Loans registered without consent, council claims

COMPANIES OWNED by developer Liam Carroll breached an agreement with Dún Laoghaire-Rathdown County Council by registering bank loans earlier this year without its knowledge or consent, it was claimed in the High Court.

The council claimed that in March and May of this year, Mr Carroll’s companies registered loan charges in favour of Allied Irish Banks and Bank of Scotland (Ireland) against land and buildings at Cherrywood in south Dublin in which the local authority has a beneficial interest.

The council claimed this breached a joint venture agreement between it and Mr Carroll’s companies as the firms had not sought its consent in advance before registering loan charges on the properties.

Proceedings have been taken by the council against Cherrywood Science and Technology Park, Cherrywood Properties and six other companies controlled by Mr Carroll in a bid by the council to protect its interest in a science and technology park in Cherrywood.

The banks are named in the action by the council, which contributed €57 million to the business park and claims to own a one-third interest in the venture.

Counsel for Mr Carroll’s companies claimed that misleading newspaper reports had led to the council’s startling and unnecessary court proceedings for damages.

Bernard Dunleavy, barrister, said that newspapers had misreported that companies associated with Mr Carroll’s Zoe group, currently the subject of an examinership appeal, were part of the Cherrywood venture with the council.

Mr Dunleavy said the local authority had come running into court on foot of newspaper reports about the solvency of companies involved in the project to develop the park.

He said it had been misreported that counsel had said in court that the Cherrywood companies formed part of a group that were threatened by the insolvency of the six companies in the Supreme Court examinership proceedings. The High Court was told in the Zoe group case that Mr Carroll had three business groups.

Pauline Walley SC, for the council, said that the solvency of the companies was an issue for the council and that the establishment of the State’s “bad bank”, Nama, which will acquire toxic development loans, was also “a separate issue that is out there”.

Mr Dunleavy told Mr Justice Garrett Sheehan it was not denied that the council had contributed €57 million as against his client’s contribution of more than €100 million.

He said the joint venture agreement set out a procedure on the termination of the project and the parties had to be afforded every opportunity to allow the process reach its natural conclusion.

A Cherrywood joint venture management team, which had the co-operation of the council, had held meetings with a view to winding up the joint venture.

Mr Justice Sheehan transferred the council’s claim to the Commercial Court and put it in for mention on October 12th. He granted the council liberty to apply to the court if an urgent matter arose.