A Lucan car dealer has been held liable for more than €1.35 million under a bank loan despite the High Court finding that his solicitor had defrauded and deceived him in the underlying property dealings.
John Madden, principal of John Madden Car Sales, borrowed €1.33 million from National Irish Bank, now Danske Bank, in December 2005. The facility letter stated that the money was for further property acquisitions and identified a house at Coldwater Lakes, Saggart, also described as 8 Tassagard Drive, Citywest, as security.
Madden maintained that the real purpose was to acquire that property from his solicitor, Thomas Byrne, as compensation following the collapse of an earlier property deal. The court found, however, that Madden never told the bank this. Documents supplied to the bank represented the Saggart property as already belonging to him and described the funding as being for investment in other property.
The loan was paid to Byrne at Madden’s request. Madden received the keys and occupied the house believing he owned it. About six months later, he agreed to refinance it through Irish Nationwide Building Society and borrowed a further €1.4 million, expecting that money to discharge the National Irish Bank loan.
The judgment records that Byrne instead retained the refinancing money for his own benefit and had also mortgaged the property elsewhere without Madden’s knowledge.
Madden argued that the original loan should not bind him because he had acted under his solicitor’s undue influence and fraud, and because the bank should have discovered that Byrne, rather than Madden, owned the property.
Mr Justice Brian McGovern rejected those defences. He found Madden was an established businessman who had not been overborne by his solicitor. While the judge expressly found Madden had been a victim of Byrne’s fraud, there was no evidence that the bank knew or should have known of it.
The court also held that the bank was entitled to rely on the signed statement of affairs, solicitor’s undertaking and other documents presented in support of the loan. Madden was therefore liable for the agreed sum of €1,359,392.97.