Court orders defendant to pay investors for investment losses but rejects claim for a separate US bank transfer.

THE HIGH COURT

[2025] IEHC 713 [2019 No. 843 P]

BETWEEN

LIAM O’DOWD, TERESA BARRETT, SÍLE BARRETT

Plaintiffs

– and –

AUSTIN MCGINLEY

Defendant

JUDGMENT of Mr Justice Max Barrett delivered on 11th December 2025.

Summary

In this judgment, I explain why Mr McGinley is liable to the plaintiffs for certain capital sums plus interest, all to be netted against certain sums already paid over by Mr McGinley.

1. Mr McGinley is a former deputy manager with Tesco. While working at Tesco he befriended Mr Flavin, who was at the time a shelf-packer. Mr Flavin claimed to have devised some system whereby he could make large gains on the stock market. Mr McGinley invested some money with Mr Flavin. He then placed an advertisement in a Kerry newspaper looking for other investors. Ms Teresa Barrett came forward. She and her husband invested €80,000 with Mr McGinley. Ms Barrett subsequently encouraged her daughter, Ms Síle Barrett to invest €35,000 with Mr McGinley. There was also a still-later transfer of €39,837 to a US bank account which I will return to later below.

2. Mr Flavin’s market trading skills proved not to be as robust as anticipated and the funds were, it seems, lost. Rather than tell the truth, Mr McGinley (who gave evidence in these proceedings) indicated that he ‘strung the plaintiffs along’ by telling them repeated falsehoods. His deception was such that he faked letters from the Central Bank of Ireland and a firm of solicitors and gave all manner of reasons why the anticipated return on funds was not being paid. Arising from his actions he has been convicted of a number of offences under the Criminal Justice (Theft and Fraud Offences) Act 2001 and was due to be sentenced a couple of days after the present proceedings were at hearing.

3. In their general indorsement of claim the plaintiffs have come seeking judgment in the sum of €155,000 together with damages for breach of contract and/or misrepresentation and/or negligence and/or breach of duty and/or fraud and/or deceit together with interest and costs. By the time the matter came before me the plaintiffs had obtained judgment in default of appearance against Mr McGinley and the case was listed for an assessment of damages. Even though this was so, Mr McGinley was granted leave to deliver submissions and to participate in the assessment hearing before me.

4. Mr McGinley did not dispute his liability for the monies due in respect of the €80,000 and €35,000 agreements. He had in fact paid €115,000 into court for payment out to the plaintiffs. This followed on a previous acknowledged payment to the plaintiffs of €5,000. So none of these amounts were truly in dispute before me and the claim fell in effect to be reduced by €120,000.

5. When it comes to the €80,000 and the €35,000 these were the subject of a couple of poorly drafted (and in the case of the €35,000 almost unintelligible) investment agreements. Counsel for Mr McGinley suggested that they were each in fact a form of loan agreement. I do not see that they were. The initial (€80,000) agreement seemed to me to be an investment agreement with a fixed rate of return. The second (€35,000) agreement reads more like a receipt than an agreement, though it speaks of a return and I consider is also properly construed as an investment agreement.

6. In her oral evidence, Ms Síle Barrett, when responding to the proposition that she had loaned money to Mr McGinley, queried why she would give a loan to a man she barely knew. I admit that I rather wondered at this point why she would place €35,000 with a man she barely knew and who did not impress me when he took to the witness-box as someone who was especially savvy financially or endowed with silver-tongued eloquence. But be that as it may, the agreements, I hold, fall more properly to be treated as investment agreements.

7. Mr McGinley indicated in his oral evidence that he was not responsible for the third investment placed by Ms Teresa Barrett, that this was something agreed directly with Mr Flavin. By contrast Ms Teresa Barrett indicated that she had gone with Mr McGinley to the Ulster Bank in Tralee and, with his assistance, wired the euro equivalent of $50,000 to BMO Harris Bank in Chicago. It seems from the date on the payment application form (in effect the form requesting the transfer) that this was on 16th September 2014. There is no evidence before me to indicate that Ms Teresa Barrett is correct in her recollection that Mr McGinley was with her at the Ulster Bank. Moreover, when Ms Barrett’s accountant took to the witness box, he slightly corrected Ms Barrett’s evidence as to what was done in the Ulster Bank on the day in question. That suggested to me that Ms Barrett’s memory of the day’s events was not entirely correct, she has nothing to show that Mr McGinley was with her, and neither of the bank officials who have signed the payment application form beneath Ms Barrett’s name gave evidence as to what transpired.

8. I accept that Ms Teresa Barrett went to the bank on the day in question. I also accept that she did not conjure up the name of a U.S. bank to receive the funds that she was transferring. (To this day, it is not clear who received the funds in the United States.) But this is the plaintiffs’ case to prove on the balance of probabilities and there is not an iota of evidence before me, beyond Ms Teresa Barrett’s say-so to indicate that Mr McGinley was in any way involved with this particular transfer. Counsel for the plaintiffs appeared to suggest that Mr McGinley and Mr Flavin were in league together and that this offered some basis for liability. However, Mr McGinley claims that he too invested money with Mr Flavin and lost it. So he seems to me to be, with respect, a financially imprudent man who encouraged the plaintiffs to join with him in placing certain unwise financial investments with Mr Flavin and then repeatedly lied and acted deceptively towards the plaintiffs when those investments did not reap the promised returns.

9. On the dearth of evidence before me, I cannot conclude that anyone went with Ms Teresa Barrett to the Ulster Bank in Tralee on 16th September 2014. In terms of linking Mr McGinley to this last transfer or to his presence at the bank on 16th September 2014, there is, as I said, simply no evidence at all – and courts must proceed on evidence.

10. As part of the plaintiffs’ evidence, I was given a report by PSC Accountants and Mr Michael Daly of that firm gave oral evidence. It is important to note at the outset what that report was concerned with. At p.3 it states that “To facilitate the High Court in making this assessment [for damages] we have been retained by the plaintiffs to prepare a report setting out and verifying the quantum of funds given by the plaintiffs to Mr McGinley, the source of these funds and the transfer of funds methodology”. The quantum is not really in dispute, nor is the transfer of the funds in issue (save as discussed above that Mr McGinley denies any connection with the third amount, including their transfer to BMO Harris Bank). The source of Ms Teresa Barrett’s funds seems also not to be in dispute: they were, to borrow from the PSC report, “Cash Drawings” from the company.

11. Mr Daly suggested in his oral evidence that the scale of these drawings was sufficient to knock the company into the commercial failure that it subsequently suffered. This is not a suggestion that features in the PSC report. Indeed, it seems to go beyond the stated purpose of that report. And with every respect to Mr Daly’s expertise, I do not accept that it suffices to establish something on the balance of probabilities that a plaintiff would produce an expert who says something that goes beyond the remit of the report that he has prepared, does not appear in the report that he has prepared, and has no real basis in that report save that the annual accounts are part-produced in that report. Again, courts proceed on evidence, and I do not see that the link between the “Cash Drawings” from the company and its later commercial failure have been established on the balance of probabilities. (The issue of whether a director satisfies her corporate responsibilities to a company by extracting “Cash Drawings” of a scale that an accountant later engaged by her could allege to have caused the commercial failure of that company was not canvassed before me and I do not address it here).

12. Ms Síle Barrett indicated that she has suffered from a degree of mental ill-health in the past (I am sorry if this is so) and that her experience as regards the failure of the investment has taken a mental toll on her. However, no medical evidence of any nature has been placed before me concerning any such ill-health or positing a relationship between what transpired with Mr McGinley and some spike in mental ill-health on Ms Síle Barrett’s part. Again, I must note that courts proceed on evidence, that this was the plaintiffs’ case to make, and that in this regard, as others, they have failed to establish key elements of their case on the balance of probabilities.

13. Does the foregoing mean that the plaintiffs must fail in the case that they have brought? No, I do not believe that it means that they fail, and here one must turn to the express terms of the agreements that they entered into.

14. The agreement for the €80,000 was done by way of a letter signed by Mr McGinley on 20th September 2011, and reads as follows:

“Liam and Teresa Down [a.k.a. Barrett] are given [sic] Austin McGinley €16,000 cash [there is an interpolation at this point that reads “cash given”] and €64,000 of a cheque for 2 years and three weeks on the understanding we get full €80,000 back and 18 months and afterwards x 3 & 18 months & 18 months on we get x 7 times.

On by chance that this investment agreement doesn’t work Austin has agreed to sell his house…and give back €80,000 and €10,000 extra”.

15. It is not an optimally well-drafted investment agreement. I do not understand how the cheque monies are being given for 27 months but there appear to be contemplated payments in Month 18, Month 36 and Month 54. However, as I read it, it is an investment agreement whereby at the end of the investment period the investors will recoup, at a minimum, the initial investment sum plus a guaranteed return of €10,000, with the possibility of a much higher rate of return if all goes well.

16. Counsel for Mr McGinley suggested in his oral submissions that the €10,000 amounted to a penalty clause. With respect I do not see that it is. The €10,000 does not become payable if there is some sort of breach. It is a guaranteed minimum return and is not dealing with a breach situation at all. Ms Teresa Barrett has never been paid that €10,000.

17. Ms Síle Barrett appears to have driven a harder bargain with Mr McGinley. Her agreement is more succinct. Dated 28th May 2012, it indicates that Ms Síle Barrett has given Mr McGinley €35,000 and then states “Money back 24 months. By 2 in 18 months after bein[g] 2015,* & by

3 18 after again 2017”.

* I do not quite follow the timing as 18 months after 28th May 2012 is 28th November 2014, not 2015. This is perhaps best read as meaning that the liability would accrue on the 18 month anniversary but the actual payment would take place sometime in 2015. I read this as being 18 months after 28th November 2014 which brings one to 28th May 2016, not 2017. Again, it is perhaps best read as meaning that the liability would accrue on 28th May 2016, but the actual payment would take place sometime in 2017.

18. Again, this is not an optimally well-drafted investment agreement. Even so, its terms seem clear. The €35,000 is to be repaid two years from the date of execution, a similar amount again is to be paid in 2015, and a similar amount is again to be paid in 2017. To put that in investment terms it is an agreement for a guaranteed return of the capital investment in Month 24 and an amount equal to that capital investment in 2015 and in 2017. Again, one is not dealing with breach, so I do not see the penalty clause argument to hold good. It is an agreement which offers a guaranteed minimum return of a capital repayment in two years and an equal sum to be payable in 2015 and in 2017. The contract is not dealing in this regard with a breach situation at all. Ms Síle Barrett’s contract does not contain a clause akin to the minimum capital sum + €10,000 return agreed in the agreement between her mother and Mr McGinley. Ms Síle Barrett has not been paid any of the guaranteed amounts.

Conclusion

19. My reading of the agreement between Mr McGinley and Ms Teresa Barrett is that 54 months after the initial investment she would get a minimum return of her initial investment plus €10,000. This fell due on 20th March 2016. I will therefore order that Ms Teresa Barrett be paid (€80,000 plus €10,000) with interest, that interest to run from 20th March 2016.

20. I do not see, for the reasons stated above, that Ms Teresa Barrett has established on the balance of probabilities that Mr McGinley is in any way liable for the transfer of the euro equivalent to $50,000 on 16th September 2014.

21. It became apparent during the hearing that Mr McGinley may have sold his interest in his family home to his wife and thus that it may not be possible for him to comply with the agreement that he would sell his home to meet his liability to Ms Teresa Barrett.

22. My reading of the agreement between Mr McGinley and Ms Síle Barrett is that Mr McGinley became liable to pay Ms Síle Barrett the following sums on the following dates:

1. €35,000 on 28th May 2014.

2. €35,000 by 31st December 2015 at the latest

3. €35,000 by 31st December 2017 at the latest.

23. I will therefore order that each of the three amounts be paid to Ms Síle Barrett, with interest to run on item 1 from 28th May 2014, on item 2 from 31st December 2015, and item 3 from 31st December 2017.

24. I am mindful that by going for the latest date of payment with each of items 1 and 2 this slightly reduces the interest payable but given the ambiguity in the agreement this seems to me to be the fairest way of proceeding. The contra proferentem rule was not argued before me and I do not have sufficient evidence before me to know how it would in any event fall to be operated on the facts before me.

25. I note that the plaintiffs have undertaken to the court that they will ‘net’ the amount owing under this judgment and any payments made in the context of the criminal proceedings such that there will be no double recovery.

26. I reject the suggestion that the plaintiffs have delayed in bringing these proceedings. The whole way up to March 2018, the plaintiffs were receiving fake correspondence from Mr McGinley (including a faked solicitor letter dated 5th March 2018 – a particularly serious form of fraud) indicating in effect that the repayment of monies was simply being delayed. Indeed, Mr McGinley had the gall to indicate in the witness box in these proceedings that were it not for the eventual intervention of the Gardai at the behest of the plaintiffs he would have continued to ‘string the defendants along’. The plenary summons in this case issued on 1st February 2019 and the proceedings continued with relative expedition thereafter, so I see no delay to present.

27. I note that Mr McGinley pleaded guilty at his trial and has repaid the initial capital sums invested (the €80,000, €35,000 plus an initial €5,000). The plaintiffs are not recovering anything for the third sum (the amount transferred to the United States on 16th September 2014) having failed to establish their case on the balance of probabilities in this regard.

28. In all the circumstances, I do not see that the requirement to pay interest on the monies owing would be oppressive to the defendant. On the contrary, it would represent an injustice to the plaintiffs were the payment of interest not to be ordered,

29. I will hear the parties as to costs.