pragmatic level, support the position of the practitioner, the issue which falls to be

determined here is purely a legal one and, in particular, a question of statutory

construction. It involves a consideration of the proper interpretation of s. 103 of the 2012

Act. If the proposed arrangement is not in compliance with s. 103, the pragmatic

considerations highlighted by the practitioner cannot cure the non-compliance. The court

has no power to extend the terms of the statutory scheme to supplement what the

Oireachtas, in the exercise of its legislative function, has chosen to enact.

19. It is therefore necessary to consider the substance of what is provided for in s. 103 (2).

As outlined above, that sub-s. applies where a personal insolvency arrangement

envisages two matters namely:-

(a) The retention by the secured creditor of the security held by it; and

(b) A reduction of the principal sum due in respect of the secured debt.

20. In the written submissions delivered on behalf of the practitioner, the case is made that

the debt “is not being reduced” and that the asset “is not being retained”. In those

circumstances, it is submitted that s. 103 (2) is not “invoked whatsoever”. However, it

seems to me that there are a number of other aspects of the case made in the written

submissions which are difficult to reconcile with the fundamental submission that s. 103

(a) At para. 7 (8) it is submitted that:

“The reality of being in a positon to proceed to enforce a loan/security

against one borrower is easier than as against two separated borrowers”;

This seems to me to clearly acknowledge that the debt due by Mr. Matthews is to be

extinguished under the proposed arrangement.

(b) At para. 7 (9) it is submitted that:

“Whilst the recourse is limited to one borrower under the PIA, the Debtor has

no means to repay any further monies”;

Again this seems to me to acknowledge that the debt due by Mr. Matthews is to be

that the recourse to Mr. Matthews “would be extinguished in bankruptcy in the

exact same manner of (sic) the PIA”;

(d) In para. 8 of the submissions, an argument is made that the arrangement proposes

that the liability of Mr. Matthews: “to [Mars Ireland] secured on the Balbriggan

property be extinguished and that he surrendered his interest in the Balbriggan

[property] … to his former wife.

The case is made that “crucially” the word “liability” is used rather than the

word “debt”. However, for the reasons discussed in para. 17 above, I fail to

see how there can be said to be any proper basis to distinguish debt from

liability in this way.

(e) In para. 15, it is contended that the arrangement “expressly does not pay a

dividend to [Mars Ireland] in relation to the Balbriggan debt, if the debt was being

reduced… then there would be a dividend due and payable in relation to same”.

However, again, this demonstrates very clearly that the proposed arrangement

envisages that no payment whatever will be made to Mars Ireland by Mr. Matthews

in respect of the Balbriggan property debt. I cannot see how this point assists the

case which the practitioner seeks to make; and

(f) At para. 15 of the submission, it is argued on behalf of the practitioner that Mars

Ireland: “retains full recourse for the debt for the co-borrower and to the security.

The debt remains fully unaffected and it is not reduced”. Again, this seems to me

to demonstrate that the intended effect of the proposed arrangement is that the

debt due by Mr. Matthews to Mars Ireland will be extinguished.

21. Moreover, it is clear from a consideration of the terms of the proposed arrangement in

this case, that nothing will be paid to Mars Ireland in respect of the debt owed by Mr.

Matthews to it and secured on the Balbriggan property. Appendix 1 to the proposed

arrangement shows the amount due in respect of the Balbriggan property at

€181,146.00. Thereafter, on p. 4 of the same appendix, it is stated that Mr. Matthews

will “surrender his interest in the property to the joint owner who is his ex-wife as she is

not willing to sell it…”. Crucially, the repayment schedule on p. 5 of Appendix 1 shows no

payment being made to Mars Ireland in respect of the Balbriggan property. The

repayment schedule shows payments being made to Mars Ireland in respect of the

mortgage over the family home, and a dividend being paid to Mars Ireland in respect of

the “negative equity write down” on the family home together with payments being made

to Ulster Bank and Bank of Ireland by way of dividend. No payment whatever is to be

made to Mars Ireland in respect of the Balbriggan property.

22. It is therefore clear that the arrangement envisages that, if confirmed, Mars Ireland will

be entitled to look solely to the former wife of Mr. Matthews for repayment of the debt

due in respect of that property. It may seem incongruous that the joint and several debt

owed by Mr. Matthews to Mars Ireland can be reduced to nil while at the same time his

co-debtor can remain fully liable in respect of the same debt. However, that is the effect

of s. 116(6) of the 2012 Act. That was the view taken by Baker J. in Re J.D. [2017] IEHC 119.

I reached a similar view in Lisa Parkin [2019] IEHC 56. It is therefore clear that the

rights of Mars Ireland to pursue the joint borrower (namely Mr. Matthews’ former wife) in

respect of the joint and several debt owed in respect of the Balbriggan property could not

be affected by the proposed arrangements. However, as outlined above, Mars Ireland

complains that the arrangement envisages that, if confirmed, Mars Ireland will be forced

to look solely to Mr. Matthews’ former wife for repayment of the debt in the future and

that the arrangement clearly envisages the extinguishment of the debt due by Mr.

23. In substance, a proposal that, in the future, Mars Ireland will look solely to the former

wife of Mr. Matthews for repayment of the debt amounts, in my view, to the reduction of

Mr. Matthews’ debt to Mars Ireland to nil. That conclusion is borne out by the terms of

the written submissions delivered on behalf of the practitioner (in particular from paras. 7

(9), 7 (11), 8 and 15 all as quoted above). While I can see that there are obvious

pragmatic reasons for the approach taken by the practitioner, I fail to see how the

approach can be said to be consistent with s. 103 (2). In circumstances where the

arrangement envisages that, going forward, Mr. Matthews’ former wife will be solely liable

in respect of the Balbriggan mortgage, the arrangement clearly involves a reduction in the

principal sum due by Mr. Matthews to Mars Ireland in respect of that mortgage to zero.

That seems to me to necessarily follow from the fact that his liability, under the proposed

arrangement, in respect of that debt is to be wholly extinguished. It is a fallacy to

suggest that, under the proposed arrangement, the debt due by Mr. Matthews still exists.

What once was a joint and several debt owed by Mr. Matthews and his former wife would,

under the proposed arrangement, become a sole debt due by his former wife.

Accordingly, it must follow that the provisions of s. 103 (2) (b) are not satisfied in this

case. The principal sum due by Mr. Matthews to Mars Ireland in respect of the Balbriggan

mortgage is being reduced to zero which is plainly less than the market value of the

Balbriggan property.

24. Likewise, it is also a fallacy to suggest that the security is not being retained. The powers

of a practitioner to deal with secured property are carefully circumscribed by the

provisions of s. 103 of the 2012 Act. This is unsurprising given the extent to which the

2012-2015 Acts have the capacity to interfere with the property rights of secured

creditors. While the marginal note next to s. 103 (1) of the 2012 Act is not admissible as

an aid to the construction of the 2012 Act, there is no need to have regard to the

marginal note to understand that s. 103 has been enacted for the protection of secured

creditors. Section 103 essentially provides a practitioner with two modes of addressing

secured property. Under s. 103 (1), an arrangement can provide for the disposal of such

property (subject to the protections laid down in that subsection). Section 103 (2)

provides for circumstances where the secured property is not to be sold. In such

circumstances, the protections built into that subsection must be complied with. In

formulating proposals for an arrangement, a practitioner is not given any other options.

Section 100 (2) (f) makes clear that when dealing with secured debts, the arrangement is

subject to each of ss. 102-105. Thus, the provisions of s. 103 cannot be avoided. It

follows, in the present case, that when the arrangement purports to provide for the

transfer of Mr. Matthews’ interest to his former wife, any such transfer is subject to the

pre-existing mortgage in favour of Mars Ireland. In the absence of some statutory power

entitling a practitioner to formulate proposals for an arrangement providing for the

release of that mortgage, the mortgage remains in place. It is therefore “retained” within

the meaning of s. 103 (2). The subsection therefore applies. It follows that the

arrangement here contravenes the subsection insofar as it provides for the reduction of

Mr. Matthews’ liability to Mars Ireland in respect of the Balbriggan mortgage to nil.

25. In light of the conclusion which I have reached in relation to s. 103 (2), I do not propose

to address, in any level of detail, the remaining issues that were debated during the

course of the hearing of the appeal. I will do no more than make a number of brief

observations as set out further below.

The suitability of the family home

26. It is contended in the affidavit of Mr. Carter sworn on behalf of Mars Ireland that the

family home of Mr. Matthews is a substantial four bedroomed property where Mr.

Matthews resides alone save when caring for his two children. Mr. Carter also draws

attention to the fact that the family home is stated to be “unfinished”. Mr. Matthews has

responded on affidavit and explained why he believes that this property is the most

suitable property to be used as his family home. In particular, he has explained that,

contrary to what is stated by Mr. Carter, the property is a three bedroomed property.

Furthermore, he has explained that his younger child has been diagnosed with autism and

that he would find it very difficult to cope with a change of family home. Mr. Matthews

has also explained that the Drogheda property is not suitable for his younger son given

the fact that it is situated outside the town and has thirteen large concrete steps to the

front door. Mr. Matthews says that this would create difficulties for his younger son who

finds it very difficult to balance himself.

27. In my view, it would be important in cases of this kind where an issue is raised about the

suitability of a particular property that appropriate evidence is placed before the court to

explain and, where possible, justify the retention of that property. Here, there were two

properties which potentially could be used as a family home namely the home described

in para. 3 above and the Drogheda property. Mr. Matthews has provided evidence which,

on its face, would appear to be capable of justifying the retention of the family home.

However, in my view, if this issue remained alive, it would be advisable for the

practitioner to ensure that more comprehensive evidence should be placed before the

court in relation to the medical condition of the younger son. I wish to make it very clear

that any concerns about the confidentiality of that information could be appropriately

addressed. Thus, any medical evidence could be provided in the form of a sealed up

confidential exhibit which would be seen only by the court and by the objecting creditor

and would not be read in open court.

The allegation of unfair prejudice to the objecting creditor

28. In his affidavit, Mr. Carter raises a number of concerns in relation to the manner in which

the debt due to Mars Ireland in respect of the family home of Mr. Matthews is addressed

under the proposed arrangements. As noted in para. 9 (b) above, Mars Ireland submits

that the arrangement is unfairly prejudicial to it in circumstances where the arrangement

envisages that it would be compelled to accept what is, in effect, a 50% reduction in the

parties liable to it on foot of the Balbriggan facility. Having regard to the analysis set out

in paras. 17-23 above, I believe there is significant force in the submission that the

extinguishment of the debt due by Mr. Matthews to Mars Ireland does give rise to unfair

prejudice. In light of the view which I have formed in relation to s. 103 (2), however, I

do not believe that it would be appropriate to make any finding to that effect. I should

also make clear that, before any finding could be reached, it would be necessary to

consider the position in the event of the bankruptcy of Mr. Matthew. In this context, it

was strongly urged by counsel for the practitioner that, in a bankruptcy, Mr. Matthews

would effectively lose the interest he has in the Balbriggan property.

29. It is also suggested, in para. 27 of Mr. Carter’s affidavit, that the rate of interest

proposed is “commercially unviable and would certainly prove loss making…”. In my

view, the evidence which has been presented on behalf of Mars Ireland in this regard is

not sufficiently detailed or comprehensive to enable a court to form the view that the

arrangements proposed will cause significant loss to Mars Ireland. In my view, much

more comprehensive evidence would be required in order to demonstrate the extent of

the loss which Mars Ireland suggests it would suffer under the proposed arrangements.

The suggestion that, under the arrangement, Mr. Matthews will be required to live

below the reasonable living expenses suggested in the ISI guidelines.

30. This is an issue which I have previously addressed in my judgement in Tadhg Hurley

[2019] IEHC 523 and I therefore do not propose to say anything further about the issue

here. It is unnecessary to do so in circumstances where I have already decided this

appeal against the practitioner on the basis of s. 103 (2) of the 2012 Act.

The conduct of Mr. Matthews in the period prior to the issue of the protective

31. There is a significant dispute, on the affidavits, as between what is said by Mr. Carter, on

the one hand, and by Mr. Matthews on the other. In these circumstances, and in light of

the fact that I have already decided this case against the practitioner on the basis of s.

103 (2) of the 2012 Act, I do not believe that it would be appropriate for me to say

anything further about the conduct of Mr. Matthews in the period prior to the grant of the

protective certificate.

32. In my view, contrary to the case made by Mars Ireland, Ulster Bank and Bank of Ireland

(both of whom voted in favour of the arrangement) should be regarded as a separate

class of creditor to Mars Ireland itself. In this context, Mars Ireland holds security over

the family home of Mr. Matthews which, on the basis of the evidence before the court,

constitutes his principal private residence. In light of the provisions of s. 99(2) (h) and s.

104(1) of the 2012 Act (both of which make clear that, save in exceptional circumstances,

a personal insolvency arrangement should seek to preserve the ability of a debtor to

remain in his or her principal private residence) the rights of the holder of security over

such a property are capable of being affected in a uniquely different way to the holders of

security over other property of a debtor. As the decision of Baker J. in Sabrina Douglas

[2017] IEHC 785 makes clear, the unique way in which the holder of security over a

principal private residence is affected by the provisions of 2012 – 2015 Acts has the

consequence that such a creditor should be considered to fall into a different class to

other creditors of a debtor.

33. In light of the view which I have formed in relation to s. 103 (2) of the 2012 Act, it is

clear that I must dismiss this appeal. In my view, the arrangement proposed by the

practitioner in this case is not consistent with s. 103 (2) of the 2012 Act and therefore is

not capable of being confirmed by the court.

Result: The appeal against the refusal by the Circuit Court of the application under S115A of the Personal Insolvency Act 2012 has been dismissed and the order of the Circuit Court has been affirmed.'

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