Claims by three Limerick solicitors that they believed personal guarantees for a multi million euro loan from Anglo Irish Bank would never be enforced have been rejected as ‘incredible and contrived’ by lawyers for the bank.
Anglo is seeking summary judgment orders for €21m at the Commercial Court against Dermot O Donovan, Michael Sherry and Aidan Frawley who are partners in the firm Dermot G O Donovan.
Another partner, Thomas Dalton, today consented to summary judgment for €21 million against him.
The action arises from personal guarantees allegedly provided by them over loans of €165m to companies and partnerships in the Fordmount property group.
The loans were advanced to buy lands and buildings in Limerick City and County.
The solicitors claim they never dealt directly with the bank and were told by developer and co-guarantor Michael Daly of North Circular Road, Limerick that the guarantees would never be relied upon.
The bank is also pursuing Mr Daly for €86m. That case will be heard at a later date.
The three solicitors have also accused the bank of reckless lending when it suspected fraudulent activity in the Fordmount Group.
The court heard that none of the four defendants was involved in the alleged fraudulent activity.
Counsel for the bank Maurice Collins told the Commercial Court it was ‘doubly incredible’ that the defendants were claiming that they believed the guarantees would not be enforced.
He said this defence was ‘wholly inconsistent’ with the contemporaneous documentation and was contrived.
Counsel for the defendants Bernard Dunleavy said the three defendants would say that representations were made that the guarantees would not be relied upon and that at the time of advancing money to the Fordmount group the bank knew or suspected that there was a fraud going on.
The solicitors were not involved in this fraud and the bank had acknowledged that at meetings, the court was told.
Mr Dunleavy said they accepted they had behaved in a fashion not becoming of a prudent solicitor in terms of note keeping.
He accused the bank of ‘sitting on evidence’ from another high court case which could corroborate at some level, their version of events.
He also alleged that the bank had deliberately excluded senior bank executives as witnesses in the case when they would have knowledge of what was said about guarantees.
The case continues tomorrow.
