“Consumer” Defence in the Spotlight Again


In this case, the High Court held that the Defendant had an arguable case that he was acting as a consumer in a summary application.

The Plaintiff had brought enforcement proceedings against the Defendant in respect of five separate loan facility arrangements entered into between the Defendant and Anglo Irish Bank (Anglo) in the period between June and December 2007.

The first two loan facility letters were credit agreements regulated by the Consumer Credit Act 1995 (CCA). The third, fourth and fifth loan facility letters were not regulated by the CCA and contained certificates confirming that the Defendant was not acting as a consumer for the purposes of the CCA and the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (the 1995 Regulations).  The Defendant also confirmed in those facility letters that he understood the effect and importance of the certificates and that he had been given the opportunity to obtain separate legal advice.

Defences put forward included:

  • That the Plaintiff's claim is statute barred because the order by which the current Plaintiff was substituted for IBRC (4 June 2015 and as affirmed on appeal on 11 April 2016) was made outside of the six year statutory time limit in respect of the institution of claims in contract.
  • That the Defendant was acting as a consumer and therefore entitled to the protections afforded to a consumer under the CCA and the 1995 Regulations.

Statute of Limitations defence

The Defendant argued that the current proceedings were a new cause of action by the Plaintiff which fell outside of the six year statutory time limit.  The Judge determined that the Plaintiff, in taking an assignment of all rights of IBRC, took the benefit and burden of the proceedings which are a chose in action and capable of now being continued by the Plaintiff.  This defence was rejected.

Consumer defence

The Defendant, Mr Lavelle, was a trader in the City of London for a number of years and then returned to live in Ireland.  Mr Lavelle was a private client of Anglo and sought investment advice through Anglo's wealth division for pension type investments.  Mr Lavelle entered into five loan facility arrangements with Anglo and used the monies to invest in various property developments through an investment company.  Mr Lavelle argued that as he had been employed as a financial trader, the loans that he obtained from Anglo were not for the purpose of his business but were used to invest in "safe pension type investments to secure my family's future" and that he was not engaged in the business of the underlying assets. 

The Judge referred to a number of recent High Court judgments on whether or not a borrower is to be classified as a consumer for the purposes of the CCA and dealt with the current application on the basis of four different headings:

  • The relevance of the characterisation of the loans by the parties:

    The Judge referred to the fact that the first two loan facility agreements contained all of the relevant CCA provisions whereas the third, fourth and fifth agreements confirmed unequivocally that the provisions of the CCA and the 1995 Regulations did not apply.  Mr Lavelle submitted that there had been no change in his personal circumstances or in the purpose of the loans to justify a change in his treatment in the loan facility letters from a consumer to a non-consumer.

    The Judge stated that whether or not a person is a consumer is "a matter of law to be determined objectively and irrespective of the characterisation that the parties may have applied to the loan".

    The Judge referred to her judgment in ACC Loan Management Ltd v Browne [2015] IEHC 722 which stated that the label or characterisation by the parties to the loan is not determinative but may be of benefit to the analysis.   The Judge accepted the proposition that the fact that Anglo proceeded on the basis that Mr Lavelle was a consumer for the first two loans is not in itself a determination that Mr Lavelle was in fact a consumer.  The Judge rejected the assertion that that the signature of Mr Lavelle on the loan facility documents confirming that he was not acting as a consumer was determinative and concluded that the characterisation of the loans was not possible to resolve at summary hearing.  
  • Scale of borrowing:

    The Judge then considered whether the amount or scale of the borrowing is determinative or relevant to the characterisation of a transaction. 

    The Judge referred to Ulster Bank Ireland Ltd V Healy [2014] IEHC 96 decision where Barrett J, in a summary application, determined that borrowing for the purpose of providing for the future or retirement did not make the borrower a professional investor or property investor and that Mr Healy had made a stateable argument that he was a consumer. However, Barrett J also stated that "there must come a point when a person crosses the Rubicon from consumer to professional" but the Judge considered this statement as obiter and not binding.

    The Judge also referred to Barrett J's more recent judgment in KBC Bank Ireland plc V Osborne [2015] IEHC 795 where Barrett J rejected the argument that Mr Osborne was a consumer as the loans were clearly business loans in respect of a business park. The Judge noted that Barrett J's judgment in this case was not based on the quantum or scale of the loans as being determinative or relevant to the characterisation of the borrower as a consumer.

    The Judge concluded that the quantum of the borrowing is not determinative but that "the purpose of the loan is the defining or identifying characteristic and not the quantum of the loan".
  • Borrowing for personal investment purposes:

    In considering this heading, the Judge referred to Allied Irish Banks Plc v Higgins & Ors where the Court determined that as the defendants had acted as partners in a partnership with a view to investing in property and making a profit, there was no arguable case that they were consumers.  The Judge also noted that Kelly J held that a person can have more than one trade, business or profession.

    The Higgins judgment and the Osborne judgment can be distinguished however from the current case as Mr Lavelle's borrowings were not used by him personally for investment purposes but instead Mr Lavelle chose to invest the funds with an investment company who managed and evaluated investment projects.  The Judge considered that the caselaw relied upon by the Plaintiff i.e. that a person who borrows money to make a personal investment is not a consumer, was not determinate of the issue.
  • "Consumer" should be strictly construed

    The Judge, having considered various European caselaw judgments, was of the opinion that there is nothing in European or Irish consumer legislation that suggested that a strict construction of the concept of "consumer" is warranted.


The Judge concluded that the arguments put forward by Mr Lavelle could not be determined on current Irish and European authorities and accepted that Mr Lavelle had an arguable case that he was acting as a consumer.


The Judge also addressed her earlier decision of ACC Loan Management Ltd V Browne in which she had stated that there was a presumption that a natural person is a consumer.  The Judge clarified her obiter statement that it was not correct as a matter of law and agreed with the statement of Barrett J in KBC Bank Ireland Plc V Osborne that there is no presumption or default position that a natural person is a consumer. 


For further information please contact Louise McNabola or your usual contact in A&L Goodbody.

Date Published: 19 July 2016