Property developer Michael O’Flynn has won his legal battle against the personal insolvency agreement of former business partner John O’Driscoll.
A ruling by the Supreme Court on Thursday could mean that the personal insolvency agreement of Mr O’Flynn’s former business partner will have to go back before a court.
The court heard that the PIA may have technically expired so it will have to be considered what happens next.
The five-judge Supreme Court, with Mr Justice Donal O’Donnell presiding, ruled that the appeal be allowed.
Delivering the judgment of the court, Ms Justice Elizabeth Diunne said there was nothing in the Personal Insolvency Act which precludes a creditor who has not proved his or her debt when requested to do so by the PIP from doing so at a later stage.
The Supreme Court ruled Mr O Flynn had” the requisite locus standi” to lodge an objection to a PIA.
The judge said had the Oireachtas wished to exclude a creditor from proving their debt one would have expected that this would have been done in express terms by means of specific prohibition in the 2012 Insolvency Act "and not in some indirect or oblique fashion".
She was satisfied in the absence of express language to the contrary a creditor in the position of Mr O Flynn had the requisite locus standi to lodge an objection to a PIA.
The court’s decision will have ramifications for all future cases. The Supreme Court had agreed to hear Michael O’ Flynn’s appeal because it raised a matter of general public importance.
Mr O’Flynn had appealed a High Court ruling of 2022 preventing him from objecting to the Personal Insolvency Agreement (PIA) made in favour of his neighbour Mr O’Driscoll from Ovens, Co Cork. Mr John O’Driscoll is a brother of Mick O’Driscoll the former Irish rugby international.
The Supreme Court appeal which was heard over a day at the Four Courts earlier this year , centred on the interpretation of the 2012 Personal Insolvency Act, the meaning of the word creditor, and Mr O’Flynn’s entitlement to raise an objection.
Mr O’Flynn’s side contended the appeal raised issues of great significance to every creditor in every single insolvency application and affects the position of creditors in objections under sections of the Act. It said the appeal mandated an analysis of rights of creditors to object whether they proved their debt or not.
During the appeal Bernard Dunleavy, SC for Alan McGee, O’Driscoll’s personal insolvency practitioner (PIP) was asked what would happen if the Supreme Court appeal was successful.
Mr Dunleavy said it would expose the PIA, which the court heard had been approved last year, “ to be unravelled” and it would have to go back to the Circuit Court for further hearing.
Mr O’Flynn claims that Mr O’Driscoll allegedly owes him over €750,000 and was allegedly not insolvent when Mr O'Driscoll sought and was granted a PIA by the courts.
Mr O’Flynn claims that he advanced a loan to a pub business Mr O’Driscoll was involved in. As a result, it is claimed that Mr O’Driscoll became a signatory to a €2.2m loan guarantee in favour of the developer, and that the two became shareholders in the business.
Mr O’Driscoll rejects the claim that he was not insolvent. In July 2022, the High Court, upholding a decision previously made by the Circuit Court, ruled that Mr O’Flynn had no right to be heard in relation to the O’Driscoll PIA.
Mr Justice Alexander Owens agreed that Mr O’Flynn lacked the locus standi to be heard because, despite being invited by Mr O’Driscoll’s Personal Insolvency Practitioner to file a proof of debt, he did not do so.
The O Flynn side had argue before the Supreme Court the developer was still a creditor as he had not gone through a process.
His counsel Marthin Hayden SC said in the PIA Michael O’Flynn was there “with debt not proven €1” opposite his name. It was marked as a contingent liability.
Counsel said his side would claim that Mr O’Driscoll was not insolvent at the time.
In a statement outside court Michael O'Flynn said he had not taken the step to appeal or object lightly.
The statement read: "Firstly, I wish to thank the Supreme Court for considering the appeal, and I separately now thank the Court for the careful and detailed judgment on this important point of law for the entire personal insolvency regime.
I am very pleased that the Supreme Court has now found that the PIP was incorrect in arguing that I was not entitled to object, and that the Circuit Court and High Court were incorrect in their findings.
"Whilst my rights have now been vindicated, it must be noted that I did not take the step to object or appeal lightly, especially considering the parties involved. "
