A businessman being pursued by Zurich Bank for more than €16 million arising from unpaid loans related to a development in Co Clare has made out an arguable defence that the bank prematurely called in its loans, a High Court judge ruled today.
However, Mr Justice Peter Kelly added, Donal O’Connor may have achieved a “pyrrhic victory” in succeeding in having his case sent to a full hearing as the loans at issue are in any event due for repayment next month.
He made directions for a full hearing of proceedings between Zurich Bank and Mr O’Connor but also indicated the bank will be entitled to apply for judgment orders when the loans become due for repayment on dates in May next.
The judge was ruling on the bank’s application today for summary judgment for more than €16 million against Mr O’Connor, Stradbally East, Clarenbridge, Co Galway. Summary judgment for that amount was previously entered against Martin Roche, of Loughrea, Co Galway.
The Bank claims it advanced some €8.46 million in June 2007 to MJ Roche Construction (Clarecastle) Ltd to finance a commercial development at Clarecastle, Co Clare. A receiver was appointed over the company last July.
Both defendants were directors of that company and the terms of the June 2007 loan required them to provide a joint and several guarantee, supported by security, the Bank said.
It claims both defendants also entered into a guarantee in September 2007 guaranteeing payment on demand of all present, future, actual or contingent liabilities of the company to the bank.
It is claimed the €8.46 million facility was later increased to a maximum €11.96 million with a final repayment date of May 2010.
However, an event of default had occurred entitling the bank to terminate the facility and demand immediate repayment last June, it is claimed. It was claimed Mr Roche had left for Australia in circumstances which threatened the completion of the development and the potential of having the loans repaid.
Repayment was demanded in June last year but was not made and more than €7.3 million is due and owing under that facility, it is claimed. After alleged default on repayments on another facility, the Bank claims a further €8.9 million is also due and both defendants were required to discharge that sum.
In his defence to the case, Mr O’Connor argued Mr Roche had fled to Australia in March 2009 without any warning to him. He also alleged Mr Roche had obtained company cheques for some €330,000 and appeared to have unilaterally informed those working on the Clarecastle development that work should cease.
Mr O’Connor said he had later recovered the €330,000 and given it to the bank. He also made a series of allegations about the conduct of the bank after this and alleged that conduct was “completely at odds” with its decision to terminate the loan before their due repayment date. Further sales of the development would have been achieved were it not for the bank’s actions, he said.
