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Judge 'disheartened' by level of challenges to cases dealing with personal insolvencies

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Mr Justice Denis McDonald

Mr Justice Denis McDonald

Mr Justice Denis McDonald

A High Court judge has expressed concern at the number of legal challenges being mounted against personal insolvency arrangements.

Mr Justice Denis McDonald said it was "disheartening" a system intended to be "relatively simple" had been "beset by legal issues and contested cases". The judge said he believed there would be "much less scope for legal challenge" if there could be "greater confidence" in the reliability of evidence given in such cases.

This would require "a change of approach" by personal insolvency practitioners and those advising them, he said.

Mr Justice McDonald made the comments in a case where exhibits to an affidavit in support of a personal insolvency arrangement (PIA) post-dated the swearing of the affidavit.

This "extremely troubling issue" prompted the judge to make a wasted costs order of €6,000 against Ashtown Gate Solicitors, which was involved in the preparation of the affidavit. The sum is to be paid towards the costs of solicitors for Pepper Finance Corporation or a charity of the finance business's choosing.

Despite the affidavit issue, the judge approved a PIA writing off over €272,000 in debts owed by self-employed upholsterer Mark Fay (54), of Puttaghaun, Tullamore, Co Offaly.

The issue was one of a number raised by Pepper in an appeal against a Circuit Court decision to approve the arrangement. However, Keith Farry BL, for Mr Fay, successfully argued that the PIA should remain undisturbed.

In an 80-page ruling, the judge also raised concerns over the filing of affidavits by practitioners containing "formulaic averments" which "frequently bear no relationship to the facts of a particular case".

He said it was in the interests of the common good that the personal insolvency system "operate effectively and efficiently and with a minimum of legal cost". Mr Justice McDonald said: "If that can be achieved, it will be possible to ensure that indebtedness can be resolved in a fair and appropriate way and adverse consequences for economic activity in the State kept to a minimum. That is particularly apposite in light of the current Covid-19 outbreak and the consequent economic cost that is likely to arise."

In Mr Fay's case, all of the parties involved accepted an affidavit sworn by him on May 22, 2018, was "tainted" when two exhibits to it were created after the affidavit was sworn.

It could not be relied upon and a new affidavit had to be sworn in its place.

Mr Justice McDonald said Mr Fay could not be personally blamed for what occurred.

The judge said an affidavit from Bill Holohan, as principal of Ashtown Gate Solicitors, showed the gathering of evidence "was deputed to a person with no proper understanding of the relevant requirements".

He said Mr Holohan had been entirely frank with the court, accepted failings in not having an appropriate level of supervision, and had taken steps to ensure this did not reoccur.

Irish Independent