The High Court has sent Allied Irish Banks plc’s €111,704.48 claim against Margaret Murphy to a plenary hearing, finding she had shown a fair and reasonable probability of a bona fide defence under the Consumer Credit Act 1995. The court did not decide whether she is ultimately a consumer or whether the loan is enforceable against her.
The judgment, delivered by Ms Justice Murphy on 16 June 2020, concerned a €95,000 loan made in September 2009 to Margaret Murphy and her husband, Timothy Murphy. It restructured debts arising from his building business. The couple secured the facility with a mortgage over 0.74 acres at Kilmihil, Ballingarry, Co Limerick, which they owned jointly.
The loan, default and amount claimed were not disputed. Timothy Murphy consented to judgment for the claimed sum and appropriate costs. His wife sought leave to defend, arguing that she entered the agreement as a consumer and was not given the statutory cooling-off protections. The judgment records that the facility letter did not provide for a cooling-off period. Under the Act, the court noted, non-compliance with the relevant requirements can make an agreement unenforceable.
Margaret Murphy said she was a nurse with her own income and bank account, had no involvement in her husband’s business and received no remuneration from it. AIB argued that the loan’s commercial purpose and her past appointment as director and company secretary of BGM Construction Ltd showed she was not acting as a consumer. The company was incorporated in 2001 and dissolved in 2004; the evidence before the court was that it had not traded.
The court held that the Act’s definition turns on whether a person was acting outside their business when entering the credit agreement. It said the law did not require a borrower to show that a loan met a need for personal consumption. It also rejected AIB’s argument that joint borrowers must have the same consumer status: on the facts, one borrower could be acting outside their business while the other borrowed for their business.
The judge found that Margaret Murphy had made a prima facie case that she was acting outside her business. The evidence about her former company role and an October 2013 letter to the bank did not displace that case at this stage. The court said the letter was ambiguous and that its meaning, along with the significance of the company role, could depend on oral evidence.
The court therefore remitted the claim against Margaret Murphy to a plenary hearing, where evidence can be tested. It did not enter judgment against her or finally determine her consumer status. The judgment’s stated consequence is that, if she establishes at the hearing that she was a consumer, that may provide a full defence under the Act. The court separately records Timothy Murphy’s consent to judgment.