THE EBS Building Society has brought legal proceedings against a property developer aimed at securing repayment of loans of €22 million, including loans issued on the basis of undertakings of the developer’s solicitor, Thomas Byrne, whose practice has been closed by the Law Society.
EBS has brought its action against John Kelly, of Hunter’s Moon, Kilquade, Co Wicklow, arising from loans issued to Mr Kelly between 2002 and August 2007.
The case was admitted by Mr Justice Peter Kelly to the Commercial Court yesterday who was told the sides may be able to reach agreement. If not, the judge will hear the bank’s application for judgment against Mr Kelly later this week.
Earlier this year, the judge admitted to the court separate proceedings in which Mr Kelly is seeking judgment for some €6.1 million against Mr Byrne over the handling of a property deal in Co Wexford.
Mr Byrne has rejected Mr Kelly’s claims and has counter-claimed for sums of €30 million, including claims for a beneficial interest in the Co Wexford property and other properties in Dublin and in Greenwich, England.
In the EBS action, the bank claims most of the loans issued to Mr Kelly related to residential investment properties in Dublin.
It said Mr Kelly was represented by Mr Byrne who was to put in place securities in favour of the bank over various properties.
However, it claimed, either no securities were put in place in its favour in relation to some properties or there were such delays in putting securities in place – in some cases delays of five years – that it had lost its priority to a first charge over such properties.
It claims Mr Kelly had executed mortgages in favour of Bank of Scotland Ireland over some of the properties, and had since appointed a receiver to some of those.
As a result of the alleged failure of Mr Kelly and Mr Byrne to put the appropriate securities in place, the bank says it will be unable to recover all of the loans.
However, its own solicitors had put in place security over two commercial investment properties and it intended to enforce that security shortly.
EBS claims Mr Kelly has failed to discharge his obligations under the loan agreements to provide security in the manner agreed. As some of the mortgages were only created in recent months and long after drawdown of the money, it also claims there must be a doubt about the enforceability of those.
Since February 22nd, Mr Kelly had defaulted in the repayments of sums due on the loans from the bank, it is further alleged.
In those circumstances, the bank claims it is entitled to call in the loans.
It did not believe Mr Kelly has any bona fide defence to its claim, the bank added.
