Promontoria barred from pursuing doctor over Ulster Bank loan

Appeal court ends 12-year battle over bank use of savings to offset disputed €1.6m debt

A fund has been permanently prevented by the Court of Appeal from seeking to recover some €1.6 million from a doctor arising from a loan issued by Ulster Bank Ireland in 2007.

The three judge court on Friday granted an appeal by Neil Healy against a High Court decision that Promontoria (Aran) Ltd is entitled to recover that sum.

The High Court finding was made in 2018 following a rehearing of proceedings by Dr Healy, with an address at Lough Sheever Corprate Park, Mullingar.

The Supreme Court in 2015 had directed the hearing after allowing Dr Healy's appeal of a 2009 High Court rejection of his claim that Ulster Bank wrongly appropriated some €667,000 monies in a deposit account to set off against his disputed liability concerning a €3.4 million loan.


Dr Healy had claimed he was released from his guarantee of the €3.4 million loan during a meeting in August 2007 with an Ulster Bank official. The Supreme Court held that the 2009 High Court decision "failed to engage" with evidence of Dr Healy's mother which was supportive of her son's account of being given certain assurances by the bank official.

Dr Healy had planned to develop an old hospital facility at Coole in Westmeath in 2005 with a medical colleague. They secured a €3.4 million loan from Ulster Bank Ireland and both provided guarantees for the borrowings.

They agreed in 2007 to terminate the arrangement on the basis of Dr Healy receiving €2.2 million and his ex-partner taking over the assets and liabilities of the partnership.

The bank claimed that Dr Healy’s liability for the original loan was still in place and, in August 2008, deducted €667,210 from the €2.2 million against the debit balance outstanding on the €3.4 million.

Dr Healy claimed the bank had no right to do that and that he had only deposited the €2.2 million with the bank after being assured at a meeting with Alan Leech, relationship manager at the Mullingar branch, on August 1st, 2007, that he was "in the clear" in relation to his liability for the Coole project.

His mother, who had attended the meeting, gave evidence supporting his account.

Following the rehearing, the High Court dismissed Dr Healy’s proceedings in March 2018 and ordered that Promontoria recover €1.63 million from him, plus costs.

In the Court of Appeal judgment allowing Dr Healy's appeal, Ms Justice Mary Faherty noted the bank had not cross-appealed the High Court finding that the assurances given by Mr Leech extended to all liabilities regarding the Coole project.

The salient consideration in this appeal was whether the bank is, in fairness, estopped – precluded from asserting something contrary to what was implied by its previous actions or statements from pursuing Dr Healy in respect of the Coole liabilities, she said.

She found the High Court erred in fact and in law in not holding the bank was permanently estopped from offsetting the funds in Dr Healy’s account and from pursuing him over the Coole debt.

Any reasonable person in Dr Healy’s shoes, who had just completed the series of transactions at issue, in which the bank was centrally involved, would have treated Mr Leech’s words as clearly representing Dr Healy’s liabilities regarding the Coole project were at an end, she said.

Dr Healy’s “entirely reasonable” reliance on the bank’s assurances also had the effect of depriving him of the opportunity to take steps to safeguard his position in relation to agreements with his former business partner.

The judge said it was “unconscionable” for the bank, after August 1st, 2007, to allow Dr Healy proceed for a year to use his funds in the belief he was free from the Coole debt without disabusing him of that belief. It was unconscionable for it to apply the set off in August 2008 in the face of the assurance given to him a year earlier.

Promontoria, as assignee of the loans, is bound by the bank’s representations and is estopped, by reason of the bank’s conduct, from pursuing Dr Healy, she further held.

Final orders arising from the judgment will be made on a later date.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times