The liquidator of Co Kildare grain merchants Edward Kavanagh (Maynooth) Manor Mills was directed by the High Court yesterday to pay €2,095,067 to Anglo Irish Bank out of the proceeds of the sale of development lands in Maynooth owned by the company.

The company went into liquidation in 2000. An earlier court hearing was told it had debts of about £20 million and assets of £14 million. Mr David Hughes was appointed liquidator in December 2000 at a meeting of the grain company's creditors.

Yesterday, Mr Justice Gilligan in a reserved judgment said the grain company repaid a previous loan in August 2000 and requested Anglo give a further loan facility for £1.650 million.

In September, 2000 the bank specified that the loan was being made available on condition that there was an undertaking by Kavanaghs' solicitors that the money would be repaid on "the sale of the lands at Maynooth". The lands were sold in the course of the liquidation.

Subsequently, the bank attempted to protect its position in relation to the loan following the liquidator's appointment but the liquidator declined to meet the bank's demands.

The issue in the case was whether or not it was the parties' intention that the loan be secured on the proceeds of sale of the lands or whether the solicitor's letter created an equitable charge on the purchase monies.

The judge said he accepted the bank's evidence that it had been advised by the senior representatives of the grain company that planning permission had been obtained for the lands, that a sale was imminent for about £8 million and that it was not happy to advance any loans without an agreement that the loan would be repaid out of the proceeds.

Mr Justice Gilligan said he was satisfied the charge was clearly attached to the proceeds and was not on the land itself.

He directed that the liquidator pay the bank €2,095,067, being the equivalent of £1.650 million-plus interest.