A "gullible" man who had suffered a head injury in a crash is entitled to recover €181,000 from a €212,000 business investment because of misrepresentation by a businessman whom he met through an internet advertisement, the High Court has ruled.
Patrick Loonam was also victim of a "bizarre scam" in which he handed over €10,000 on the promise he could make €20,000 by changing "nearly out of date" €5 notes through a credit union, the court heard.
Mr Justice Brian McGovern described Mr Loonam, Moyvilla, Oranmore, Co Galway, as a "naive and gullible" man who was induced to invest as a result of fraudulent or reckless misprepresentation by William Kenny, Kiltrogue, Claregalway, Co Galway.
The judge found Mr Kenny was involved in the €5 note scam as well as misrepresentation to get Mr Loonam to invest in companies arising out of an advertisement on the donedeal.ie website.
The judge reduced a €212,540 award to Mr Loonam mainly on grounds of Mr Loonam’s contributory negligence and “foolishness” in failing to take his solicitor’s advice before making the investment.
He apportioned contributory negligence at 10 per cent and further reduced the damages due to Mr Loonam by €11,000 to take into account goods and materials taken by Mr Loonam from the investment companies, including €1,000 paid to him on account of salary.
The judge said the €181,386 award is made jointly and severally against Mr Kenny and the now largely insolvent companies subject of the investment. They were: K&K Plant and Haulage Ltd; Kenny Tyres Ltd; Topgear Car and Truckwash Ltd and Tribal Catering Ltd.
The judge noted Mr Loonan had suffered some cognitive impairment as a result of a significant head injury from a traffic crash on July 1st 2001 and had received compensation for his injuries.
Psychiatric evidence suggested he was a vulnerable individual who could be taken advantage of, the judge said. The evidence was that, although well oriented in time and space, anyone engaging with him would pick up on his naivety.
In November 2011, Mr Loonam, after reading an ad on the donedeal website, contacted Mr Kenny with a view to investing in the tyre and car/truck wash businesses. Mr Loonam agreed to invest in those and also to invest in the purchase of a catering trailer with a view to setting up a catering business to provide food for customers of the tyre and car/truck wash businesses. He gave €212,540 to Mr Kenny for equity in the businesses.
A garda who gave evidence agreed with the assessment of Mr Loonam as vulnerable in the context in which Mr Loonam got involved in a “bizarre scam involving a man name Phil” related to the “nearly out of date” €5 notes, the judge also said.
The judge said he was satisfied Mr Kenny was involved for the purpose of inducing Mr Loonam to part with the €10,000 in the notes scam.
The judge accepted some of the investment monies paid into Mr Kenny’s personal account were used by him to defray expenses connected with the businesses. However, it was impossible to say how much money was used for this purpose due to inadequate book keeping and improper records, he said.
When Mr Loonam made his initial investment of €80,000, he was not under undue influence of Mr Kenny and was determined to make the investment despite the advice of his solicitor, the judge said.
If he had carried out the “most rudimentary due diligence” of the businesses, he would have realised they were not profit making and he would never made the investment.
The judge found Mr Loonam was partly induced to enter into the investment agreement by virtue of untrue representations by Mr Kenny. By the time he made further investments, he was under the undue influence of Mr Kenny who was aware by that stage he was “a soft touch and gullible”, the judge said.