A woman has lost a challenge to the rejection of her proposed personal insolvency arrangement following a dispute over the appropriate valuation of her home.
Start Mortgages had rejected the €180,000 valuation of the woman’s home in Birr, Co Offaly, provided last summer by an independent expert appointed by the Insolvency Service of Ireland (ISI), and advanced an alternative valuation of €230,000.
A Circuit Court judge later upheld Start’s objection to the woman’s arrangement, based on the €180,000 valuation, on grounds the woman’s personal insolvency practitioner (PIP) had not followed the statutory procedural requirements concerning valuation.
The woman then appealed to the High Court. The case concerned interpretation of section 105 of the Personal Insolvency Act which outlines how a secured property is to be valued for the purpose of the Act.
In her judgment, Ms Justice Marie Baker said she considered Start’s refusal to provide valuation documentation sought by the woman’s PIP to be indicative of a “lack of good faith” or meaningful engagement in the process of agreeing the market value of the property.
While she did not go so far as to say Start was trying to “hide” its valuation, as the debtor argued, Start’s approach was not that required by the Act.
However, the woman’s PIP had moved too quickly, without pursuing other steps provided for in the Act, to have the ISI appoint an independent expert, the judge found.
Based on those findings, she ruled the Circuit Court correctly found the €180,000 valuation was not a relevant and binding valuation for the purpose of the debt resolution process as it was not achieved in accordance with section 105.
‘Market value’
Earlier, she said the Act provides “market value” is to be decided by agreement between the PIP, debtor and relevant secured creditor. If agreement cannot be reached, the Act requires the sides to try and agree an appropriate independent expert to determine the market value. If they cannot, the next stage is the ISI can appoint an independent expert.
The circumstances giving rise to the power to appoint the ISI expert had not arisen here, the judge found.
Start had provided the woman’s PIP with its proof of debt in July 2016 and offered the €230,000 valuation figure but did not provide a formal valuation report. The PIP sought a formal report and claimed, by not providing that, Start was not engaging with the process in good faith as required by the Act.
Start then proposed the parties would try and agree on appointment of an independent expert and offered a panel of its preferred experts. The PIP rejected Start’s panel list and sought “without further ado” to have the ISI appoint an independent expert.
The judge said the provisions of section 105 were “mandatory” and she considered the legislature intended to involve the ISI only when the parties involved cannot reach a consensus.
