Mixing business with romance can put your house at risk, warns judge
Blind love may leave you homeless was the strong underlying warning behind a judge's remarks concerning ill-advised romantic engagements in business affairs.
"Emotionally transmitted debt", whereby legal liability is spread from a debtor to a romantic partner, can destroy relationships and even families, Mr Justice Max Barrett said in the High Court.
He was deciding if the court should direct summary judgment involving a significant financial threat to the home of a Galway woman who claims she unwittingly signed business guarantees for her live-in lover and business partner.
Judge Barrett told Andrew Walker, counsel for Allied Irish Banks plc, that its financial claim for summary judgment against Mary Geraghty, of Headford, Co Galway, on foot of guarantees, should go to full plenary hearing before the court.
The judge said the court was repeatedly presented with debt proceedings in which persons had acted "out of the goodness of their heart" when deciding to provide a guarantee to a loved one or accepting a company directorship.
The judge said it is "effectively taking a gamble that all will go well or if things go badly the loved one will act as one expects".
The court had been told Ms Geraghty was a co-director with her partner James Kearney, of Ballinasloe, Co Galway, in Rostaff Property Development Limited, of Clonberne Enterprise Centre, Ballinasloe, and that judgment had already been obtained against Mr Kearney and the company.
The judge said Ms Geraghty in 2009 and in 2012 had signed documents guaranteeing all sums of money at any time owing to AIB.
Ms Geraghty, a hairdresser, said she met Mr Kearney in 1996 and, after developing a romantic relationship with him, he moved into her home.
He started up his own construction company, giving her a 49pc interest as unpaid company secretary after she invested €17,500. Six months later, Mr Kearney had said her input was no longer required and took full control of the company. By 2001, the company was not doing well and she began to receive calls from Revenue Sheriff bailiffs, angry tradesmen and builders' providers looking for money.
Ms Geraghty said they tried to make their relationship work, but by November 2013 Mr Kearney had left her home and told her their relationship was over.
He had returned later and asked her to sign over her shares, which she did.
"I accept it is my signature on the documents the bank says I signed but I did not knowingly sign a personal guarantee," she told the court. She had trusted Mr Kearney, never having been made aware she would be held liable for company debts.
Judge Barrett said a person asked to become a personal guarantor to a loved one should ask a series of questions before guaranteeing something. "Emotionally transmitted debt can also present for parents who may be asked by their adult children to assist them in acquiring a first home," he added.
The proceedings against Ms Geraghty now stand adjourned.