Many of the statistics reflecting trends in Irish economic activity have remained constant over the past few years. GDP has been rising, unemployment has been falling and inflation has remained fairly static. The recent publication of the Courts Service Annual Report 2017 confirms a similar consistent pattern in creditor litigation and enforcement, for the calendar year 2017.
The traditional barometer of creditor activity in the courts, the volume of monetary judgments obtained by creditors against Irish debtors, in default of appearance or of defence, has been falling steadily, from a peak back in 2010. Creditors obtained 9,367 such judgments in 2017 across the District, Circuit and High Courts compared to 10,475 in 2016.
Judgment enforcement proceedings
This decline can also be seen in other areas of enforcement. The Report notes that there was a 10% drop in the publication of judgments year on year, as well as a 27% decrease in the number of instalment order applications issued in 2017. This is where a creditor applies to the District Court for an order compelling the debtor to pay the debt by fixed instalments. Finally, the total number of judgment mortgage certificates signed by the Irish Courts in 2017 stood at 1,118 representing a 38% decrease on the 2017 equivalent.
We have commented in previous debt recovery updates here and here that the lack of credit in the banking and business sectors generally during the years of economic recession in Ireland were reflected in creditor enforcement in the Irish Courts. The Report notes that this trend continued in 2017.
Indeed, these trends can also be seen in bankruptcy proceedings, where the Report notes that 454 debtors issued petitions to declare themselves bankrupt in 2017, as opposed to 559 in 2016. Creditor take up of bankruptcy fell also, with just 47 creditor petitions being issued – a decrease of 30% on 2016. There was a small increase of 10% in applications to the courts for the various debt resolution arrangements available under the Personal Insolvency Act 2012.
Residential property repossessions
We have previously highlighted that the main deviation from the downward trend of creditor litigation over the past few years has been that of residential mortgage enforcement. However, the volumes of these proceedings also, now seem to be in decline. Since, 2013, in order to get an order permitting it to repossess a defaulting customer’s Principal Dwelling House (PDH), a creditor has had to issue proceedings in the Circuit Court. This led to a surge in such cases, particularly in 2014:
Sales of residential mortgage loan portfolios by lenders have been well-publicised in recent times. There have been repeated calls for the closer regulation of the international investment funds, who are the staple purchasers of such portfolios. Whilst the level of mortgage arrears in Ireland has also steadily fallen since 2010, there remain many unresolved cases (which cases are invariably included in such portfolio sales) that suggest that the volume of litigation in this area will remain constant and may even rise.
Whilst the Report has noted that the volume of creditor enforcement has been falling, the rate of decline is not so pronounced, year on year, as it has been in the past. Since Ireland exited the EU/ECB/IMF bailout in 2013, the economy here has been recovering and indeed has grown significantly in recent years. Credit activity is invariably accompanied by credit default, so it seems inevitable that court-based remedies will be required by those who extend credit.
Although we expect to see a further leveling out in enforcement statistics in future Courts Service Annual Reports, we do not expect the dramatic declines seen in previous years. The extension of banking and business credit in Ireland since recovery has taken hold may well cause these numbers to rise in the not-too-distant future. However, at this remove it remains unlikely that debt recovery litigation and enforcement will return to pre-2008 levels.