A €280,000 sum given to a Co Donegal husband and wife by their “naive” friend was a loan sought by the wife with no specified repayment date and not an unsolicited “gift”, a High Court judge has ruled.

The “real tragedy” stems from the reaction of Jacqueline and John Keenaghan when Fidelma ‘Della’ Kerrigan sought repayment in 2014 of the loan made by her in August 2010, Ms Justice Deirdre Murphy said.

The €280,000 was one third of a €750,000 compensation sum secured by Ms Kerrigan about two weeks earlier over serious personal injuries suffered by her in a road accident in 2002 in which her father died.

The judge accepted evidence of Ms Kerrigan and her sister Celine that in the months leading up to the settlement, Ms Keenaghan, whose architect husband’s business was in serious difficulty due to the financial recession and who was very friendly with the sisters, broached the possibility of Ms Kerrigan helping her out of the settlement proceeds and assured Ms Kerrigan she would pay back “every penny”.

Ms Kerrigan had agreed in principle to help out her “dear friend” and Celine Kerrigan was an enthusiastic supporter of her sister’s decision to do.

Rather than acknowledge their debt, the Keenaghans chose to deny it and, thereby, “at least by implication”, cast doubt on the honesty of Ms Kerrigan and her sister Celine, the judge said.

“It was Jacqueline Keenaghan’s denial of the true circumstances of this loan that ruptured this friendship,” she said.

“The Kerrigans saw this denial for what it was, an enormous breach of trust”.

There was no suggestion Ms Kerrigan ever demanded immediate repayment of the full sum and the court was confident any reasonable proposal from the couple would have found favour with Ms Kerrigan even if spread over “many, many years”.

The Keenaghans could have made repayments from sale of lands and their earnings and it would “not have been unreasonable” for them to have asked their adult children, whose education had been “entirely funded” from Ms Kerrigan’s money, to make some contribution. Had they taken such steps, it was probable “this case would never have come to court.”

Even if she had found the €280,000 was a gift, she would have set that aside as an “improvident transaction” on foot of which the defendants had been “unjustly enriched” and it would be “unconscionable” to permit them to retain it, the judge stressed.

The case has been adjourned to January 29th for final orders and to address cost and interest issues.

A Revenue official had given evidence there are income tax implications arising from receipt of an interest free loan.

Outside court, Ms Kerrigan, accompanied by family members and her solicitor Aisling McGowan of Damien Tansey solicitors said: “I’m glad it’s over.”

Ms Kerrigan (59), of Benildus Avenue, Ballyshannon, and her sister Celine, had told the court the money was offered as a loan after Ms Keenaghan, of Rathmore, Ballyshannon, sought money from them. It was claimed she had told them she feared losing her home as her husband’s business was adversely affected by the 2008 financial recession.

Ms Kerrigan said the money was a loan which could be called in, allowing a reasonable period for the defendants to set up their new business. She sought repayment in 2014 but was not repaid and she is now on social welfare payments.

The Keenaghans denied the claims and insisted the money was a gift with the effect they had not failed to repay it.

Having assessed the evidence, Ms Justice Murphy was satisfied on the balance of probabilities Ms Keenaghan had, in the face of “impending financial disaster” for her family, pleaded with Ms Kerrigan for help and that, if she was helped, the money would be repaid.

She was also satisfied that, sometime between August 15th and 27th, 2010, the sum requested by Ms Keenaghan increased from €240,000 to €280,000. The judge also said there was a “real possiblity” that Ms Keenaghan never told her husband that she had asked for the money and promised to pay it back.

It was to Mr Keenaghan’s credit he had qualms about accepting the money despite the dreadful financial circumstances in which his family was in at the time but it was to his discredit he relented and agreed to accept a huge sum “grossly in excess” of the family’s liabilities, she said.

Those liabilities were in the region of €180,000 to €190,000. Out of the €280,000, the Keenaghan’s paid their bank debts of €83,282, repaid family loans and paid €10,000 into the account of their eldest son, who lives in the USA. Some €20,000 went to finance their daughter Danielle’s return to college and money was also put aside to finance the college expenses of another son. The balance was used to allow the couple train as counsellors and set up a counselling business. €88,000 also went towards paying a VAT and income tax liability of Mr Keenaghan.

The judge, who noted earlier the Kerrigan sisters have had limited formal education, said Mr Keenaghan had been in business for 30 years and should have known Ms Kerrigan should take advice before handing over a third of her settlement cheque to his wife.

By accepting this money, Mr Keenaghan was able to get two powerful creditors, a bank and the Revenue “off his back” and replace them with a creditor who was “benign, generous, empathetic and, unfortunately for her in the circumstances of this case, naive and gullible”.