The High Court has handed down a $372,000 (€350,000) judgment against an Irish souvenir maker for having paid his brothers an advance to fill a lucrative US contract.
The amount was paid to Philip Gaffney of The Naul, Co. Meath, after he struck a $1.3 million deal with US-based Quality Value Choice Corporation (QVC), which a judge found to be a TV – operates a shopping channel and had an online presence by Mr Justice Anthony Barr.
Mr Gaffney’s Irish ceramic products, such as leprechauns, huts, fairy doors and mushrooms, were to be made in a day around St.
QVC’s order for 67,000 units was not fulfilled. The court, after weighing the probabilities, was satisfied that Philip Gaffney had lost the order or had to relinquish it because he did not pass all the required tests and/or failed to comply with the order by mid-March 2016.
In court, his brothers Alan and Derek Gaffney demanded repayment of what they believed was due under an oral loan agreement in October 2015.
They said they made various payments to Philip Gaffney and his wife Teresa between October 2015 and February 2016 as loans to expand their workshop and procure raw materials to fulfill the QVC order.
They claimed it had been agreed that the loan, which was said to be secured by a charge on the couple’s Co Meath property, would be repaid along with 15 per cent interest if payment were to be made by QVC in spring 2016.
Alan Gaffney stated that the total of $372,043.70 included $100,000 from him, with a similar amount being contributed by Derek Gaffney, and that he also had a line of credit secured against his family home for the remainder said the judge.
The judge dismissed Philip Gaffney’s subsequent case against Alan Gaffney and his wife, who alleged they had breached an agreement to invest €400,000 in his company.
Philip Gaffney countered that Alan Gaffney’s money was not a loan but an investment in his company, which would be repaid from the proceeds of the QVC payment plus 15 percent profit. He claimed he never had anything to do with Derek Gaffney on the matter.
Mr Justice Barr said the case showed the validity of the truism that an oral contract “is not worth the paper it’s not written on”.
However, an email sent by Philip Gaffney to Alan Gaffney in March 2016 makes it “crystal clear” that he took the contract to refer to a loan from Alan Gaffney. The court was satisfied that the agreement was a short-term loan on “extremely favorable terms” for the plaintiffs.
He judged $272,000 for Alan Gaffney and $100,000 for Derek Gaffney against Philip Gaffney as the “sole borrower”. He dismissed the lawsuit against Teresa Gaffney.
Unconvinced that the obligation to repay the loan was contingent on payment by QVC, the court found that the loan was repayable by spring 2016 regardless.
Citing the relative economic strength of the plaintiffs, the judge said the court was satisfied that an alleged 15 percent interest clause in the oral agreement “constitutes a rogue transaction and is therefore unenforceable.” The court declined to order their payment.
The Court was not required to rule on the question of whether Philip and Teresa Gaffney’s property in Co Meath was collateralised as no explanation was sought in that regard.
However, the court would have difficulty deciding that a 2015 statement by Philip Gaffney that he was prepared to post any security required by an Irish credit bank would be sufficient to bring a charge at law or in equity or provide security over the Property.
In addition, the fact that the lands include the family home raises questions about compliance with the provisions of the Family Home Protection Act 1976, the judge said.