KBC BANK and a legal firm have clashed over property valuations which are relevant to the sum of damages to be paid by the lawyers over “very serious failures” to ensure the bank had proper security for substantial loans made to property developer John Kelly and struck-off solicitor Thomas Byrne. More than €20 million in damages are being sought.

Mr Justice Brian McGovern previously ruled KBC was entitled to damages from BCM Hanby Wallace (now Byrne Wallace) over the firm’s failures to put in place securities on a large number of properties. The bank had sought security on 30 properties but only got security on three.

The judge had said KBC was entitled to recover the full amount of the loans advanced, plus certain costs and stamp duty, but minus the 2008 value of the three secured properties, some €900,000 received from Mr Kelly, the value of an 18-acre site at Oylgate, and certain costs.

At a hearing on damages which opened yesterday and continues today, Mr Justice McGovern was told the sides were in dispute about valuations of the Oylgate site and of a property in Rathmines, Dublin, formerly a car showroom but now a convenience store.

KBC claims the mid-2008 value for the Oylgate site, bought by Mr Kelly in 2006 for €3 million, was €295,000, while Byrne Wallace claims the valuation as of that time was €2.5 million.

Before Mr Kelly bought the site in September 2006, two applications for planning permissions for development on the site had been withdrawn, the judge was told.

A valuer for the bank said a decision by Wexford County Council in 2007 not to allocate funds for a wastewater treatment facility in the Oylgate area effectively ended any development hopes for the site but that evidence was disputed by a valuer for the firm who said he believed planners had not ruled out development of the site.

The valuers also clashed over valuations which would have attached in 2008 to the Rathmines property, with the bank saying it was €2 million while the firm contended it was €4.5 million.

Last March, Mr Justice McGovern found the breach of duty by the firm to KBC was “egregious” because the firm not only failed to ensure proper security was in place but deliberately misled the bank by either suggesting security was in place or the funds would not be released to the borrowers until security was in place.

The breach of duty amounted to “a deception” because the firm was aware the required security was not in place but led the bank to believe it was, he said. This was about “multiple failures” repeated across four loan transactions.

He rejected arguments of contributory negligence by KBC in failing to properly check out the creditworthiness of either Mr Byrne or Mr Kelly before agreeing to advance loans of some €9 million and some €16 million to them respectively from 2005 to 2007. KBC, the firm alleged, was aggressively pursuing Mr Kelly and Mr Byrne and would have made the loans in any event.

While the bank was “somewhat careless” in appraising both borrowers, it was entitled to rely on assurances from professionals retained by it, he said.