On June 29, Bernadette Goodwin will finally get her day in court. At every step possible, AIB, majority-owned by the state and one of Ireland’s two pillar banks, has fought the 83-year-old widow to prevent her from reaching this moment. But Goodwin, born in the Dublin suburb of Kimmage in 1938, never gave up and never backed down.

More than 300 other people originally joined her in similar litigation against the bank, and more than a dozen of that number died before getting a full court hearing on the substantial issues. But Goodwin has kept going, undeterred, unyielding. She has fought her way through the High Court, the Court of Appeal, and finally, last December, the Supreme Court. It was the Supreme Court that finally ruled the case could go ahead.

Goodwin is alleging that the bank mis-sold a high-risk property investment, the Belfry fund, to her and her late husband. The product was sold to more than 3,000 investors in total, most of whom lost much of their money.

Goodwin’s action is both symbolic and strategic – her case is the first in a series of so-called “pathfinder” cases against AIB, six former directors of various Belfry funds, and related companies, including accountants BDO. In total, the 300 waiting in the wings invested €52 million in five Belfry property funds and lost all their money.

The 300 investors have stuck together since 2014 when they first tried to sue AIB. They stuck together when the bank pushed back arguing over preliminary issues and the discovery of documents. And they stuck together when AIB and its co-defendants argued that the investors were statute-barred from suing (this was overturned in the High Court).

And they stuck together when AIB and its co-defendant went to the Court of Appeal and won on this issue, only for the 300 investors to go to the Supreme Court where they won. Now, 18 years after Goodwin and her late husband Charles were first asked by AIB to invest in the Belfry funds, she will finally get to state her case in a courtroom.

For AIB the case revolves around money, but for Bernadette Goodwin there is more to it than that.

Goodwin’s allegations against the bank in relation to her investment in Belfry make for sad reading. In his dying months, she claims her husband was convinced by officials in the bank to invest in the fund. The bank insists he and his widow did so with their eyes open to the risk involved, a claim his widow rejects.

Judge Brian O’Moore has set aside ten weeks to hear Goodwin’s pathfinder case in what promises to be an important trial with big implications for the many others suing AIB in relation to Belfry. 

It is a story of one woman’s battle against a bank. But it is also a story about so much more – about the tactics used by financial institutions, the cultural attitudes within the sector and the efforts the bank engaged in to stop this action.

But, as an 83-year-old grandmother prepares for her day in court, it is also a story of resilience.  

An origin story, sadly of its time

The Belfry funds were the brainchild of an entrepreneur called Tony Kilduff, who made his first fortune selling his banking software business in 1991 to what is now known as Misys. He was an incredibly active investor in the 1990s and the early years of the following decade, backing various tech companies, running an internet café chain, investing in an online organic food company, taking a stake in the creche company Giraffe. The list goes on.

At the time he lived on Shrewsbury Road in Dublin 4 and had a significant private property portfolio. He even had a majority stake in a private jet leasing business too, and he hired out a ski chalet in Courchevel in the French Alps.

In the early ‘00s, Kilduff hit upon the idea of raising funds from AIB clients as equity for a series of companies called Belfry. Kilduff’s company Cheval sourced the properties to go into these funds, starting with prime properties in London. But as time went on and each fund got larger, gradually properties were largely being sourced from across Britain.

John Rockett was AIB’s head of private banking at the time and a director of the Belfry funds. In a 2003 interview, he explained the logic of the plan, presenting it as a positive that the investments were away from the powerhouse of London and were instead located in “provincial” areas like Leeds, Blackpool, Manchester and Norwich.

“Such areas do not have the volatility of London, which is particularly affected by the swings in the financial sector,” he reassured potential investors.

The first Belfry fund was a great success for investors, and a lot of the assets it acquired were in London. The Belfry funds, 2, 3, 4, 5 and 6, did not do so well. Investors in these funds lost all or much of their money. In total, more than 3,000 people invested in Belfry, putting in between €100,000 and €400,000 on average each. All told, about €300 million was raised from investors. This equity was then leveraged up with debt to the tune of €1 billion.

At each step of the way, investors were charged fees by various parties. Lawyers. Surveyors. Even Cheval itself. It is estimated that fees totalled €100 million in total as a hodgepodge of hundreds of shops, industrial sites, offices and cinemas were acquired all over Britain.

There were plans for a seventh Belfry fund too around 2007 but this never went ahead.

Instead, investors in the fund were about to discover how exposed they were – not only to the second-tier commercial property market in provincial Britain but also to the financial crisis. And, sadly, they were also exposed to the small print of the deals they had signed up to. 

How Bernadette Goodwin came on AIB’s radar

Bernadette Goodwin was born on May 25, 1938, in Kimmage, Dublin 6W. She was living in Laois with her family when her father died at 41 in July 1949. Losing her father required her mother to go out to work and the family moved to live with her grandparents in Glasnevin in north Dublin. Goodwin was good at school and won a scholarship to Holy Faith Convent in Dominick Street but because of her family circumstances she could not take it up and she left school at 15.

Her first job was with fashion designer Marjorie Boland, who back then had an exclusive store on Grafton Street. But the money wasn’t good, so Goodwin got a job instead as a dental nurse, before working as a shop assistant and later a bookkeeper. In 1962, at the age of 24, she married her husband, Charles. After that, she never worked again outside the home.

Her husband Charles was an accountant and was ten years older than her. Her husband got into business importing machinery and he co-founded a company called Harvest Machinery. The couple bought some land in the emerging suburb of Templeogue in Dublin and eventually they got enough money to build a house there. They sold this house in 1968 and moved to Malahide and later to Swords. They had three children. Tragically, their eldest son Keith died in a drowning accident at the age of five. In October 1972 they adopted a boy, and two years later the family moved to Dunshaughlin, Co Meath where they lived for the next 17 years.

In 1991 Charles Goodwin became seriously ill, and he had to retire from his job as managing director of the machinery business he had co-founded. In 1992 he went for an operation to treat an aneurysm, and a month afterwards suffered internal bleeding. His health never recovered after this. The Goodwins sold their house in Dunshaughlin as their children had grown up and moved to Spain as it was felt the warm weather might help Charles. They bought a home there.

After a few years they also bought a home in Mullingar, Co Westmeath as Charles needed to come home regularly for medical treatment. After they came home for Christmas in 1999, the doctor advised them that Charles was now too ill to travel. In the spring of 2003 they decided to sell their home in Mullingar and bought a new home in Kells, Co Meath. Charles Goodwin was too ill to work so he sold his shares in the machinery business. It was at this point that they really came on the radar of AIB.

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After selling their home in Mullingar, and an apartment in Spain, and selling out of their business the Goodwins suddenly had significant money in their AIB account.

Bernadette Goodwin left school at 15 and, according to her, she had no investment experience as her husband always made the decisions when it came to business. 

This claim is disputed by officials in AIB who claim that as a director and shareholder in her husband’s businesses she was experienced. 

Charles Goodwin certainly had some knowledge of investing and investments. Over the years, he had bought shares, initially using Goodbody before switching his business to NCB. According to Bernadette Goodwin, her husband was a conservative investor who did not gear up or make high risk investments. (AIB again disputes this description, classifying him instead as a “non-risk averse” investor.)

From property disposals and the sale of their shares in their business, Bernadette and Charles Goodwin had €1.6 million. With their children reared they were thinking about their old age, and what would happen when Charles Goodwin died as his health continued to deteriorate.

It was then that AIB came calling.

A low-risk investor weeks from death goes high risk

On July 4, 2003, Teresa Oakes, an AIB official, called to the Goodwin family home in Kells just after lunchtime. Charles Goodwin was 73 at the time. He was terminally ill, heavily medicated, and had, according to his medical diagnosis, just weeks to live. Oakes would say in May 2020 that she didn’t know any of this, and that Charles Goodwin appeared to her to be competent and able to manage his own affairs. 

Bernadette Goodwin’s recollection is different. She says her husband’s health was discussed, as was the fact that he was expected to pass away within a short period. She said she had lifted her husband from his wheelchair into a chair in their drawing room to meet Oakes, and a colleague from the bank.

According to Bernadette Goodwin, they wanted to discuss a safe, long-term investment that would provide for her after her husband died. The meeting, she said, lasted 40 minutes at most, as this was the most her husband could go without taking medicine or receiving injections.

She recalled the meeting well because, she says, by that stage Charles Goodwin was so ill he rarely left the house and was meeting few people other than close family, the parish priest and his solicitor, who was helping him to prepare his will. Bernadette Goodwin recalls Oakes mentioning the prospect of investing in Belfry, and she recalls that Oakes was told about her husband’s nearness to death, and requirement for an investment suitable for her after his passing.

The particular fund that was discussed was called Belfry 3, as this was the third such property fund launched by AIB. The fund was buying up swathes of commercial property around Britain.

Bernadette Goodwin has no recollection of Teresa Oakes going through the Belfry prospectus page-by-page, or of her stopping to explain the risk factors that were detailed on page 25 and page 26 of the document. Teresa Oakes claims she did so. Given the length of the meeting, Goodwin says she does not believe it would have been possible to go through the prospectus in such a tight time frame. Oakes disagrees.

Either way, documents were signed, and AIB debited €223,000 from the Goodwin family savings account to go into Belfry. A letter from Oakes to the couple dated July 4, 2003, describes the performance of the first two Belfry funds and how they had largely gone well for investors. Belfry 3, the letter said, was suitable for individual, company and pension fund investors. The letter invited the Goodwin’s to read all the documentation and revert to Oakes with any questions.

Bernadette Goodwin, when going through her husband’s files, came across a 15-page brochure detailing various fund offerings from AIB. A blue pen mark is beside the column marked “low risk investments,” and Goodwin believes this indicated the intentions of her husband when investing. Bernadette Goodwin acknowledges that she was aware that her husband had met with AIB prior to the meeting she attended. She does not know what was said at this meeting.

A relationship based on trust

Bernadette Goodwin recalls the July 4, 2003, meeting as being centred around making an investment that would provide for her through her old age. At the time her children lived overseas, so the husband and wife were anxious that she would have enough money to travel and pay for a nursing home if it was ever needed.

AIB’s Teresa Oakes claims that Bernadette and Charles Goodwin were clearly aware of the risks associated with Belfry, a fund with an eight-year term, and that Charles knew it was a high-risk investment – and potentially a high reward one.

AIB maintains that Charles Goodwin understood the concept of gearing – combining equity with debt to take greater risks. Bernadette Goodwin says she did not understand this concept. She also believes her husband didn’t, and that if he did know what it meant he wouldn’t have invested their money in Belfry. The risks associated with gearing, especially if there were breaches of lending arrangements, was not explained by AIB, she says.

Bernadette Goodwin said AIB had been their bankers for decades, and as a result she trusted it to give them good advice. Charles Goodwin, as well as investing in Belfry, also made other arrangements to prepare for his death such as finalising his tax affairs, and making investments in bank shares, then seen as a conservative investment.

On August 25, 2003, Charles Goodwin died. Oakes attended the funeral as did another AIB official. Bernadette Goodwin had her own health issues after that, and she lived for a time in Spain as well as in Ireland. She continued to use AIB as her banker, and she used Oakes again in December 2003 when she invested €100,000 in a Goodbody Active Stock Market fund.

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As the years went by, Bernadette Goodwin received regular updates on Belfry. A company called Cheval Properties Ltd, controlled by Tony Kilduff, was actively investing the fund in UK commercial property. About £100 million had been borrowed by the fund to help it do so.

On September 19, 2007, there was good news. Her initial investment of £150,000 was now valued at £342,000. By August 5, 2008, however it was valued at £262,000. The investment was down from its peak, but things were still going well.

The following month Lehman Brothers, a large investment bank in the United States, collapsed, triggering a global financial crisis. AIB was on the brink of going under until the state stepped in to guarantee the entire Irish banking system. Things were now set to get dramatically worse.

“Written down to nil”

On June 17, 2009, Stephen McGivern of Cheval wrote to Goodwin and other shareholders in the Belfry 3 fund to give them an update. He told her that there were “extremely difficult market conditions” due to the financial crisis, which was now at full force with banks being nationalised or bailed out around the world. McGivern briefed that Investors’ equity had been “eroded” but that it wasn’t all bad.

Belfry had good cash flow that covered its obligations, a diversified property portfolio, and it had renegotiated the terms of its debt with its UK bankers. McGivern said directors were “confident” that investors would be in a position to benefit from a “potential upturn in the UK property market”.

By September 1, 2009, it was a different story. Cheval told Goodwin that the terms of her loan had been renegotiated on April 14, 2009. “The revaluation of the portfolio has resulted in the value of your investment being written down to nil,” she was told.

Goodwin was alarmed. She feared her money was entirely gone. She wrote to Oakes and others she had dealt with in AIB seeking answers. She also contacted accountants BDO, which handled correspondence for Belfry.

On March 2, 2010, she wrote to her manager in AIB’s Drogheda branch as this was the person she knew best in the bank. She accused the bank of misselling to the elderly. She told the bank of her distress and asked for her money to be refunded.

AIB wrote back on May 5, 2010, defending its position, and dismissing her accusations. It said that at the July 4 meeting Oakes had identified Goodwin’s risk profile. Oakes claimed she had outlined a number of potential investment options from non-risk to high-risk.

The higher risks associated with Belfry 3 were explained; so too its eight-year investment term, the bank said. Goodwin denies that this explanation was given, and she argues that her terminally ill husband in any event would not have agreed to such an investment as the money was intended to protect her in her old age.

According to the AIB letter, the Belfry prospectus stated on page 25 that the investment involved ‘a high degree of financial and commercial risk’. Goodwin denies this and says her legal advice is that this is a misstatement of what was said on page 25 which refers only to ‘a degree of financial and commercial risk.’ She said nowhere in the prospectus she received is the phrase “high risk” or “high degree of risk” used.

AIB wiped its hands. It told Goodwin she had “previous experience of risk-based investments”, and that it had done all it could for her but the money was gone.

It told Goodwin: “We understand your disappointment in relation to this matter, yet we cannot agree to uphold your complaint for the reasons outlined above. If you are not happy with our response you may refer this matter to the Financial Services Ombudsman’s Bureau.”

Bernadette Goodwin wrote to the Financial Services Ombudsman in 2010, to be told that it could only look at transactions that had occurred up to six years earlier than a complaint so it could not hear her. Around then, she heard about something called the Belfry Action Group, which had been formed by investors to band together to pursue a case of alleged misselling. Bernadette Goodwin decided to reach out to it.

Wiped out, fighting back

The Belfry Action Group started coming together from 2010 on. Hundreds of investors in the fund would meet in hotels like the Red Cow in west Dublin to try and get answers on what was happening to their money. By 2012 lenders to the Belfry funds, including AIB itself, had instructed “an orderly disposal process”, which involved selling off all the properties to recoup the banks’ losses. Since 2009, the investors had suspected they were to lose everything. Now it was actually happening.

The radical plan implemented by the Belfry funds on the instruction of its bankers was to sell all of the properties in the funds as they had breached their loan-to-value covenants. This would ensure bankers to the properties got most of their money back, but it also meant that investors were going to lose everything.

Two businessmen called Barry Flattery and Paddy Walsh asked their accountant, Conor Sheahan, to go to one of the Belfry town hall meetings to see if he could do anything.

Sheahan had just had some success in New York where he had represented 37 clients of an Irish fund called Sorrento who feared they had lost $20 million in an apartment deal gone wrong in the Sliver Building in Manhattan. A hedge fund had bought debt related to the building and was trying to wipe-out their equity. Sheahan had managed to force the fund to repay investors $12 million or about 60 per cent of their money. Also at these meetings was a solicitor called Tom Casey of Tom Casey Solicitors, a law firm based near the Four Courts in Dublin 1. Casey wasn’t afraid of taking on a bank like AIB nor the various wealthy businessmen involved in the Belfry funds.

He had represented for example James Haughey, an orphaned double-stroke victim, whose money was gambled on contracts of difference by high powered stockbrokers in Davy. In 2014 Haughey had told the High Court he had been left in “financial ruin” after the broker invested his money on risky bets. In a damning judgement in 2014 Judge Peter Charlton concluded Davy was guilty of “negligence and manifest breach of contract through deliberate neglect,” in relation to a vulnerable young man.

Casey decided to take on the Belfry case, and Sheahan, with his firm CKS Finance, agreed to help on what was a fearsome task – marshalling a group of small-time investors to take on a much bigger bank and a group of experienced businessmen. More than 300 investors agreed to fund an action, each chipping in a couple of thousand to create a fighting fund. They had no idea how hard it would be to even begin taking their legal action.

What was said, and who said it

In earlier proceedings, Bernadette Goodwin managed under discovery to obtain notes made by AIB officials in relation to her investment. There was a typed note by Oakes detailing a meeting she said took place on June 4, 2004, with Charles and Bernadette Goodwin in their home. She said the prospect of investing in the Belfry 3 Fund was discussed at this meeting. The note makes reference to the amount of money the Goodwins had and other matters, but there is no reference to the specific risks involved being discussed on this date. The note is 75 words long.

Goodwin says categorically that she did not meet Oakes on this date, and only met her once on July 4, 2003. Her diary has a note of a meeting with AIB on July 4, but not June 4, 2003. Oakes also had a second note of this July 4 meeting. This note is twice as long as the previous note, and parts of it covers the same ground as the June 3 note. This time however, Oakes describes Charles Goodwin as an “astute” businessman noting his experience investing in shares via NCB. This time Oakes said she discussed a “full suite” of products ranging from “non risk to risk-based investment” with the couple. This time Goodwin is described as “keenly interested” in Belfry, and Oakes notes how she went through the prospectus and brochures/booklets explaining how the deal worked. “I clearly outlined the risk factors associated with the investment – which was outlined in the prospectus,” she said, adding that the Goodwins decided to invest in their Belfry fund after a “full discussion”.

Bernadette Goodwin disputes this note. She says Belfry was not described in the July meeting as “high risk”, and she claims that this was not the type of investment either she or her dying husband was interested in. She said various investment options at different risk levels were not discussed at this meeting.

In discovery, Goodwin also obtained an internal memo written by Oakes dated March 2010, which was used by the bank when it wrote to her in May 2010 to tell her it was not going to refund her any of her money.

In this memo Oakes said she had “many conversations” with Charles Goodwin, and that the Goodwins were experienced investors who took “high risk” in their stock market dealings.

Bernadette Goodwin disputes this, saying they never borrowed money to buy shares, and that investing in a portfolio of shares under the guidance of a stockbroker was not a high-risk activity. Goodwin said her husband invested in blue-chip shares in developed economies.

The type of companies Goodwin invested in were well-known names like British Airways, Fyffes and Greencore. He traded rarely and tended to hold onto stocks for many years. His portfolio was worth about €200,000 and it had a number of banking stocks. His biggest investment was in AIB itself. 

Oakes claims in her memo that she is “fully confident” that the Goodwins understood the risks involved with Belfry. She said she had carried out a “thorough fact finding and detailing of client needs”.

Oakes, in her memo, states she outlined “risk associated with property, gearing and time frame” and she claims after she outlined those risks, the couple “clearly understood the risk associated” with the Belfry including concepts like “gearing.” Bernadette Goodwin disagrees, and claims neither the risks nor concepts like gearing were explained to her.

In the memo, the banker states that Charles Goodwin was “mentally fit” when he invested, but makes no other mention of his health.

Bernadette Goodwin maintains that AIB knew its client was near death, on medication, and physically incapacitated, and that this was reflected in what she claims is the need for a low-risk investment product. 

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After the Belfry Action Group consortium lost their case in relation to being statute-barred in the Court of Appeal, a meeting was held in the Heritage Hotel in Portlaoise to discuss what to do. The advisors to the group turned up expecting a downbeat affair. Instead, the group of 120 investors who turned up urged them to push on, as did many others who were unable to attend. They voted together to take the next step to go to the Supreme Court. In December 2020, the Supreme Court overturned this loss and ruled that the investors were not statute-barred in their claims of misrepresentation and negligent statement arising from the existence, and alleged non-disclosure, of loan-to-value (LTV) covenants in the borrowings negotiated on behalf of the Belfry investment vehicles by the defendant directors, that led to them all being wiped out. The case was now back on, with a date in the High Court set for June 29 in front of Mr Justice Brian O’Moore. There are five other people waiting to take their own actions after Goodwin.

The memory of her husband

Colin Hunt became chief executive of AIB in March 2019. Four months into the job he spoke about the Central Bank’s investigation into the tracker mortgage scandal which had caused so much distress and loss to a large number of small customers of the bank. At that stage, Hunt said the bank had put aside €35 million to deal with the issue. “It is vital for the long-term viability of the bank and the sector that we close the chapter on legacy issues,” he said, adding: “We want to see the reputation of this institution being restored fully in the eyes of the public.”

Hunt made it clear that things were going to change in a bank that had a history of scandal and required a €20 billion bailout from the public following the financial crash. AIB’s subsequent acquisition of stockbroker Goodbody puts an even greater imperative on the bank to retain the confidence of prospective investors and clients.

AIB when asked about Goodwin’s case and Belfry said: “We won’t be commenting on an ongoing legal matter.”

Later this month Hunt’s AIB will face off against an 83-year grandmother who is determined to not back down. For AIB the case revolves, like most things with banks, around money. But for Bernadette Goodwin there is more to it than that. She has put together a strong legal team, who are representing her and the other 300 individuals, including John O’Donnell SC, Gary McCarthy SC and the solicitor Tom Casey.

Why is an 83-year-old going to spend up to ten weeks arguing her case in the High Court, and being cross-examined by AIB? She is lucky that she doesn’t desperately need to get her investment back. Her motivation isn’t money, it is the memory of Charles Goodwin.

*****

End note: Sister Ignatius of the Bon Secours order paid tribute to Charles Goodwin at his funeral mass on August 25, 2003. Sister Ignatius spoke of a loving husband, and a good father who bore his illness with “heroic fortitude”. She spoke about praying beside him at 2am in the morning as he lay dying and how Charles Goodwin found the strength to tell her what he would like to say to his loved ones at his funeral. She said he remembered his son who had died at the age of five, his family, and all those who had cared for him during his long illness. He spoke that night too of “my loving wife Bernadette” whose “devotion during my long illness was unmatched”. Sr Ignatius told the crowded church: “The name Charles Goodwin was synonymous with integrity, loyalty, fidelity, honour and gratitude. He was a man whose word was his bond.”

He was a meticulous man, she said, who “saw to it that all his earthly affairs were put in order with scrupulous accuracy”. Attending the funeral and paying their respects were two AIB officials, including Oakes. In the years since that day and after she sued the bank, Bernadette Goodwin hasn’t seen her former advisors in AIB. In 22 days they will encounter each other again.

Can the 3,000 other Belfry investors not part of the Belfry Action Group still sue?

It is hard to definitely say, but it will certainly be difficult. If you haven’t lodged a claim against AIB and others by early August 2014, per the recent Supreme Court judgement in the proceedings, investors are statute-barred from suing the bank, unless the Court determines there was “fraudulent concealment” by AIB and the other defendants of the investor’s cause of action.

This is one of the issues which the High Court is being asked to determine in the forthcoming Goodwin test/pathfinder case.  However, it remains possible to go to the Financial Ombudsman and ask him to take a look.  A change in the governing legislation in 2017 allows the Ombudsman to investigate a complaint relating to the alleged mis selling of a long term financial product, such as Belfry, if the complaint is made within three years of a certain date of knowledge [of the issues giving rise to the complaint] and also gives the Ombudsman a discretion to extend the time to make a complaint where there are reasonable grounds and it is just and equitable to do so.  Insofar however as the Belfry investors were aware of their losses since 2009 it may be difficult to persuade the Ombudsman to consider a complaint at this stage.  The Currency can’t say definitively what is best to do.