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The concept of “unfair prejudice”

Section 115A(9)(f) refers to the PIA not being “unfairly prejudicial” to the interests of any interested party.

The jurisprudence in relation to unfair prejudice appears to be particular to the circumstances of the particular cases concerned. However it appears that the Court will in particular not allow a term which involves “warehousing” a part of the debt (ie. a term under which the creditor will not seek any repayments on the “warehoused” part of the debt for a particular period) if that term is regarded as being overly restricted – e.g. where the warehousing will last the lifetime of the debtor and have 0% interest, or where the creditor will be restricted in the future in renegotiating that warehousing.

A decision maker may wish to examine any term in relation to warehousing debt. However, they should be careful about refusing legal aid under this point without sight of the Notice(s) of Objection as it may be that the objection falls on other grounds. The Court has rejected any contention that warehousing itself runs contrary to the 2012 Act and for this reason it should also be noted that the mere fact that there is a term which involves warehousing will not necessarily act as a bar to the coming into effect of the PIA. Unfair prejudice must be caused by the term.

It also might be the case that terms which depart from the standard PIA terms may be examined. Again it may be difficult to do this in the absence of the notice of objection.

In Re JD & Personal Insolvency Acts [2017] IEHC 19 the High Court overturned a Circuit Court decision that where an estranged co-debtor did not consent to a mortgage the Court could not make an order as it would effectively change the terms of the mortgage. Ms Justice Baker held that the fact that the debtor was not the sole owner of the home concerned should not prohibit them availing of the section 115A procedure