Ulster Bank has won a High Court order preventing the developers of a Dublin retail park proceeding with an action alleging the bank had contrived a situation in order to call in €24 million in loans.
Komady Ltd, owned by James Flynn and members of his family, along with business partner Michael O'Reilly, last year failed to secure orders continuing an injunction restraining a receiver selling Belgard Retail Park in Tallaght.
Ulster Bank then applied to have the entire action struck out on grounds it was unsustainable and an abuse of process.
In his judgment on Friday, Mr Justice Raymond Fullam granted the bank's application.
The judge said there was a failure to establish a prima facie case of bad faith in relation to the bank exercising its contractual right to demand repayment of loans of €24.2m each given to Komady and Mr O'Reilly in 2005 for the purpose of refinancing loans from Anglo Irish Bank for the retail park.
“There is no evidence the bank engineered a loan default on the part of the plaintiffs in this case,” he said.
The bank had denied it contrived to manufacture a default situation to call in loans of Komady and Mr O’Reilly.
Ransom strip
Lawyers for Komady and Mr O’Reilly claimed a site adjoining the retail park, over which the bank had also appointed a receiver, would increase in value by between €10 million and €15 million if that site and the retail park could be sold together.
Access to the other site would be via a right-of-way “ransom strip” through the retail park, it was alleged.
In August 2014, the bank demanded immediate repayment of the loans advanced in 2005. When they were not paid, receivers were appointed.
Komady and Mr O’Reilly obtained an interim injunction preventing the receiver selling the property but the court later refused to continue that order. The company and Mr O’Reilly had claimed the bank was not entitled to immediate repayment, repayments were being met and the loan facility had another ten years to run.
It was claimed the bank had an ulterior motive in calling in the loans in order to enhance the value of the adjoining site.
Experienced developers
The bank denied that and claimed, among other things, the plaintiffs were experienced developers fully aware of their obligations including having to pay rental income directly to the bank.
Mr Justice Brian McGovern, in previously refusing to continue the injunction, rejected the claim of ulterior motive or that the bank failed to correspond with the plaintiffs about failure to transfer the retail park’s €1.3 million rent roll directly to Ulster Bank.
In his decision, Mr Justice Fullam found there was no issue to be tried, let alone a substantial issue. The plaintiffs could not have understood the bank had agreed to waive its right to have the rent roll paid directly to the mortgage account, he also said.
