The Court of Appeal has dismissed AIB Mortgage Bank and Allied Irish Banks’ appeal over whether Kevin and Gillian O’Brien may argue at a full High Court hearing that two 2010 loan facilities lacked consideration.
The appeal concerned a limited procedural question: whether the couple should be allowed to pursue that specific defence at trial. The underlying bank claim will be determined at a plenary hearing in any event. The Court of Appeal did not decide whether the facilities were supported by consideration, whether the couple will succeed in their defence, or the amount they may owe under earlier loan arrangements.
The banks’ summary summons claim arose from facilities of €2.563 million and €774,000 offered in September and October 2010. The banks said the couple accepted the offers, drew down the facilities in December 2010, then fell into arrears. The High Court had found the couple’s contention that no consideration passed to them was arguable and sent the case to a full hearing. The banks appealed that decision.
The couple’s position was that the 2010 transactions were an internal restructuring of earlier borrowings, rather than new lending. The banks relied on the facility letters, account records, drawdown requests and repayments. But the Court of Appeal said the claim and supporting evidence did not clearly explain what consideration underpinned the 2010 facilities. It concluded that the banks’ case required the court to piece together the relevant documents to work out what benefit, if any, passed to the borrowers.
The appeal court distinguished the case from earlier decisions concerning loan restructurings. In those cases, the bank had given up its right to enforce earlier facilities as part of the consideration. Here, the banks had not pleaded or argued that forbearance to sue was the consideration for the 2010 facilities in the High Court. The court also refused to let the banks raise that argument for the first time on appeal, finding there was no evidential basis laid for it at the earlier hearing.
The judgment noted that, even if the couple establish their defence concerning the 2010 facilities, that would not necessarily mean they owe nothing under the 2006 or 2008 arrangements. Other matters—including the second defendant’s arguments about benefit and the first defendant’s proposed counterclaim over alleged promises to fund an extension—remain for the High Court. The court made no determination on those matters.
The appeal was dismissed. The court said costs would normally follow the outcome, but proposed staying execution of the costs order in the defendants’ favour until the High Court case is decided, subject to either party applying within 14 days.