The Commercial Court has ruled that well-known property players David Courtney and Bernard Doyle have made out an arguable defence to actions by Barclays Bank for €9m judgement orders against them over non-repayment of development loans.
Mr Courtney and Mr Doyle claim the loans were issued in 2005 by Barclays Bank Ireland Ltd on a long-term basis as part of the bank's 'aggressive' attempt to get in on the Irish property market and particularly to bank the business of another well-known developer Bernard McNamara.
The loans related to a development at Finglas Village, including 160 apartments and a retail development, to be carried out by Marumba Properties Ltd, a company involving Mr Courtney, Mr Doyle and Mr McNamara. Planning permission for that development was granted in August 2004 but Barclays claims 'no stone has been turned' on it and permission expires in two months time with no extension likely.
The bank claims repayment of the loan amounts in full were due by November 30 2007 but it had given some 13 extensions of the repayment date before repayment of the full amount was demanded in March last.
Rossa Fanning, for Mr Courtney and Mr Doyle, argued that Barclays had strongly induced his clients to move their business from First Active and sought to 'curry favour' so as to bank the Thornton Hall prison project with which Mr McNamara was associated.
He argued that the bank's decision to bring the summary proceedings was part of a strategy to exit the Irish property market, and the bank continued to impose 'penal' interest repayment rates on his clients, who were up to date on interest repayments. Barclays was 'out of step' with how other financial institutions were behaving relating to loan facilities.
While Barclays had brought an action for summary judgement against his clients for sums totalling €9, the bank had not moved against either Mr McNamara or MPL, counsel added.
Barclays has made an agreement with Mr McNamara concerning repayments but Denis McDonald SC, for Barclays, said it had concerns about whether a security provided by Mr McNamara had the required value, and because AIB had an existing charge over that security.
Mr McDonald said the risk to the Bank had significantly increased given the changed economic circumstances.
Mr McDonald argued that the loans issued were repayable on demand and no further extensions were granted on them after March last. Claims about policies to exit the property market here were irrelevant and did not alter the bank's entitlements, and Barclays also rejected the 'startling' claim it had to make further facilities available to Mr Courtney and Mr Doyle at reasonable rates.
After hearing both sides, Mr Justice Peter Kelly ruled that Mr Courtney and Mr Doyle had established an arguable defence to the summary judgement application on the basis of their claim that the loans, while ostensibly repayable on demand or within a two- to three-year period at most, were varied orally or by implied agreement with Barclays to allow repayment in the long term.
Both men had also made out an arguable defence that the bank was prevented from seeking immediate repayment in light of alleged representations by it in 2005 which induced Mr Courtney and Mr Doyle to transfer their business from First Active plc to Barclays.
Both men claim they decided to move to Barclays for financing of the Finglas project because of regular and continued representations by Barclays to them to see the project to fruition over the long term. They claim an e-mail from Colman McCarthy of Barclays of April 22 2005 supported their view as it stated it was the bank's intention the facility would be available to you for 'the required period'.
Given his findings of an arguable defence on those grounds, the judge said he did not have to rule whether both men had made out a defence on other grounds raised by them. He also stressed that he was not indicating whether the defences outlined would succeed at trial.
The judge's ruling means the case will now go to full plenary hearing. After making directions with a view to progressing that hearing, the judge adjourned the proceedings for further directions to early November.
Separate action have been brought against David Courtney, Belgrave Square, Rathmines, Dublin, and Bernard Doyle, Waterside, Dargle Road, Bray, Co Wicklow, with the bank seeking orders both men to pay it €4.5m each, plus interest, on foot of a loan facility agreement of June 28 2007.
Both actions will now essentially proceed together on their agreement that the court's findings on Mr Courtney's claims will also apply to Mr Doyle.
The Bank claims repayment of the loan amounts in full were due by November 30th 2007 but the Bank had given some 13 extensions of the repayment date before repayment of the full amount was demanded in March last.
