A DIRECTOR of a building company which owes Bank of Ireland more than €22 million has been ordered by a judge to pay €4 million to the bank under a personal guarantee related to the company's debts. The guarantee was for a maximum €4 million.
Ms Justice Mary Finlay Geoghegan yesterday granted the order against Mervyn Walsh, with addresses at Lansdowne Village and in Monaco, arising from his guarantee over the debts of Largreen Ltd, in receivership.
In separate proceedings, Mr Walsh was warned last month by Mr Justice Peter Kelly that he would go to jail for contempt unless he complied with court orders to provide full details of the accounts of Largreen and two other companies to the receiver.
In her judgment, Ms Justice Finlay Geoghegan noted Largreen was a property-owning company with property at Portlaoise, Co Laois. Largreen owed Bank of Ireland some €22.4 million for which Bank of Ireland held the guarantee from Mr Walsh as security. The bank had demanded repayment and, on December 12th last, appointed a receiver.
Mr Walsh asserted Largreen had a claim for damages against the bank over its alleged wrongful refusal to allow Largreen draw down a €1.9 million facility to complete a portion of the Portlaoise development in September 2008, the judge said.
Mr Walsh initially claimed Largreen was entitled to damages of €26.5 million but later implicitly accepted there was an element of double count in that sum and reduced it to €23.4 million. He claimed he had a right to be excluded from liability because Largreen was entitled to set-off damages against its undisputed liability of €22.4 million.
The bank denied any entitlement to damages. It also argued there was no credible arguable claim by Largreen against the bank for damages in excess of €18.4 million, meaning Mr Walsh would still be liable for the €4 million under his guarantee as Largreen's debts were €22.4 million.
While Mr Walsh had established that a clause of the guarantee did not prevent him making the defence that he had no personal liability to the bank because of Largreen's alleged entitlement to set-off, the judge found he failed to make out an arguable claim Largreen was entitled to damages of more than €18.4 million.
