A Co Kildare farmer who lost his 240-acre farm because of his debts to the Bank of Ireland, is suing the bank for damages and alleging fraud.

The bank is arguing that the matter has already been ruled on by the courts. A spokesman also said the bank never benefited from the matter at the centre of the dispute.

Mr James Behan (54), of Dollardstown House, Athy, Co Kildare, has already taken a number of High Court and Supreme Court actions in relation to the loss of his farm.

During the course of these hearings the farmer discovered for the first time that the bank had applied in 1985 for benefit of £18,455 from the Revenue as part of the Reduced Interest Scheme for Farmers in Severe Financial Distress.

The bank credited the amount to the farmer's account even though he had already settled his £215,000 debt by paying £165,000 to the bank in full satisfaction.

A Supreme Court ruling in July found that the "fact of the payment by the bank to the plaintiff of a sum of approximately £18,000 in accordance with the provisions of the farm rescue package, was returned to the Revenue so as to obtain a fiscal advantage upon which the scheme was based."

At the time interest rates were running at over 20 per cent. The government introduced an interest subsidy scheme whereby the bank charged a reduced rate to qualifying customers and received appropriate tax credits.

The Supreme Court heard that the bank agreed the settlement with Mr Behan on the understanding it could obtain the fiscal advantage associated with the scheme, but did not tell Mr Behan. The sum was then used to reduce the £50,000 shortfall in relation to Mr Behan's debt, recorded in the books, to £30,000.

The bank submitted to the court that the whole affair constituted a bookkeeping transaction and no more, but this was not accepted by the court. The court also ruled that the issue was not statute barred, as Mr Behan was not told by the bank about the matter at the time, and so could not have taken an action.

Mr Behan took a case against the bank claiming he had been badly advised in relation to loans he had taken out, but lost his case in both the High Court and the Supreme Court. He was awarded just over £21,000 by the High Court in August of last year in relation to the linked farm rescue package issue. In that case he argued that the bank had improperly and unreasonably delayed his inclusion in the scheme. The High Court ruling was appealed to the Supreme Court by the bank, but was upheld.

Mr Behan said yesterday he has now issued a new plenary summons against the bank accusing it of fraud. The farm rescue package sum could have made a decisive difference in relation to his business difficulties at the time, he said, and the decision of the Supreme Court gave him a new basis on which to take a case.

It is the bank's view that the matter has already been ruled on. A spokesman also said that an internal inquiry had come up with no evidence that the £18,455 payment was ever made to the bank by the Revenue.