The High Court has entered summary judgment for Kilsaran Credit Union for €94,584.62 over a €90,000 loan made to Mark Lowth in 2008.
In a judgment delivered on 14 April 2011, Mr Justice Hogan rejected Mr Lowth’s arguments that the loan was outside the credit union’s powers and that it had failed to comply with Irish League of Credit Unions rules. The court concluded that neither argument amounted to an arguable defence to the claim.
Mr Lowth, a qualified accountant and director of Danucci Ltd, applied for the loan after the company’s attempts to obtain short-term bank finance failed. The company needed bridging finance for relocation costs while awaiting a €90,000 Enterprise Ireland grant. The credit union told him it did not offer business loans and approved a personal loan in his name. The judgment records that the credit union knew the funds were intended to be lent on to Danucci.
The expected grant did not arrive. Danucci entered examinership in June 2009 and liquidation in September that year. The court noted that only a small portion of the loan capital had been repaid and that Mr Lowth was in default; those points were not disputed.
Mr Lowth argued that the loan was unlawful under section 35 of the Credit Union Act 1997 because it was, in substance, made to a non-member company. The judge held that the loan was made to Mr Lowth, who remained personally responsible for it, and that lending to a member so he could provide liquidity to a family based business could serve a productive purpose under the Act.
He also argued that the credit union had not provided the written loan approval notice required by Rule 46A of the League’s rules. The judge said it was unclear whether a borrower could enforce those rules, which formed a contractual arrangement between the credit union and the League. Even assuming Mr Lowth could enforce them, the written credit agreement contained the required loan details and notice, so the argument disclosed no arguable defence.
The court granted summary judgment for the claimed €94,584.62. It did not send the dispute to trial, having found neither legal argument sufficient to resist judgment on the summary application.