A couple have lost their appeal over a decision AIB is entitled to judgment against them arising from loans advanced more than 10 years ago to acquire development lands in Slovakia.
Thomas and Mary O'Callaghan, of Clonmore, Drumcollogher, Co Limerick, appealed after the High Court ruled last year AIB was entitled to recover some €466,757 against them.
The Court of Appeal (COA) said that sum will now be altered as a result of AIB’s decision to waive any claim for surcharge interest included in the sum claimed. The couple had disputed the surcharge claimed.
The precise amount of the altered judgment sum will be put before the COA on a later date after which final orders will be made.
In separate proceedings which were stayed pending the outcome of the COA appeal, AIB Mortgage Bank is seeking possession of the couple’s family home, part of the security for the AIB loans.
Giving the three-judge COA's judgment on Thursday, Mr Justice Robert Haughton dismissed the couple's appeal over the High Court finding they had not made out a credible defence to the bank's summary judgment claim such as would entitle them to a full hearing.
The bank sought summary judgment of some €463,757 in 2017 over sums it alleged were due and owing from loan facilities advanced in 2009 which restructured a loan package advanced in 2005.
AIB claimed the bulk of the 2009 facilities were repayable over six months, by July 2009, and were in any event repayable on demand.
In their appeal, the couple argued they had a defence on grounds including alleged reckless lending by the bank.
No previous experience
Mr O’Callaghan, a poultry farmer, had claimed he had no previous experience of transnational investment and sought advice from AIB after he saw advertisements in the Farmers Journal in 2005 concerning farming opportunities in Slovakia.
The intention was to develop 80 houses on development lands and farm some 1,100 acres of agricultural lands in Slovakia, the court heard.
He claimed his local AIB branch in Newcastlewest, Co Limerick, provided “flawed” advice and demonstrated a “cavalier” attitude. Internal bank documents seeking approval for the loans were “replete with mistakes”, including stating “clients have already secured sanction via eqty top up with IIB for 320k” when there was no such arrangement, he claimed.
He and his wife, a nurse, were “robustly” advised by AIB to provide a mortgage over their family home as security despite their being “somewhat nervous” about that, he also claimed.
Mrs O’Callaghan was not involved apart from signing relevant documents and AIB should have ensured she had the benefit of independent legal advice, it was claimed.
AIB denied the claims and denied it acted as an adviser to Mr O’Callaghan about the Slovakian investment. It claimed he had extensive business experience here, had determined to invest in Slovakia before approaching AIB and had obtained finance from a bank in Slovakia.
In the COA judgment, Mr Justice Haughton said there is no tort of reckless lending known to Irish law and it was not within the courts’ competence to invent such a tort.
Special relationship
The couple had not shown such special relationship with AIB or other factors as could ever give rise to an argument a court could find a duty of care, the breach of which gives rise to an entitlement to damages or other relief for ‘reckless lending’, he said.
The couple had not contradicted claims by AIB they were at all times advised to obtain independent legal advice, he said.
Addressing claims the couple, in relation to the loans, should have been treated as consumers and given the protection of the Consumer Credit Act, he said it was sufficient for the High Court to have decided the couple secured the borrowing for investment purposes and were therefore not consumers.
On those and other grounds, the appeal was dismissed.
