Court gives judgment of €350,000 against souvenir manufacturer for advanced payments

ireland
Court Gives Judgment Of €350,000 Against Souvenir Manufacturer For Advanced Payments Court Gives Judgment Of €350,000 Against Souvenir Manufacturer For Advanced Payments
Philip Gaffney’s ceramic Irish products, such as leprechauns, cottages, fairy doors and mushrooms, were to feature as the firm’s “Today’s Special Value” item on a date around St Patrick’s Day in 2016.
Share this article

High Court reporters

The High Court has given judgment of $372,000 (€350,000) against an Irish souvenir manufacturer over a payment advanced to him by his brothers, so he could fulfil a lucrative US order.

The amount was paid to Philip Gaffney, of The Naul, Co Meath, after he landed a $1.3 million contract with US-based Quality Value Choice Corporation (QVC), which runs a TV shopping channel and had an online presence, according to a judgment of Mr Justice Anthony Barr.

Mr Gaffney’s ceramic Irish products, such as leprechauns, cottages, fairy doors and mushrooms, were to feature as the firm’s “Today’s Special Value” item on a date around St Patrick’s Day in 2016.

QVC’s order for 67,000 units was not completed. The court was satisfied, on the balance of probabilities, that Philip Gaffney had lost the order or had to relinquish it due to not passing all the required tests and/or not being able to fulfil the order by mid-March 2016.

Advertisement

Through the court, his brothers Alan and Derek Gaffney sought repayment of a sum they alleged was due on foot of an oral loan contract made in October 2015.

They claimed they made various payments to Philip Gaffney and his wife Teresa, between October 2015 and February 2016, as a loan to expand their workshop and obtain raw materials to be able to meet the QVC order.

They claimed it was agreed the loan, allegedly secured via a charge over the couple’s Co Meath property, would be repaid, together with 15 per cent interest, when payment was due to be made by QVC in the spring of 2016.

Alan Gaffney stated that the sum of $372,043.70 comprised $100,000 from him, with a similar amount contributed by Derek Gaffney, and, in addition, he had drawn down a line of credit secured against his family home for the remainder, said the judge.

The judge dismissed Philip Gaffney’s subsequent proceedings against Alan Gaffney and his wife which had alleged they had breached an agreement to invest €400,000 in his business.

Oral contract

Philip Gaffney countered that the money from Alan Gaffney was not a loan but an investment in his business venture, which would be repaid out of proceeds from the QVC payment plus a 15 per cent profit. He claimed he had never had dealings with Derek Gaffney on this matter.

Advertisement

Mr Justice Barr said the case demonstrated the validity of the truism that an oral contract is “not worth the paper that it is not written on”.

However, an email sent by Philip Gaffney to Alan Gaffney in March 2016 makes it “crystal clear” he regarded the contract as referring to a loan from Alan Gaffney. The court was satisfied from the evidence that the agreement was for a short-term loan on “extremely favourable terms” for the plaintiffs.

He made judgment in the sum of $272,000 for Alan Gaffney and $100,000 for Derek Gaffney as against Philip Gaffney as the “sole borrower”. He dismissed the action against Teresa Gaffney.

The court was not satisfied the obligation to repay the loan was contingent upon payment from QVC and found the loan was repayable by the spring of 2016 regardless.

Noting the relative economic strength of the plaintiffs, the judge said the court was satisfied an alleged 15 per cent interest clause in the oral agreement represents an “unconscionable bargain and is therefore unenforceable”. The court declined to order its payment.

It was not necessary for the court to rule on the question of there being any loan security over the Co Meath property of Philip and Teresa Gaffney as no declaration was sought in respect of this.

However, the court would have difficulty holding that a 2015 statement of Philip Gaffney’s, to the effect that he was prepared to provide whatever security would be required by an Irish lending bank, would be sufficient to create in law, or in equity, any charge or security over the property.

Further, the fact the lands include the family home raised the question as to compliance with the provisions of the Family Home Protection Act 1976, said the judge.

Read More

Want us to email you top stories each lunch time?

Download our Apps
© BreakingNews.ie 2022, developed by Square1 and powered by PublisherPlus.com