Supreme Court agrees to hear appeal by couple being pursued by AIB

Move has potentially significant implications for borrowers seeking to defend claims against them on grounds they are ‘consumers’

The Supreme Court has agreed to hear an appeal by a Co Limerick couple being pursued by Allied Irish Bank for €465,875 over loans taken out more than 10 years ago to develop lands in Slovakia.

The appeal has potentially significant implications for borrowers seeking to defend claims against them on grounds they are “consumers” under the Consumer Credit Act.

The correct construction of the term “consumer” for the purposes of the legislation is a matter of general public importance which may arise in a large number of cases, a three judge panel of the Supreme Court said in a recently published determination.

"It is in the public interest to obtain further clarity," Chief Justice Donal O'Donnell, Mr Justice Peter Charleton and Mr Justice Seamus Woulfe said.


Thomas and Mary O'Callaghan, of Clonmore, Drumcollogher, Co Limerick, sought the further appeal after the Court of Appeal upheld a High Court ruling that AIB was entitled to judgment against them.

The Court of Appeal ruled in November 2020 the couple had not shown a credible defence to AIB’s claim.

In separate proceedings which were stayed pending the appeal, AIB Mortgage Bank is seeking possession of the couple’s family home, part of the security for the AIB loans.

The bank sought summary judgment in 2017 arising from loan facilities advanced in 2009 which restructured a 2005 loan package.

The couple argued they had a defence on grounds including that, in taking out the loans, they were consumers entitled to the benefit of the Consumer Act and also alleged reckless lending by the bank.

Mr O’Callaghan, a poultry farmer, claimed he had no previous experience of transnational investment and sought advice from AIB after he saw advertisements in the Farmers Journal in 2005 concerning farming opportunities in Slovakia. The intention was to develop 80 houses on development lands and farm 1,100 acres of agricultural lands in Slovakia.

‘Flawed’ advice

He claimed his local AIB branch in Newcastlewest, Co Limerick, provided "flawed" advice. He also alleged he and his wife, a nurse, were "robustly" advised by AIB to provide a mortgage over their family home as security despite being "somewhat nervous" about that.

AIB denied it acted as an adviser to Mr O’Callaghan about the Slovakian investment. It claimed he had extensive business experience here and had determined to invest in Slovakia before approaching AIB.

In rejecting their appeal, the Court of Appeal said there is no tort of reckless lending known to Irish law and noted the couple had not contradicted AIB’s claims they were advised to get independent legal advice. The court further held it was sufficient for the High Court to have decided the couple secured the borrowing for investment purposes and were therefore not consumers.

In agreeing to hear a further appeal, the Supreme Court noted the issues raised include whether a 2010 High Court decision concerning the definition of consumer was correctly decided.

Entitled AIB v Higgins, the 2010 judgment rejected the proposition that every person who belongs to a trade or profession, and who later decided to invest money in promoting another business, would have to be treated as a consumer.

The Higgins decision was relied on by the High Court and Court of Appeal in dismissing the couple’s case.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times