Keen to enter the Irish market, it seems the UK bank offered favourable terms to two developers, writes
NOT A sod has been turned on the revamp of the Finglas shopping centre owned by developers David Courtney and Bernard Doyle, but it looks set to be the subject of a three-week court case later this year.
In 2005, Barclays Bank Ireland loaned €4.5 million each to Doyle and Courtney, who are shareholders in Marumba Properties Ltd, owner of Finglas Village, which they intended to redevelop as a combined retail and residential complex. The project received planning permission, but has yet to go ahead.
Barclays is now suing them for the repayment of the €4.5 million (they paid any interest due). This week, the bank sought a summary judgment from the High Court for its return. However, Mr Justice Peter Kelly ruled that the developers did have a defence, and ordered that the case go to a full hearing, which could take up to three weeks, following four or five months’ preparatory work.
The bank’s argument is essentially that the money was loaned on the basis that it had to be repaid in one year, or within that time on demand. The agreement could be renewed if necessary. But Justice Kelly homed in on two arguments raised by Courtney and Doyle, and which are outlined in both their affidavits.
First, that on the basis of various representations made to them by the bank during the original negotiations, the agreement was more open-ended than this, and the loan could have a life of up to 20 years. Second, because they borrowed the money on the basis of those representations, it cannot demand repayment now.
An e-mail from a former member of the bank’s Irish staff, Colman McCarthy, pointed out that the loans were described as being for one year for “internal purposes only”, and that the bank intended renewing them during the projected two- to three-year lead-in time for the project. After that, he said that the bank would be willing to refinance the loans.
More details will emerge when the case goes to a full trial. But in court on Tuesday, the judge pointed out that Courtney’s affidavit states that Barclays approached them and offered them attractive terms because it wanted to be involved in the Finglas centre, and other deals, including Thornton Hall prison.
The defendants’ property consultancy, Spain Courtney Doyle, acted as agent for the government on the Thornton Hall site deal. The construction firm controlled by another Marumba shareholder, Bernard McNamara, was ultimately chosen to build the prison.
Barclays also loaned €4.5 million to McNamara, but he has settled with the bank. It emerged in court that Barclays now believes there is a difficulty with the security that he has offered as part of that deal, as AIB may hold a charge over the same property. The bank’s lawyers did not clarify why they raised this issue.
Barclays was to bank the Thornton Hall project, but that deal was done through its Belfast and London offices, and not in Dublin. Also, while the loans for Finglas were agreed in June 2005, McNamara’s firm, Michael McNamara and Company, did not win the Thornton Hall contract until two years later.
Nevertheless, it does appear that Barclays was keen to get into what was then the booming Irish commercial property market. In that case, separately or together, Courtney, Doyle and McNamara would have made very attractive clients. They were part of the Select Retail Consortium that had just bought the Superquinn grocery chain, were shareholders in the Shelbourne Hotel in Dublin, and had a range of property development businesses and interests.
Doyle and Courtney say that Barclays terms were so attractive that they chose the bank over First Active, where they already had a relationship, as the main banker for the Finglas project.
The ins and outs of those terms and what they mean for the parties in the dispute are a matter for the full trial. Whatever the result, it promises to shine an interesting light on how banks and developers did business at the height of the property boom.
