The High Court dismissed Patrick O’Donovan Jr’s application for judicial review of the Law Society of Ireland’s decision to compensate him for €18,822.63, the amount he had repaid on a mortgage loan. The Society had refused compensation for the remaining balance. Mr Justice Garrett Simons ruled on 9 July 2019 that the decision was neither unreasonable nor irrational and disclosed no error of law.
The claim arose from a 2008 property purchase that did not proceed. O’Donovan said his former solicitor, Alexander Gibbons, advised him to borrow €190,000 from Allied Irish Banks plc (AIB), then drew down the loan and misappropriated the money. The judgment records that the parties believed Gibbons owned the land, but he did not hold proper title. Gibbons had acted for O’Donovan in the conveyancing while also purporting to sell the land to him; the judge described that as a conflict of interest. Gibbons was struck off the Roll of Solicitors in 2012.
AIB issued summary proceedings against O’Donovan in August 2015, but they had not advanced beyond the issue and service of a summons. The Society’s July 2018 decision allowed compensation for the €18,822.63 already repaid and refused payment for the outstanding balance, €171,177.37. It said the evidence did not establish that a loss for the balance had crystallised. O’Donovan argued that the distinction between repayments made and the unpaid balance was arbitrary, and that the Society had wrongly added a “crystallised loss” test not found in the legislation.
The judge said the Society was entitled to consider whether O’Donovan would ultimately have to repay the full balance. The material before it showed that AIB’s proceedings had not progressed since 2015, and there was no evidence of the bank’s precise position. At the hearing, counsel said there had been more recent correspondence from AIB, but it had not been included in the court papers. The possibility that the bank might accept a reduced settlement gave the Society a rational basis to distinguish repayments already made from the contingent liability for the balance.
The judge held that “crystallised” was used to explain the difference between a sustained loss and a contingent liability; it did not show that the Society had misinterpreted the legislation. He noted that the Society had left open the possibility of a fresh application based on new evidence, including if AIB reactivated its proceedings or offered to accept a lower sum in full settlement. The court’s ruling upheld the Society’s decision on the material then before it; it did not determine O’Donovan’s ultimate liability to AIB or award compensation for the outstanding balance.