The High Court has sent AIB Mortgage Bank and Allied Irish Banks’ claim against Kevin and Gillian O’Brien to a full plenary hearing, finding that the defendants raised an arguable issue over whether the 2010 loan facilities were supported by new consideration.
The banks had sought summary judgment for €2,621,702.19, said to be due under facilities offered in September and October 2010. Mr Justice Binchy delivered judgment on 8 June 2018. He did not decide whether the defendants owed the claimed sum, or whether they had established a defence at trial.
The dispute arose from borrowing connected to the purchase of No. 24 Clonfadda Wood in Blackrock in 2006. The couple borrowed €2.5 million to buy the property, which they intended to extend and use as a family home. They planned to sell their existing home, No. 23, and use the proceeds to reduce the borrowing. No. 23 was eventually sold in 2012 for €762,000, after an attempted auction in 2007 attracted no bidders.
The defendants said the 2010 facilities merely restructured existing debts and that no new funds were advanced. The banks relied on correspondence requesting drawdown, records showing credits and debits across loan accounts, and subsequent repayments. The judge said the records did not remove the substance of the defendants’ argument: the 2010 transactions appeared largely to transfer existing balances to new accounts. About €70,000 was advanced to clear a Bank of Ireland mortgage over No. 23, but the judge said it was arguable that this was done to enable the banks to take security over that property, rather than as consideration given to the defendants.
The judge concluded that the consideration issue alone disclosed an arguable defence requiring a plenary hearing. He noted that this conclusion did not determine whether the defendants remained indebted under the earlier 2006 or 2008 facilities, or what amount might be due under them.
The defendants had also raised issues about an alleged oral promise to fund an extension, the resulting delay in selling No. 23, and compliance with the mortgage arrears process. Mrs O’Brien relied on non est factum and alleged pressure and undue influence in connection with the loan documents. The judgment did not decide those issues. Having sent the case to a full hearing, the judge said the defendants could pursue the matters they had raised in resisting summary judgment. The court made no summary judgment order for the amount claimed.