Nationwide cedes status in Liam Carroll legal action

A JUDGE has removed from the fast-track Commercial Court a legal action by the Irish Nationwide Building Society (INBS) for a €60 million judgment against beleaguered developer Liam Carroll because of the society’s “total failure” to obey court orders to discover certain documents.

The decision by Mr Justice Peter Kelly means the INBS case, which had been fixed for trial in the Commercial Court next March, will now proceed through the ordinary High Court list with the result if will take considerably longer to come to trial.

The trial will not proceed at all in any court unless the INBS discovers the documents by January 11th next, the judge also warned.

Mr Carroll is being sued over a September 2006 personal guarantee allegedly given by him and developers Larry O’Mahony and Thomas McFeely for a maximum €60 million over loans of €78 million from the INBS to Aifca Ltd, Mount Street, Dublin, for the proposed development of the Square Shopping Centre in Tallaght.

Aifca was a company of Mr McFeely and Mr O’Mahony which bought a licence to develop the Square Shopping Centre in Tallaght. Mr Carroll later acquired a controlling interest in Aifca.

Last July, Mr Justice Kelly ruled that Mr Carroll had made out an arguable defence to the €60 million claim. Directions and orders were later made for the exchange of documents and a trial date was set for March 9th.

The judge later ordered the building society to provide Mr Carroll with material concerning loans made by the society to Mr O’Mahony and Mr McFeely, bank statements and “net worth” statements for both men and valuations for certain properties.

Yesterday, Hugh Mohan SC for Mr Carroll, asked the judge to dismiss the INBS case against Mr Carroll due to the failure to make discovery in accordance with court orders.

Tony O’Connor SC for the INBS, apologised for the “significant” breaches of the orders and said this was due to pressures of work on the society, a “resources problem” and the breadth of the order. He added he could not say when the society would be able to make discovery and agreed his side had failed to respond to correspondence from lawyers for Mr Carroll.

Counsel also acknowledged the failure to make discovery had affected timescales for the case, but urged the judge not to dismiss the action, saying to do so would be “penal in the extreme”.

Mr Mohan said a limited number of “straightforward” documents were involved and he took issue with the claims about the breadth of the order. The society was “almost treating the court with contempt”, he said.

Mr Justice Kelly said the society’s attitude was “quite extraordinary”. It was still unable to say when it would be able to comply with the court orders.

This showed an extraordinary contempt by the society for the court’s process. It was the society who had applied last May for the proceedings to be entered into the Commercial Court, he noted.

The judge said he believed the discovery sought was fairly limited but there was “a total failure” by the INBS to comply and it had also failed to respond to letters from Mr Carroll’s solicitors about the matter. It was “not good enough to adopt this rather cavalier approach”.

While dismissal of a claim was very much a last resort, the society’s attitude had left the Commercial Court in a very difficult position with no idea when the documents would be discovered.

In the circumstances, he would dismiss the society’s claim unless it made discovery by January 11th and, in any event, was withdrawing it from the Commercial Court. The judge also awarded costs to Mr Carroll at the highest level, on a solicitor-client basis, against the society.