AIB gets €6.3m summary judgment

A High Court judge has ruled Allied Irish Bank is entitled to summary judgment orders for some €6.32 million against four businessmen, including a son of well-known hotelier Jim Mansfield, over unpaid loans advanced to develop lands in Co Meath.

At the Commercial Court today, Mr Justice Peter Kelly granted summary judgment against the four after finding none of them had made out an arguable defence to the bank’s claim such as would allow the matter go to a full hearing. He placed a stay on the judgment orders for a week to allow consideration of an appeal.

The orders were sought against James Mansfield Jnr, Palmerstown House, Johnstown, Co Kildare; Brian Higgins Allensgrove, Celbridge Road, Leixlip, Co Kildare; Glen O’Callaghan, Drapier Road, Dublin 11 and Seamus Kavanagh Kyle, Killea, Templemore, Co Tipperary.

The bank alleged the four owe it some €6.2 million as a result of loans advanced to them from 2003 in connection with the purchase of a site at Duleek, Co Meath. It was claimed the defendants formed the “Duleek Partnership” to acquire the lands for the purpose of constructing apartment blocks, an underground car park, and commercial units which were to be sold on.

In opposing the bank’s application, all four alleged they borrowed from AIB as “consumers” within the meaning of the Consumer Credit Act 1995 but the bank had failed to comply with the requirements of that Act.

Mr Mansfield also made additional arguments, including that he has literacy difficulties and was unsure of the nature of documents signed by him.

Mr Justice Kelly rejected the men’s arguments the provisions of the Consumer Credit Act (CCA) applied to them and said their construction of the Act was “unsustainable”.

The men acted as partners in a partnership which borrowed money from AIB, he said. They did so with a view to investing in property and for its development for profit. In doing so, they engaged in business and the CCA had no application.

To avail of the CCA, the defendants had to show they borrowed as consumers or as persons acting outside their business, he noted. While he accepted property investment was not their main business, their interpretation of the CCA would mean every person who belonged to a trade or profession who decided to borrow money to invest in another business would have to be treated as a consumer under the CCA.

The judge rejected additional arguments by Mr Mansfield that he was not involved in the partnership. There was no issue but that the letter of loan sanction of January 19th 2009 was accepted by Mr Mansfield and no issue about the authenticity of his signature on that letter, the judge said. There was also no issue that the monies were drawn down.

It was clear from the evidence the alleged limited nature of Mr Mansfield’s involvement was never notified to AIB, the judge added. AIB had produced “compelling evidence” demonstrating a much greater involvement by Mr Mansfield than he admitted.

On Mr Mansfield’s claim his liability to the bank was only for one sixth of the loan extended to buy the lands, the judge said this was grounded on his claim he had signed documents believing they were something else. This plea was in part based upon an alleged reading disability.

The judge noted reports to the court showed Mr Mansfield had very little schooling and left a technical school two years after starting there and without taking exams. His reading fluency had been assessed as of a seven year old child.

Given Mr Mansfield’s difficulties, it was surprising to find he could fly a helicopter and was a director of some 25 companies with a wide range of activities and had signed annual returns for those, the judge observed. This was no proof of his literacy but did suggest he had “a good deal of experience” in understanding commercial and financial matters.

While he accepted Mr Mansfield is under the “considerable disability” of having the reading age of a seven year old child, Mr Mansfield had wide business experience and should have told AIB of his problems and taken all reasonable precautions to find out about documents he was signing. He did not do so and had failed to show an arguable defence to summary judgment on such grounds.

In all the circumstances, none of the defendants had surmounted the low threshold required to avoid summary judgment, Mr Justice Kelly ruled.