A very interesting case was heard in the High Court recently. The case was Ulster Bank Ireland Limited v. Healy. It was a case where an accountant had borrowed money to buy a number of investment properties. The borrower subsequently defaulted on the loans and the bank sought to repossess the properties.
Mr. Healy argued that as he had not purchased the property as part of his normal business, he should be treated as a consumer and not as a property investor. The relevance here is that if the court were to treat him as a consumer for the purposes of the Consumer Credit Act, 1995 then the bank may not be able to enforce their loan agreement with him.
The case centred on the definition of the word ‘consumer’. The argument Mr. Healy made was that he was acting outside his normal business, trade or profession and therefore he should be treated as a consumer and not as a professional property investor.
Mr. Healy made an application to issue judicial review proceedings and he was successful but the overall case has yet to be determined by the courts. The High Court stated at the initial hearing that they accepted that there was a possibility that Ulster Bank may have acted in contravention of the Consumer Credit Act when it gave a loan to Mr. Healy. They said that it could be argued that they should not have described him as a commercial borrower and therefore as a non-consumer, they should have given him the benefit of the relevant provisions of the Consumer Credit Act. The court accepted that this was a reasonable argument to make and that the bank may have been in breach of the relevant provisions of the Act, which could lead to his loan agreement being unenforceable or only being enforceable on terms the court considered reasonable and appropriate.
No final decision has been made on this but it is certainly of great interest and there are any number of people in Ireland, who invested during the Celtic Tiger years and who were treated by the banks as commercial investors rather than consumers and it may well be that the banks breached their obligations under the Consumer Credit Act in so doing.
This matter will be finally determined, probably before the end of the year and we will revisit this area once again at that time.
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