The High Court has ruled National Irish Bank is entitled to summary judgment for some €37 million against Durkan New Homes, a couple and another company over failure to repay loans given for a large housing development at Cabinteely, Co Dublin.
Mr Justice Peter Charleton found in favour of the Bank today against Durkan New Homes; Don and Marian Casey, of Wooodbrook, Beech Park, Cabinteely, and Tullycross Developments Ltd but directed no orders would be made until after he hears the defendants’ application for a stay on his decision next week.
The judge will also consider interest and costs issues next Thursday.
In a statement, Durkan New Homes said it had “no comment” to make on the judgment.
The Bank had sought summary judgment for €37.1 million under two separate but related loan agreements of March 2006.
It claimed one loan agreement for €29.46 million related to DNH, with offices at Ranelagh, Dublin, and Don and Marian Casey, of Woodbrook, Beech Park, Cabinteely, (the DNH agreement) while the second loan agreement for €7.64 million related to Tullycross, with a registered office care of O’Donnell Sweeney Solicitors, Earlsfort Terrace, Dublin.
The €29.4 million loan was to refinance existing loans on land and for the purchase of houses so as to make up a large site at Beech Park, Cabinteely. It was proposed 11 or 12 suburban houses would be bought and then knocked, a large site would then be assembled and planning permission sought to build hundreds of houses.
The loan terms included full repayment some two years and six months after the first drawdown. The €7.64 million loan to Tullycross was on the same terms.
The Bank had claimed the effect of cross-guarantees meant all four defendants had a liability for the €37 million sum but the defendants argued they had paid interest by the loans’ repayment date of September 2008 and the Bank’s claim was limited to securities on certain properties.
The Bank rejected those claims.
It said the loan agreements provided the value of the property securing the loan had to be at least 70 per cent of the loan and, when both loans were taken together, this meant the value of the property could not drop below €53 million.
The Bank became concerned about the value of the property in summer 2008 and it was subsequently valued at €45 million. In those circumstances, the Bank alleged the defendants’ debts under the loan agreements had, by late September last, exceeded 70 per cent of the combined value of the properties specified in the agreements and it was entitled to repayment of the full amount sought.
In his decision, Mr Justice Charleton found the defendants had failed to make out a defence to the summary judgment application. He rejected claims the relevant contracts were effectively a term loan and that, having paid the interest, the defendants simply had to make the property available to fulfil their contract.
He said the intention of the sides was to be discerned from the language of the loan facility letter and there was nothing in the guarantee contracts or mortgage documents which altered his view of those intentions. This was carefully drafted contract agreed against the background of serious borrowing for development purposes.
Once the ratio of the defendants borrowing to security did not breach the 70 per cent limit, the Bank only had recourse to the security set out in the contract, he said. This meant the value of the property could not fall below €53 million but there was no dispute, on the repayment date of September 30th 2008, the value of the properties had declined to €45 million.
In those circumstances, NIB was entitled to judgment for €37 million jointly and severally against all of the defendants, he ruled.
