Overdraft costs couple £4m home

A millionare property developer and his wife lost everything because they continued to borrow beyond their means in the hope that “their ship would come in”, a judge ruled.

They were also ordered to pay almost £1 million despite the wife saying she has only £30 to her name.

In 2004 Michael and Carol Ann Gatt, both 66, bought £4 million Melksham Court, a Cotswold medieval manor with space for Mrs Gatt’s horses, a £240,000 mobile home, as well as Mr Gatt’s Ferrari and Harley Davidsons.

But it was re-possessed and Mr Gatt declared bankrupt when their company GLN Holdings collapsed in 2007. They had to move into a bungalow owned by their son on the estate in Stinchcombe, near Dursley.

From there, they embarked on a five-year fight for £3 million compensation from Barclays claiming they were ruined by a simple banking error which led to them being refused re-mortgage finance. They said that although Mr Gatt was £260,000 overdrawn, it was with the permission of the bank and should not have led to adverse credit reports.

But High Court judge Patrick Moloney, QC, rejected their claims of negligence, breach of contract and defamation. He ruled that a higher limit had been sanctioned to provide funds in February 2007 but for four months only, after which it reverted to the £1,500 limit.

Judge Moloney added: “It is more probable that, like so many others, the Gatts, who had prospered on the rising market but had spent their profits and continued borrowing beyond their means, would not have been able to survive the falling market even if these credit reports had not been published. Plainly, they were not afraid of borrowing, as some people are, but regarded being overdrawn for business and living purposes as a normal condition, confident of being able to repay when their ship came in.”

He ordered Mrs Gatt to pay £847,287 in outstanding loans and overdrafts, as well as £80,000 in costs. Mr Gatt was originally a claimant as well but his case had been discontinued. He was scathing about the judgment, saying: “We have a letter from Barclays Bank saying they made a mistake.

“We also have a letter from a previous bank manager confirming we were very good customers. We have been cheated by the justice system. We can’t pay that sort of money, it’s just ridiculous. We don’t know whether we want to go through all this again but we are considering appealing.”