The High Court has ordered five borrowers to repay Allied Irish Banks plc after finding that the bank’s June 2010 demand for payment on a development loan was valid. The judgment does not specify the amount of the order.
The bank had claimed €10,676,158.76 plus continuing interest. At the hearing, it said the balance including interest was €12,059,522.06. The judgment, delivered by Ms Justice Iseult O’Malley on 21 May 2015, records that the bank sought repayment under a joint loan facility.
The original December 2006 agreement provided that the €10.64 million purchase loan would be repaid from proceeds as residential units were sold. The court found that, while those terms remained in force, the bank could not demand repayment before the development was completed and sold, absent default. The loan also included a separate €6 million development facility, which was never drawn down.
In April 2009, all five defendants signed a new offer, although the bank had only a faxed copy. The court found the signatures were not disputed and held that the letter replaced the 2006 agreement. It removed the repayment term linking capital repayment to unit sales, withdrew the unused development facility and set a review or refinance date of 30 April 2010. The court held that the bank could not demand repayment before that date in the absence of default.
A further offer issued in December 2009 was not signed by all five borrowers. The bank’s March 2010 demand, based on that failure to sign, was invalid, the judge found. The bank later issued fresh demands in June 2010, after the April review period had expired. As no new agreement had been reached, the judge held that the general terms applied, allowing repayment on demand, and that the June demand was valid.
The borrowers had argued that the loan was limited to the secured property and that repayment remained tied to the development’s sale proceeds. The judge rejected the non-recourse argument and found each borrower jointly and severally liable under the general terms. She also rejected the first defendant’s arguments that he was a consumer for the purposes of the Consumer Credit Act 1995 and that the bank’s failure to put legal charges in place supported a contributory negligence defence.
The judgment states that the court would enter judgment for the bank. It does not set out a separate order amount.