Alan Gaffney and Derek Gaffney v Philip Gaffney and Teresa Gaffney
| Jurisdiction | Ireland |
| Judge | Mr. Justice Barr |
| Judgment Date | 29 April 2022 |
| Neutral Citation | [2022] IEHC 251 |
| Court | High Court |
| Docket Number | [Record No. 2016/1020 S] |
[2022] IEHC 251
[Record No. 2016/1020 S]
[Record No. 2017/3234 P]
THE HIGH COURT
Summary judgment – Loans – Debt – Plaintiffs seeking repayment of a loan allegedly made by them to the defendants – Whether the debt was due on foot of an oral contract of loan between the plaintiffs and the defendants
Facts: The first set of proceedings were issued by Mr A Gaffney and Mr D Gaffney in 2016 (the 2016 action). The plaintiffs and the first defendant, Mr P Gaffney, were brothers. The second defendant, Mrs T Gaffney, was the wife of the first defendant. In this action, the plaintiffs sought repayment of a loan allegedly made by them to the defendants in the sum of US$372,043.70. That debt was allegedly due on foot of an oral contract of loan between the plaintiffs and the defendants, which was concluded in or about October 2015. The second set of proceedings were issued by Mr P Gaffney in 2017 (the 2017 action). In those proceedings, he sued Mr A Gaffney and his wife, Mrs N Gaffney, for breach of an agreement, whereby it was alleged that they had agreed to invest €400,000 in Mr P Gaffney’s business.
Held by Barr J that, in respect of the 2016 action, the lenders were Mr A Gaffney and Mr D Gaffney. In terms of the identity of the borrowers, the court found that Mr P Gaffney was the sole borrower. The court was not satisfied that Mrs T Gaffney was a party to the contract. The court found that funds in the total sum of US$372,043.70 were actually furnished to Mr P Gaffney under the loan agreement. The court accepted the evidence of Mr D Gaffney that he put up US$100,000, with the remainder being provided by Mr A Gaffney from his savings and from money that he drew down on foot of his equity line of credit, which had been secured against his family home. The court did not accept the evidence of Mr P Gaffney that the sums which were received by him represented a long-term investment in his business by Mr A Gaffney and Mrs N Gaffney. The court found that Mrs Gaffney was not a party to any lending or financing agreement with Mr P Gaffney. The court found the agreement to be a loan agreement between Mr A Gaffney and Mr D Gaffney, on the one part, and Mr P Gaffney, on the other part.
Barr J proposed making the following orders in respect of the 2016 action: (i) judgment for the first plaintiff in the sum of US$272,043.70 as against the first defendant; (ii) judgment for the second plaintiff in the sum of US$100,000 as against the first defendant; and (iii) dismissing the plaintiffs’ action against the second defendant. In the 2017 action, the court proposed making the following order: (i) dismissing the plaintiff’s action against the defendants.
Summary judgment.
JUDGMENT of Mr. Justice Barr delivered electronically on the 29th day of April, 2022.
These two actions were heard together. They involve members of the one extended family. They each revolve around the same payment that was made with a view to funding a business project that Philip Gaffney had undertaken, in or about October 2015.
In order to understand the background to the two actions, it is necessary to set out, in very brief terms, some detail about the business carried on by Philip Gaffney. For some years, he has been engaged in the production of various items that could be regarded as souvenirs of Ireland, such as; small ceramic ornaments depicting Irish scenes, such as leprechauns, cottages, fairy doors and fairy mushrooms.
Mr. Gaffney had developed a successful business relationship with a company in the United States called Quality Value Choice Corporation (hereinafter “QVC”), which ran a shopping channel on American television networks and also had an online presence. As part of the operation of the shopping channel, QVC would select a particular item, which would be designated as “Today's Special Value” item (hereinafter “TSV”) for a particular day. The TSV item would be featured on a regular basis throughout that day.
In or about October 2015, as a result of negotiations that had gone on for some months, Philip Gaffney landed the contract to supply certain product as the TSV on the shopping channel for the show that was due to go on air at or around St. Patrick's Day 2016. This was a sizeable contract, which was going to be worth approximately US$1.3 million to Mr. Gaffney.
The first set of proceedings were issued by Alan Gaffney and Derek Gaffney in 2016 (hereinafter “the 2016 action”). The plaintiffs and the first defendant are brothers. The second defendant is the wife of the first defendant.
In this action, the plaintiffs are seeking repayment of a loan allegedly made by them to the defendants in the sum of US$372,043.70. That debt is allegedly due on foot of an oral contract of loan between the plaintiffs and the defendants, which was concluded in or about October 2015.
In summary, the plaintiffs' case is that when the defendants were unable to secure funding to enable them to take up the contract, which had been offered to the first defendant by QVC in respect of the television programme that was due to go out on or about 17th March, 2016, the first and second plaintiffs between them provided the funds the subject matter of the loan, so as to enable the defendants to be in a position to fulfil the order that had been placed with the defendants by QVC.
It is alleged by the plaintiffs that in the oral agreement that was made between them and the defendants in October 2015, it was agreed that the plaintiffs would lend up to a total sum of US$400,000 to the defendants to enable them to carry out certain construction works at their property in The Naul, Co Meath, as it was necessary for the defendants to expand their workshop and to improve the access routes thereto, in order to take up the contract. In addition, the funds were to be used to obtain the raw materials to enable the defendants to manufacture the goods that were required for the order that had been placed by QVC. The funds were also to be used to pay the wages of staff.
The plaintiffs alleged that it was agreed between the parties that the defendants would repay the loan, together with 15% interest, when payment was made by QVC in or about April 2016. They alleged that it was agreed by the defendants that the funds received from QVC would go directly to the plaintiffs in repayment of the loan, plus interest. It was further alleged that as security for the loan, the defendants agreed that it would be secured by way of a charge on their property in The Naul, Co. Meath.
In October 2015 and in the following months, the plaintiffs furnished the loan in various payments that were made either to the defendants, or directly to their suppliers. It is alleged that in the period October 2015 to February 2016, the plaintiff's advanced the sum of US$372,043.70 for the use and benefit of the defendants.
Unfortunately, things did not turn out as had been anticipated. The plaintiffs maintain that the order that had been placed by QVC for production and delivery of the goods, which were going to be used in the TV show to be broadcast on or about St. Patrick's Day in March 2016, was conditional on the products passing certain safety and suitability tests. The products were deemed by QVC as not having passed a particular test. For that reason, the company cancelled the order in February 2016.
When that happened, the first named plaintiff drew up a written contract from a precedent, which he had obtained on the internet. He maintained that this document set out the terms of the loan, which had been agreed orally between the parties in October 2015. He sent that contract, in draft form, to the defendants. The first defendant did not accept the terms thereof. The first plaintiff then sent two further amended versions of the contract to the defendants, but they did not accept those either. The draft written contracts were never signed by any of the parties.
The first defendant has defended this action as a lay litigant. He maintains that he never received any loan from the plaintiffs, but he concedes that he did receive money from the first named plaintiff and his wife, Nicole Gaffney. The first defendant states that those monies were paid, not as a loan, but as an investment by the first plaintiff and his wife, in the first defendant's business venture. That payment forms the subject matter of the proceedings issued by Philip Gaffney in 2017.
The first defendant maintains that his wife, the second defendant, was never a party to any oral agreement that was concluded between the first defendant and the first plaintiff in or about October 2015. While he acknowledges that the second defendant works in the business and is named as a director in a number of companies that are jointly owned by him and the second defendant, he denies that she was ever a party to the loan agreement. The second defendant was not represented at the hearing of the action.
Thus, in answer to the 2016 proceedings, Philip Gaffney denies that he ever received any loan from the first plaintiff and/or Derek Gaffney. The issues which arise for determination in the 2016 proceedings can be summarised as follows: (i) was there a contract of loan between the plaintiff's and either, or both, of the defendants in October 2015; (ii) if there was, what were the terms of that contract; (iii) depending upon the answers to the foregoing questions, what judgment and orders, if any, are the plaintiffs entitled to obtain against the defendants and each, or either, of them?
The second set of proceedings were issued by Philip Gaffney in 2017 (hereinafter “the 2017 action”). In those proceedings, he has sued Alan...
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