The High Court has allowed James McGinnis to defend a claim by US Mainstream Renewable Power Inc for repayment of a $114,784 loan, finding a real probability of a bona fide defence under the Consumer Credit Act 1995.
In a judgment delivered on 3 September 2021, Ms Justice Niamh Hyland said conflicting affidavit evidence about the loan’s purpose and connection to Mr McGinnis’s employment could not be resolved on the company’s application for summary judgment. The court did not decide whether the Act applied or whether the loan was irrecoverable.
The company said it lent Mr McGinnis $100,000 in June 2017, when he was its employee and chief executive of Mainstream Capital, the investment and financing arm of its group. The written loan agreement set annual interest at 13.5%, compounded semi-annually, and described the loan as being for “personal reasons”. The company sought repayment after his employment ended in 2018. It was common ground that no repayment had been made.
Mr McGinnis argued that the loan was subject to the Consumer Credit Act and unenforceable because mandatory requirements had not been met. He said it was linked to his employment and that the principal means of repayment was to be his 2016 and 2017 bonuses. The company disputed that account, saying the loan was separate from his employment contract and was made after he experienced financial difficulties.
Justice Hyland said whether Mr McGinnis was acting outside his business when obtaining the loan, and whether the company qualified as a creditor under the Act, required further consideration. The available evidence was insufficient at this stage to rule out that the company could be a creditor. If the Act applied, questions would remain about compliance and the effect of any non-compliance.
The defendant also claimed unpaid bonuses of at least $300,000 and referred to share options. The judge did not decide whether any bonus was owed or whether those claims could support an equitable set-off. She said any separate claim for money allegedly owed would have to be identified in a defence as a counterclaim, if pursued. Defence counsel acknowledged that the share options were granted by a different company, making a counterclaim on that basis difficult.
The order gives Mr McGinnis liberty to defend the proceedings. It does not determine the loan’s enforceability, the bonus claims or any counterclaim.