A High Court Judge has decreed that a monetary fund is owed €11.6m from the assets of a late quarry owner in County Meath due to him issuing guarantees on behalf of his sons. John Joseph Flood had hoped to aid his sons by transferring ownership of his quarry lands to them, allowing Allied Irish Banks (AIB) to use them as collateral. However, Ms Justice Siobhan Stack noted that there was no proof Mr Flood intended to risk his family house or other properties, but he erred in doing so.
She remarked that it was universally mistaken that only the quarry was at risk. She argued that the deals made by Mr Flood, who ceased being the operator of his quarry business in Oldcastle in 1994, were unwise and carried out under the undue influence of his son, David. Despite gaining independent, albeit inadequate legal guidance, she claimed Everyday Finance DAC—the firm that took over the AIB collateral—had no prior knowledge of this inadequacy or the resulting error.
Ms Justice Siobhan Stack concluded that Everyday Finance DAC has grounds to claim some €11.6m from the deceased’s wife and legal representative of his estate, Joan Flood. In a recent judgement, it was stated that Mr Flood passed away in 2012, unaware that the bank was planning to enforce the guarantees.
The court case arose from two assurances issued in May 2007 by Mr Flood for his sons’ benefit, who were involved in property development via the Flood Partnership. The assurances were given as collateral for a €1.5 million overdraft for three of his sons—David, Tom, and Alec—and a loan of about €12.7 million given by AIB to Tom and Alec. Mr Flood also permitted AIB to have a claim on his lands, covering 59 acres of quarry lands and 12 acres of agricultural land, as well as his family residence. This guarantee was activated when the intended property development failed.
Further, the judge noted that David Flood still manages the quarry company, which was a source of income for his parents through the rental payments. This income supposedly hinged on Everyday being unable to take possession of the lands or register a claim against the estate following the court’s ruling. The judge dismissed the suggestion that Mr Flood did not understand the transactions upon their execution.
Judge Smith outlined that David Flood was accused of exerting undue influence on his father, to such a degree that his father failed to exercise his independent judgment while conducting transactions. The nature of their relationship led to suspicions of undue influence.
However, after finding evidence that the deceased had independently met with his solicitors for transaction advice, she concluded that there was no clear evidence suggesting the use of undue influence. Despite this, the nature of the transaction, which involved giving the bank complete access to all of the deceased’s assets, raised suspicions that the transaction could have been coerced by David Flood in order to benefit himself and his partnership.
Even though the judge found that the deceased was not mentally compromised and was therefore capable of making decisions, she noted that he was heavily reliant on the assistance provided by David, who managed his financial affairs, bills and post. This led to the presumption that David could potentially influence him.
The judge also insinuated that it was up to Everyday to refute these suspicions, either by showing evidence of independent legal guidance given to the deceased, or by proving that the gift was freely given by the deceased.
Interestingly, the judge underscored that the legal guidance provided to the deceased was unbiased, as the solicitors were not in a conflicting position and were solely representing the deceased. Yet, the depth of the advice was insufficient since the solicitors hadn’t looked into the deceased’s financial status or the value of the lands, which meant they couldn’t have adequately advised the deceased on whether the transactions were beneficial.
A more thorough investigation would have revealed that losing the lands would mean losing the sole income of the deceased and his spouse. The judge held that carrying out guarantees covering the deceased’s total assets was an imprudent transaction.
However, since Everyday did what was reasonably required to ensure that the charge and guarantees were the result of the deceased’s full, free and informed agreement and were unaware of the deficient advice, they were entitled to a decision, the judge held. The final verdict would be given at a later date, she concluded.