The Court of Appeal has dismissed Karen Tracey’s appeal against a High Court judgment requiring her and her former husband, George Tracey, to pay AIB Mortgage Bank €3,364,961 jointly and severally, plus costs.
The High Court entered judgment on 20 March 2013 over borrowing for the purchase of a Foxrock house called Hillside. Mrs Tracey alone appealed, asking the Court of Appeal to set aside the judgment and send the case for a full hearing. The appeal concerned whether her affidavit evidence showed a reasonable probability of a bona fide defence to the bank’s claim against her.
The couple bought Hillside as co-owners for €6.6 million at the end of 2006. The bank approved a €3.7 million loan. The facility letter described an eight-year term, with an arrangement that it would revert to a 20-year facility after drawdown. The bank also agreed to waive its requirement for life cover on Mrs Tracey, following a written request from the borrowers.
Mrs Tracey said the proceeds from the sale of the couple’s former Foxrock home contributed to the purchase. She maintained that her husband had assured her Hillside would later be transferred to her alone, without an encumbrance. She said she trusted him with the financial arrangements, signed documents presented to her, and understood that he would make the loan repayments. She also argued that the bank knew she could not service the loan and that it should be treated as non-recourse to her.
The Court of Appeal noted that Mrs Tracey had consulted her own solicitor about the sale and purchase before signing the loan acceptance. A letter from that solicitor referred to the proposed home for her and the children, the use of the former home’s sale proceeds, and a proposed declaration of trust in her favour. Those separate proceedings against her husband, in which she sought a declaration of sole beneficial ownership, had not concluded.
The court held that the facility letter made no provision for the loan to be non-recourse to Mrs Tracey. It also found that the loan was for purchasing a house in which she and the children would live, distinguishing it from commercial loans obtained by her husband in other proceedings. The court concluded that the matters she raised did not meet the threshold for a plenary hearing and that it was clear she had no defence to the bank’s claim.
The Court of Appeal therefore upheld the High Court judgment and dismissed her appeal. It did not determine the separate ownership proceedings against her husband.