Judge says fairer debt settlement system needed for Covid-19 economic crash

‘All too common’ copying and pasting from affidavits criticised in personal insolvency cases

The High Court  judge made his comments in a ruling that approved a personal insolvency arrangement which has  allowed a 51-year-old man  write off debts of almost €300,000.

The High Court judge made his comments in a ruling that approved a personal insolvency arrangement which has allowed a 51-year-old man write off debts of almost €300,000.


A High Court judge has criticised the “all too common” practice of practitioners copying and pasting paragraphs from court papers in other cases without regard of the facts of individual cases.

Mr Justice Denis McDonald said in a judgment in one personal insolvency case that the practice was a symptom of solicitors failing to consider properly their obligation to place evidence in insolvency cases and the “need to treat the swearing of affidavits with the necessary solemnity.”

Fees paid to solicitors by the Legal Aid Board “are pitched at a level that has induced some solicitors to delegate the necessary work to a relatively junior level within their firms,” he said.

“If that is so, it does not justify the taking of short cuts or the delegation of work to personnel who lack the necessary experience or understanding of what is required,” he added.

In wide-ranging further comments on the State’s personal insolvency regime and the considerable litigation between creditors and debtors occupying the court, the judge reminded practitioners that they were independent intermediaries requiring them to apply appropriate ethical standards.

He said that there were “far too many legal challenges occupying the time of the courts and increasing the overall level of costs involved.”

“It is disheartening to see how a system which was intended to be relatively simple and straightforward has become so beset with legal issues and contested cases,” he said.

‘Common good’

The judge made his comments in a ruling that approved a personal insolvency arrangement - a mechanism to restructure the finances for an insolvent individual - that has allowed a 51-year-old man Mark Fay of Tullamore, Co Offaly, to write off debts of almost €300,000.

The judge said he believed the personal insolvency system could operate with “much less scope for legal challenge” if there could be greater confidence in the reliability of evidence given in personal insolvency cases but that “a change of approach” by practitioners and those advising them was required.

It was “in the interests of the common good” - of both debtors and creditors - that the personal insolvency regime envisaged by the Oireachtas in the post-crash 2012 legislation operated effectively and efficiently and with minimum cost, said the judge.

“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,” he said.

“That is particularly apposite in light of the current Covid-19 outbreak and the consequent economic cost that is likely to arise.”

Mr Fay, who works as an upholster and an agent for an insurance company, amassed debts of more than €547,000 after his business got in difficulty due to competition from other stores and the 2008-09 financial crisis.


The bulk of his debts were owed to financial institutions, including Pepper Finance and AIB. He also owed smaller amounts to a supplier when he had formerly operated his shop, and to Revenue.

The terms of his personal insolvency arrangement (PIA) include that he retains his home, which is valued at €200,000, and that his creditors do better than if he was adjudicated a bankrupt.

Under the terms of his PIA his secured debt of €482,000 owed to Pepper Finance Corporation Ireland DAC in respect of his property, will be written down to €210,000 which he will continue to pay off.

The remainder of what he owes to Pepper will be written down and treated as unsecured debt. Other unsecured creditors, will receive a dividend of 2 cent in the euro, compared to nil if Mr Fay was bankrupted.

Pepper which acquired Mr Fay’s debt from ACC Loan Management, had appealed the Circuit Court’s decision to approve Mr Fay’s PIA.

Its appeal was brought on several grounds including that the property over which it held a mortgage was not a principal private residence as defined in the 2012 Insolvency Acts and that a majority of unsecured creditors had voted against the arrangement.

Mr Fay, represented in court by barrister Keith Farry, had argued that the PIA should remain undisturbed and the appeal should be dismissed.

In his judgement Mr Justice McDonald said he was satisfied to dismiss the appeal and approve Mr Fay’s PIA.

Wasted costs order

The judge also said he was making a wasted costs order against solicitors that had acted for Mr Fay’s personal insolvency practitioner.

This was because there had been a manifest failure by the firm, Ashtown Gate Solicitors, in relation to its handling of evidence in the case, including an affidavit sworn by Mr Fay and accompanying exhibits in 2018.

The firm, which accepted that such a costs order should be made against it, admitted its shortcomings in this, and several other insolvency cases, it had handled.

It told the court that following a full review it had taken steps to ensure there would be no repeat of what had happened.

The judge said that while taking into account the gravity of the failing, once the matter had been raised by the court the principal of Ashtown Gate Bill Holohan had acted entirely properly and undertook a comprehensive review of his firm’s records.

The judge said the solicitor was “entirely frank with the court and accepted his own failings in not having an appropriate level of supervision over the personnel dealing with the swearing of affidavits.”

“It is clear that he has now taken steps to ensure that failings of this kind will not recur in the future,” the judge added.

However to mark the gravity of the situation in Mr Fay’s case the judge ruled that the firm should pay €6,000 plus Vat to Pepper’s solicitors, or at Pepper’s option make a donation in the same amount to a charity of Pepper’s choosing.

The judge also ruled that where there had been a similar shortcoming in a separate unrelated case they should make a payment of €2,000 plus Vat to the objecting creditor’s solicitors or make a donation to a charity.