Lay Litigant’s Currency – A Vexing Issue For Financial Institutions

Borrowers in arrears are resorting to increasingly creative arguments as to why they do not have to repay their loans and why lenders have no right to enforce against them. Some have even argued that the loans were illegally made and that they are entitled to recover from the lender all repayments made. The recent High Court decision in Thomas Kearney v KBC Bank Ireland plc and John Reynolds (in which we acted for the Defendants) may finally put to bed a series of emerging themes in unmeritorious lay litigant banking litigation.

Background to Proceedings

The Plaintiff, Mr Thomas Kearney, was a property investor/developer. Between November 2004 and 2007 he obtained six loans from KBC Bank Ireland plc ("the Bank") to finance the purchase of various buy-to-let properties in Ireland and the UK. The loans were secured to the Bank by way of mortgages.

When the Plaintiff failed to repay the loans following service of letters of demand in August 2012, the Bank appointed receivers over the secured properties. In September 2012, the Plaintiff issued plenary proceedings against the Bank and its former CEO ("the Defendants") making what the High Court described as a series of "diffuse" claims. He alleged fraud, extortion, illegal creation of currency, breach of duty of care and unjust enrichment, and sought various reliefs including damages for "all payments and interest unlawfully stolen" by the Defendants. The Defendants brought a motion to strike out the proceedings on the basis that they disclosed no reasonable cause of action and were frivolous, vexatious and bound to fail.

As the Plaintiff's claims did "not easily lend themselves to being summarised", the Defendants distilled the claims insofar as possible and their summary was adopted by the Court. Essentially, the Plaintiff claimed that the Bank:-

failed to prove that the Plaintiff entered into a binding loan agreement; engaged in the illegal creation of currency; had no entitlement to enforce the loans following their securitisation; breached the Central Bank Asset Securitisation document by failing to obtain the Plaintiff's consent to the securitisation of his loans; was not entitled to appoint a receiver without a court application; is or was insolvent; and fraudulently misrepresented matters in relation to a UK property development to unjustly enrich itself and had a conflict of interest when lending. In a reserved judgment delivered on 16 May 2014, Mr Justice Birmingham dismissed each of...