Property developer fails to prevent Nama sale of loans to Cerberus-owned fund

Court of Appeal rules the transfer of the loans from Nama to Promontoria was done properly

Mr Justice Brian McGovern, on behalf of the Court of Appeal, said the transfer of the loans from Nama (through its company National Assets Loan Management) to Promontoria was done properly.

Mr Justice Brian McGovern, on behalf of the Court of Appeal, said the transfer of the loans from Nama (through its company National Assets Loan Management) to Promontoria was done properly.

 

A property developer has failed in an appeal in which he challenged the sale of his and his company’s loans of about €25 million to a fund.

William Farrelly, of Hill of Wall, Athboy, Co Meath, and his company, Vitgeson Ltd, also failed in his appeal over a challenge to the power of receiver Tom O’Brien of Mazars to sell properties on which loans were secured.

Mr Farrelly and a company of which he is a director, Vitgeson Ltd, have been involved in property development for 40 years.

US Cereberus subsidiary Promontoria (Arrow) Ltd says it bought from Nama a number of loans originally made by AIB to Mr Farrelly and the company. Security was provided from some 32 apartments, 26 houses, and five commercial properties. The properties included a house in Rathgar and an apartment in Dundrum, Dublin, as well as several properties in Co Meath.

Mr Farrelly and his company claimed the recovery of certain loans he had, which Nama later sold to Promontoria, were not actionable by Promontoria. He also claimed the fund was precluded by law from relying on certain mortgages because of representations between Nama, him and his company.

It was also claimed the receiver was only a rent receiver for the properties and did not have the power to sell them.

In 2017, the High Court dismissed the claims and gave judgment to Promontoria against Mr Farrelly for €15.3 million and against Vitgeson for €11.3 million.

He appealed and on Thursday, but a three-judge Court of Appeal dismissed his case.

Mr Justice Brian McGovern, on behalf of the court, said the transfer of the loans from Nama (through its company National Assets Loan Management) to Promontoria was done properly.

The loan facilities, indebtedness and security now owned by Promontoria were freely assignable without the mortgagor’s consent. “Goodbye” and “hello” letters sent to Mr Farrelly and Vitgeson satisfied the requirements of proper notification of the transfer, he said.

The judge also found the receiver was entitled to act as as an agent for marketing the properties for sale.

There was no error in the High Court decision, he said.