Zurich Bank gets €8.15m judgment on property loans

ZURICH BANK has secured €8.15 million summary judgment orders at the Commercial Court against five people over unpaid loans issued in 2007 to buy properties in Bantry, Co Cork. The combined value of the properties in late 2009 was €2.5 million.

Ms Justice Mary Finlay Geoghegan yesterday rejected arguments by the defendants the true nature of the loan agreement involved the bank having no recourse to the defendants personally and was limited to the properties involved.

It was “beyond argument” the express written terms of the facility letter of December 6th, 2007, as varied by another letter of January 21st, 2009, made the defendants personally liable for repayment of the principal and interest on the loan, she said.

Both those letters were accepted in writing by the defendants after legal advice, she noted.

Claims by the defendants they were advised by an official of the bank on a strategy to “deceive” the bank’s credit committee into falsely believing they had raised the €550,000 deposit required for the loan did not amount to an arguable defence to the bank’s claim entitling the defendants to a plenary hearing, she also ruled.

Given those findings, she entered summary judgment for €8.15 million jointly and severally against Richard Coffey, Avoca Park, Blackrock, Co Dublin; Brian O’Hagan, Talbot Lodge, Grove Avenue, Blackrock, Co Dublin; Donal Hunt, Golf Course, Cahir, Bantry; Rory O’Callaghan, Snave, Ballylickey, Bantry, and Viv O’Callaghan, Blackrock Road, Bantry, all trading as Seafield Holdings Partnership.

The partnership had purchased Vickery’s Hotel, New Street, Bantry, for €4.5 million with a €3.6 million loan from AIB. It also agreed to purchase adjoining properties, Kiddycare and World Choice Travel, and had an agreement with the Dix family to buy another property with the intention of redeveloping all four properties to construct a large mixed use development.

To facilitate that proposed development, Zurich advanced a €7.9 million term loan to the defendants in December 2007 for a period of 12 months from the date of drawdown, later extended. When the loan was not repaid by October 2009, the bank demanded repayment.

Zurich alleges its loan included €1.25 million to buy Kiddycare, €1.42 million to buy World Choice Travel and €4.15 million to refinance the borrowings with AIB on Vickery’s Hotel. The bank appointed joint receivers over the properties in June last year.