The High Court has dismissed a claim by four businesspeople who said Bank of Ireland breached their loan contract by changing how it calculated interest on a commercial mortgage. The court found the agreement permitted the bank to switch from Euribor to its own Bank Cost of Funds rate after giving one month’s notice.
Mr Justice Barry O’Donnell delivered judgment on 18 December 2024. The plaintiffs, Sean Harte, Patrick McCarthy, John O’Meara and Geraldine Balfe, had claimed that the bank charged €738,440.24 more interest than it should have under the contract. That amount was agreed between the parties for the purposes of the proceedings.
The dispute arose from financing arranged in November 2009 to buy and develop an industrial site at Aerodrome Business Park in Rathcoole, Co Dublin. The original facilities were restructured in or around March 2010 into a single commercial mortgage repayable over 240 months. The loan was paid off in or around January 2017.
The plaintiffs said their agreement tied the interest rate to Euribor. In October 2011, the bank notified them that from 16 November it would replace that reference rate with BCOF. The bank said the change reflected increased funding costs and anticipated an increase of about 0.7 percentage points. The plaintiffs disputed the bank’s right to make the change but continued repayments under protest while reserving their rights.
At trial, the plaintiffs relied only on breach of contract. The judge said the issue was therefore one of interpreting the written agreement objectively, rather than deciding what the parties had privately intended or understood during negotiations. The contract included a clause allowing the bank, at its “absolute discretion”, to change the method of calculating interest and the interest rate, with one month’s prior notice.
The plaintiffs argued that the clause allowed changes to account for changes in market conventions, but not changing market conditions, and that it concerned calculation mechanics such as the day-count method rather than replacing Euribor. The judge rejected that interpretation. He found that “or otherwise” meant the bank’s discretion extended to other reasons, and that the clause allowed a change to the interest reference rate. He also found the bank had given the required prior notice. No separate legal or regulatory bar to the change was argued.
The court dismissed the claim. The judge gave a provisional view that the bank was entitled to its costs and listed the matter for 15 January 2025 to hear any submissions on costs and make final orders. The judgment therefore did not make a final costs order.