O’Donnells get two weeks to file defence to Bank of Ireland claim of fraud

Supreme Court grants bank costs against family members in absence of satisfactory explanation as to why they had not engaged with letters from the bank

Solicitor Brian O’Donnell, his wife Mary Patricia and two adult sons Blake and Bruce have two weeks to lodge their defence to Bank of Ireland’s action alleging fraud against them over allegedly conspiring to put in place a “blatant” scheme to put a property asset in London beyond its reach.

The Supreme Court yesterday extended by two weeks a stay on a decision granting judgment to the bank due to no formal defence to its claim having been entered so far. The stay permits the O’Donnells a further opportunity to enter a defence.

The bank initiated proceedings alleging fraud in July 2012 as part of efforts to recover a €71 million judgment entered against Brian and Mary Patricia O’Donnell in December 2011 arising from unpaid loans provided for property investments.

The claim includes allegations of fraud arising from dealings of the defendants relating to a property at Columbus Courtyard in London.

The bank also took proceedings in Britain seeking to register claims over shareholdings in properties there. One of those properties, Westferry Circus, was sold in July 2013 for a sum less than the debt due to Morgan Stanley, the senior debt holder in Hibernia 2005 Ltd, the company alleged to be the effective owner of the property.

The O’Donnells later appealed the High Court’s October 2012 rejection of their claim that the Irish courts should refuse jurisdiction in the matter due to the UK proceedings.

The appeal was due for hearing today (Wed) before a five judge Supreme Court but Ross Maguire SC, for Blake and Bruce O’Donnell, said it was being withdrawn because it was moot (pointless) as the bank had withdrawn its UK proceedings last February.

He understood the UK case was withdrawn because there was “nothing” to be charged, counsel said. Allegations of a serious nature, including fraud, were made in those proceedings and reported in the media with “huge” figures associated, he added.

His clients were entitled to costs of the appeal which was part of a group of proceedings before the court, he argued.

Seeking the bank’s costs of the appeal, Cian Ferriter SC argued the bank told the appellants last October the UK proceedings were being discontinued and that was done in February but, because the appeal was not withdrawn till now, the bank and court were put to further costs.

The O’Donnell parents had sworn in March 2011 that they fully owned a share in Hibernia 2005 but later “did a volte face” and claimed it was subject to a trust, counsel said.

Because of the parents’ UK bankruptcy petition \[dismissed in late 2012], the share charging proceedings could not go to trial in the UK and, as a counter to that, the bank petitioned for and secured the couple’s bankruptcy in Ireland in September 2013.

The bank was maintaining allegations of fraud in the remainder of the proceedings, counsel said. The bank had not alleged fraud regarding shares in Hibernia and the O’Donnells would have “ample opportunity” to defend the claims of fraud, “if they have a defence”, at the trial which will now proceed, counsel added.

Mr Ferriter said the bank got judment in defualt of defence to its proceedings last July but a stay applied on that judgment order pending this Supreme Court appeal. The bank would agree to that stay continuing another two weeks to allow a defence to be entered.

Giving the Supreme Court ruling on costs, the Chief Justice, Ms Justice Susan Denham said no satisfactory explanation was provided as to why the O’Donnells had not engaged with letters from the bank last October and February concerning the discontinuance of the UK case. The bank was entitled to costs in the Supreme Court against the O’Donnells and its costs in the High Court, she said.

The court also granted a further two week stay on the decision entering judgment in default of defence to the bank’s proceedings.

The separate appeal by Brian and Mary Patricia O'Donnell, aimed at overturning their Irish bankruptcy, will be heard later this month while judgment is pending on their children's appeal to prevent the bank gaining posession of their home in Killiney.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times