Tuesday 20 March 2018

Man duped into lending €350k to former councillor loses appeal against bank

Ger Killally, former Fianna Fail politician.
Ger Killally, former Fianna Fail politician.

Tim Healy

A MAN who was duped into lending almost €350,000 from his life savings to former Offaly Fianna Fail councillor Ger Killally has lost an appeal against a bank which handled the monies.

Joseph Delaney was "a hard working man" who was duped by Mr Killally into lending him the money by making a number of withdrawals from the

bank from his €430,000 savings between August and September 2008, Mr Justice Michael Peart said in the Court of Appeal.

He was giving judgment in an appeal brought by Mr Delaney, from Edenderry in Co Offaly, against a High Court decision dismissing an action he brought against AIB and receivers to a business property in JKL Street, Edenderry, which Mr Killally had put up as security on other loans he got from AIB and which he (Killally) had leased to Mr Delaney.

The judge, with whom his two appeal court colleagues agreed, said while he had the greatest of sympathy for Mr Delaney due to the "parlous position in which he finds himself because he was duped by Mr Killally into a misplacement of his trust", he had to dismiss the appeal.

The High Court was correct in its decision to strike out the claim on the basis it was either unstateable or bound to fail, he said.

Mr Justice Peart said Mr Delaney had argued he was entitled to possession of the JKL Street property.

This was a premises where Mr Delaney was in the process of setting up a small business.   

He was involved in plant hire having returned from England after 23 years working there.

Mr Killally had offered the premises to him rent free for what was to be more than 24 years and in this way Mr Delaney's loan was to be repaid, the judge said.

Mr Killally had made the offer because Mr Delaney, who had got assistance in his tax affairs from Mr Killally, an accountant and auctioneer, began expressing concern about the money he was giving him.

Mr Killally had asked Mr Delaney for assistance in August 2008 saying he was having some temporary financial problems, the judge said.

Over the next few weeks, Mr Delaney's wife Marion started making the withdrawals by draft on her husband's behalf from AIB Edenderry when a bank official asked her if she was being threatened or forced to make them. The payee (Killally) on the drafts was known to the official as a prominent customer of that branch.

Mr Delaney decided to "have a word" with Mr Killally who then offered him the rent free premises, the judge said.

But Mr Delaney did not know it had already been mortgaged by Mr Killally to AIB and that one of the conditions was the bank's consent was required before it could be leased.

By May the following year (2009), AIB sought judgment against Mr Killally for €15m.  On July 27, 2009, Mr Killally and his wife were declared bankrupt.

It was no surprise, the judge said, that AIB was the only available defendant against whom Mr Delaney considered there was any prospect of recovering damages for "the terrible catastrophe that had befallen him".

Mr Delaney eventually gave up possession of the JKL Street premises, following a legal battle, to receivers appointed over it by NAMA which had taken over the AIB loans.

At the heart of Mr Delaney's claim against AIB was that the bank ought to have told him about Killally's "precarious" position with the bank because it knew he (Delaney) was the source of significant lodgments to Killally's account.

He believed the bank had a duty to place the Killaly accounts under inquiry long before they did so and was negligent in failing to advise him not to lend to Mr Killally.

Mr Justice Peart said the High Court had rightly found this claim to be unstateable because of the bank's strict duty of confidentiality to customers, described by the trial judge as "an absolute bedrock of banking law".

The appeal court said it would not impose the costs of the High Court case on Mr Delaney.  While it would make an order that he pay the appeal court costs, it urged the bank to give sympathetic consideration to not enforcing the costs order.

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