A BUSINESSMAN has sued the EBS Building Society, alleging its negligence and misrepresentation led to his investing and losing €6 million in a major property development in Co Louth financed by the EBS.
Tommy Kelly alleges the development involved a property company, now insolvent, in which the family of a senior EBS official appeared to have an interest which had not been disclosed to him.
Mr Kelly, Bellinstown, Ballyboughal, Co Dublin, alleges EBS head of development finance Martha Widger had advised him about the development involving Keelagh Homes Ltd (KHL), now insolvent, but never disclosed at meetings that her family had an interest in the Keelagh group “and therefore a vested interest” in its financial survival.
He claims Ms Widger had emphasised he was investing in conjunction with the EBS and repeatedly assured him he was guaranteed to get his money back. She said she was confident KHL would be able to repay his investment from other projects being carried out by it in Navan and Cavan, he claims.
At no stage had EBS disclosed Ms Widger’s personal involvement with the Keelagh group to him. Had he been aware of “this conflict of interest”, he would never have proceeded with the investment, Mr Kelly said.
It appeared the Widger family has an interest in the Keelagh group and a subsidiary, Keelagh Homes (South) Ltd was formed to acquire and develop lands in Waterford, he said. KHL, he added, holds a 67 per cent interest in KHSL and members of the Widger family hold the remaining 33 per cent interest.
On the application of John Hennessy SC, for Mr Kelly, the proceedings against the EBS were admitted to the Commercial Court yesterday by Ms Justice Mary Finlay Geoghegan.
Bernard Compton, for the EBS, said it was satisfied it had “no case to answer” and might also seek to join as third parties to the proceedings Mr Kelly’s own legal and property advisers.
In documents in the case, the EBS also alleges any loss suffered by Mr Kelly was as a result of the general deterioration in the property market.
In his claim, Mr Kelly alleges one of his advisers, Seán Dooley, was contacted by Ms Widger in 2006 saying it was seeking “high net-worth individuals” to invest in a development in Co Louth.
Ms Widger said the necessary loan facility was all “pre-approved” by EBS with finance of €21.6 million to buy the lands and €17 million to develop them, he said. E-mails from Ms Widger, he claims, stated the proposed development was projected to return net profits before tax of €12 million, representing an 18 per cent return on costs of €60 million.
