The High Court has sent part of Allied Irish Banks plc’s €3.76 million summary judgment claim against Michael McPhillips to a plenary hearing, finding that he had raised an arguable defence concerning a €2.5 million loan connected to a Galway development site.
Mr Justice Barr ruled on 12 May 2016 that the bank could obtain judgment on four other loans. Those sums totalled €853,920 as of the bank’s demands on 13 November 2013. The bank could take judgment for that amount immediately, or the figures could be updated by agreement or affidavit to establish what was due on the judgment date.
The dispute over the 2006 loan arose from financing intended to let McPhillips acquire a 25% unencumbered interest in a 4.5-acre site on Tuam Road, Galway. In affidavits, McPhillips said he did not know that the bank had already lent money to the site’s owners, identified in the judgment as AOC and JMcN, and held a charge over the site. He alleged that the bank knew he could not obtain the unencumbered interest and failed to disclose its existing interest and the outstanding stamp duty.
McPhillips said €575,000 from the loan was paid to solicitors for AOC and JMcN and used to pay stamp duty, allowing the bank to perfect its security before the site was refinanced with Ulster Bank. He also said the bank took security over his property at 11 Abbey Gate Street, Galway, which was later sold by a receiver, and had not accounted to him for the sale proceeds. These were the defendant’s allegations, not findings that the bank had acted wrongfully.
The judge concluded that the defence concerning the €2.5 million loan was more than a bare assertion. He found that McPhillips had raised an arguable defence in equity because his proposed counterclaim arose from the same transaction as the bank’s claim and could support an equitable set-off if successful. The judge did not decide the underlying allegations or the counterclaim; he sent the claim concerning the 30 August 2006 loan for plenary hearing.
The bank’s application had sought summary judgment for €3,758,973.43 across five loan agreements. The other four sums were not contested. The judgment records the bank’s entitlement to judgment on those loans, while allowing the amount to be fixed at €853,920 or updated as described.