Honohan says some judges lack experience for banking cases

The Master of the High Court has raised concerns about the approach of some judges and bankers concerning banks' bids for final judgment orders.

Master Edmund Honohan decided on Tuesday that a woman, who claims a loan was intended for her father but was advanced to her to "bypass" AIB's normal financial guidelines, is entitled to a full hearing of the bank's claim for final judgment of €945,613 against her.

The decision means the case will not go down the normal route of being decided by a High Court judge solely on the basis of sworn affidavits. There will instead be a full hearing with oral evidence, cross-examination and discovery of documents.

Master Honohan said he was doing this because he has concerns “the court will not follow the law as set out by the Supreme Court” in relation to the test to be met before final judgment is entered.

That test requires it must be “very clear” a defendant has no defence, “not even an arguable defence”.

The Master, an official who deals with various pre-hearing matters, said he is particularly concerned that some judges have insufficient experience of such applications to be aware of deficits in sworn evidence of banks.

He was also concerned there is a “generation of bankers” who think it is “fair game” to push for a ‘”balance of probability” judgment on the basis of affidavits without discovery or cross-examination.

He made the comments in a decision on Tuesday adjourning AIB’s application against Trudy McDermott, a business consultant, of Westmoreland Street, Dublin, to plenary hearing.

He awarded costs of the application to Ms McDermott, represented by Ted Harding, against the bank.

Ms McDermott opposed AIB’s bid for final judgment for the €945,613 on foot of a facility allegedly provided in early 2008 to her.

In affidavits, she and her father Seán, a businessman from Patrickswell, Co Limerick, claimed Bank of Ireland had in early 2008 advanced $2 million to Mr McDermott for an investment in Chicago on the basis that this would be halved by a $1 million sum Mr McDermott was to source from other lenders.

It was claimed AIB made a loan of €740,000, equating to the sum of $1 million dollars to Mr McDermott, in January 2008 with no paperwork being completed in that regard.

Ms McDermott claims she came home in May 2008, having been abroad for some months. She claimed her father had advised her of the situation where he allegedly got funds from AIB in early 2008.

She claimed she attended the AIB branch in O’Connell Street, Limerick, to open a deposit account for her business after which she was given two pages to sign, one with a mandate to open an account and the second the last page of the loan facility letter.

She claimed it was represented to her this was the “workaround” to enable AIB make the required provision for her father and there was to be no recourse to her.

In affidavits on behalf of AIB, the claims were denied. An official alleged to have dealt with the McDermotts, who is now with another bank, said it was his “distinct memory” that Mr McDermott had in January 2008 sought information about obtaining credit facilities for his daughter to invest in a number of investments in which Mr McDermott was investing.

The official denied claims he was of the view Mr McDermott was overexposed based upon his borrowings and could request that a family member obtain such borrowings as “a way around it”.

In his decision, Master Honohan said the former AIB official who dealt with the McDermott’s had offered little more than denials which could not prove anything conclusively.

An opinion from another AIB official that Ms McDermott is lying is not evidence and is not admissible, he also said.

Even on the material in the AIB file, it it hard to see how the bank’s solicitor could have reached the view Ms McDermott has no defence, he said. This material included internal paperwork “replete” with references to her father and appears to contemplate a single investment in a mezzanine fund.

He also queried why the bank would offer a loan of €740,000 to a non-customer of it, earning only €45,000 gross a year.

Because Sean McDermott has provided an affidavit corroborative of his daughter’s evidence, the grounds of defence she advances “are not bare assertions”, he added.

For those and other reasons, he adjourned the matter to plenary hearing.