AIB was grossly negligent in failing to provide the original of an important document when they took a case to repossess a hotel-turned-church in Co Cavan, the High Court ruled.
Ms Justice Mary Laffoy made the comment when granting an order for possession to AIB against Richard McKenna and Vera McElwaine, owners of the former Percy French hotel, Ballyjamesduff, now called the Word of Life Centre. It is now used as a church and child minding centre.
The judge described as “incomprehensible” the bank’s handling of the letter of offer of a loan to the borrowers.
She said “whoever had responsibility” at AIB Drogheda for the letter of offer “did not appreciate the importance of it” and should have replaced it with a photocopy when the file was “doing the rounds”.
“The fact that the original was not available to be exhibited in these proceedings in my view amounts to gross negligence on the part of the plaintiff,” the judge said.
Letters of offer were as important as the deed itself and the bank should take care of them and make sure it does not happen in the future, she said.
She refused to grant the bank its costs in the case, saying it had to “learn a lesson”.
Ms Justice Laffoy described the borrowers as “decent, honest and hardworking people” who were “genuine victims of the Celtic Tiger”, but not of dishonesty.
The couple had challenged an affidavit filed in court in 2009 by the bank which was supposed to have been the letter of offer they were given when they consolidated loans to a value of €700,000 in 2003. They said this was not the letter they had signed. They claimed the bank had been dishonest and the case should be struck out.
The bank had subsequently filed a second affidavit in July 2010 correcting the “error” and showing the correct agreement, which showed the borrowers should make interest-only repayments of €2,500 a month rather than €5,300 shown in the 2009 affidavit.
The bank said the borrowers’ file had been sent to various offices in AIB as well as to the office of the Ombudsman, photocopied many times and many original documents were lost.
Ms Justice Laffoy said it was “as plain as a pikestaff” that the second page of the corrected letter of offer, which carried the borrowers’ signatures, was “a photocopy of the same document” from which the second page of the incorrect letter of offer was taken.
She also described the document as “practically illegible" and not on headed notepaper. But she said the bank was “not in any way dishonest”; it made a mistake which could have been avoided “if proper steps were taken in the branch to reserve the original and prevent it being mishandled”.
She found however the couple had not kept to the terms to repay €2,500 a month and by January 2006 the bank was entitled to possession of the property. She had "no option" but to make an order for possession.
She agreed to put a stay of execution on her order for six months after hearing the current tenants had put a lot of work into what was a shell of a building and would need some time to find alternative accommodation.