Definition of ‘consumer’ to be decided by the Supreme Court-important consequences for borrowers defending claims against them

The Supreme Court is to hear an appeal by a couple who have lost their debt claim proceedings in the High Court and the Court of Appeal. The outcome of the Supreme Court hearing could have significant consequences for all borrowers in Ireland.

The significant question the Supreme Court will be answering is the meaning of ‘consumers’ as apprehended by the Consumer Credit Act 1995.

Background

The couple borrowed money from AIB to develop lands in Slovakia 10 years ago. The couple claim AIB encouraged them to borrow the money and to grant a charge over the family home as security. The bank is now seeking €465,875 from the couple.

The couple also claim that they should be entitled to be considered ‘consumers’ for the purposes of this loan and should be entitled to the protection of the Consumer Credit Act.

One of the borrowers is a poultry farmer and had no previous experience in something like developing land in a foreign country such as Slovakia. AIB denies giving such advice and claim the borrowers were determined to carry out the development in Slovakia.

They also claim to have been nervous about providing a charge over the family home.

However, the Court of Appeal held that the couple did not deny being advised by the bank to get independent legal advice. The High Court had held that the couple obtained the borrowing for investment purposes and were therefore not consumers and not entitled to the protection of the Consumer Credit Act 1995.

An earlier judgment in the High Court in AIB v Higgins in 2010 rejected the proposition that a person who was involved in one profession or trade would have to be treated as a consumer if he was investing in a different business. Both the High Court and the Court of Appeal relied on this AIB v Higgins case.

The Supreme Court’s construction of the term ‘consumer’ under the legislation will have significant consequences for all borrowers in Ireland who would be seeking to defend claims against them on the basis that they are consumers.