The High Court ordered a solicitor firm to repay Allied Irish Banks (AIB) €2,992,500, plus interest, after finding that loan funds intended to secure a Wexford property were deliberately diverted to a separate purchase. The order followed a hearing on the bank’s claim over the firm’s failure to comply with its undertaking to put security in place.
AIB sanctioned a €3 million loan in May 2007 to Alan and Noreen Hynes to acquire Moongate, a property in County Wexford. The bank transferred €2,992,500, after an arrangement fee, to the defendant firm’s client account on 7 June 2007. The firm had undertaken to use the money to complete the purchase or discharge the existing mortgage, and to ensure AIB obtained a first legal charge.
The judgment found that Fergal Dowling, an employee handling the transaction, instead used the loan proceeds for a separate property purchase in Dalkey. The existing mortgage over Moongate was not discharged, and AIB’s intended security was never put in place. Dowling was not called to give evidence. The judge rejected his reported explanation that he had inadvertently overlooked the mortgage repayment, finding the diversion deliberate.
The firm argued that it should be allowed to resolve the breach by acquiring the existing mortgage and arranging for AIB to obtain security or sale proceeds. It also argued that requiring repayment of the full loan would be oppressive, and pleaded that AIB contributed to its loss by not appointing its own solicitor. AIB sought repayment of all sums due, relying on the deliberate diversion and the prolonged failure to inform it of the problem.
The court considered whether the undertaking could still be completed and whether the bank had suffered loss. The judgment noted obstacles, including unresolved Land Registry queries and uncertainty about the title and sale value of part of Moongate. It did not decide that late compliance was impossible. Instead, the judge held that the deliberate and fundamental breach, and the diversion of funds to a purpose AIB had not approved, made a Coleman-style remedy inappropriate. The court also rejected the contributory-negligence argument.
The order was for the defendants to repay the sums paid into their client account under the loan sanction, with interest until payment. The judgment did not order acceptance of the proposed mortgage or property-sale arrangements. It also did not set a final interest figure in the order.