Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

There is a very simple answer to the questions posed by Deputy Donnelly. Section 2(4) states: "On the expiry of any period of adjournment granted under subsection (2), the court may grant a further adjournment of the proceedings concerned where it considers that significant progress has been made in the preparation of a proposal for a Personal Insolvency Arrangement." Let us assume that any progress has been made on one side and that the creditor has not adequately engaged. Section 2(3)(d) refers to the conduct of the parties to a mortgage in any attempt to find a resolution. I am of the view that this is going to guide the courts in certain circumstances. Obviously, this legislation has not yet been enacted but despite the fact that there is no statutory obligation on them, even now judges are adjourning proceedings in order to give individuals experiencing difficulties an opportunity resolve them. In recent cases a number of judges actually encouraged engagement. Section 2(2) states that in any proceedings brought by a mortgagee seeking an order for possession of land to which the mortgage relates in a case to which this section applies, a court - without prejudice to any other power which a court may have to adjourn proceedings - may, of its own motion, etc., adjourn proceedings. The courts have an inherent power to adjourn proceedings.

In circumstances where if I were the owner of a principal private residence and my lender informed me that it wanted to repossess and if I consulted a personal insolvency practitioner and made an eminently sensible proposal, it must be remembered that in the background there are directions to the banks to engage with those who are in difficulty. They must engage not only in the context of considering the possibility of debt forbearance, but also, in appropriate cases, debt forgiveness. A borrower who is experiencing problems and who is able to truthfully inform a court about a constructive proposal he or she has put forward which makes sense in the overall background circumstances may find that a lender who has not been willing to properly engage may get into great difficulty with the courts. In such cases the courts may simply adjourn proceedings and tell everyone to go away and reconsider matters for a period of three or six months. What the courts cannot do is force a personal insolvency arrangement on anybody. This is because the fact that there must be agreement is the very essence of the personal insolvency legislation.

We are referring here to debt settlement and personal insolvency arrangements and the emphasis is on the term "arrangement". Of course, where a mortgage is involved it will be a personal insolvency as opposed to a debt settlement arrangement which will apply. Judges have all sorts of wonderful ways of relaying messages to people whom they believe to be recalcitrant. I am of the view that the Bill creates the legal backdrop to facilitate them in this regard. Judges may show reluctance to grant orders of possession in circumstances where the lender is behaving unreasonably. I accept that I have been talking for far longer than should have been the case but these are important issues.

I hope the architecture we are providing will facilitate that to which I refer. Ultimately, there is a matter of Central Bank oversight. The Central Bank has now required lending institutions to specifically engage in respect of this matter. There have been a number of years of debt forbearance, resulting in medium or short-term relief for many individuals who are in difficulty with their mortgages. The Central Bank requires that the institutions must engage in order to put medium and long-term arrangements that are viable in place. I do not believe it envisages that wholesale repossessions will occur in respect of family homes or principal private residences in circumstances where practical and sensible financial arrangements can be entered into, particularly in situations where, if a sale is forced and if there is negative equity, the lender will not recover its money in full and where there are certain matters which should be addressed. We are putting in place an interesting and important architecture which will allow the courts to assess the bona fides not just of those against whom repossession orders are sought, but also of those who seek such orders.

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