Developer told to repay €22.9m loans

A PROPERTY developer has agreed to a court order requiring him to repay loans of €22.9 million issued to him by the EBS building society, including loans granted on the basis of undertakings of the developer’s solicitor, Thomas Byrne, whose practice has been closed by the Law Society.

Mr Justice Peter Kelly was told yesterday by Eoin McCullough SC, for the EBS, that his side had reached agreement with John Kelly, Hunter’s Moon, Kilquade, Co Wicklow, in relation to the bank’s application for judgment for €22.9 million arising from loans issued to Mr Kelly between 2002 and August 2007.

On consent of both sides, the judge granted judgment in favour of EBS for €22.9 million against Mr Kelly and, also on consent, made an order for Mr Kelly to pay the bank’s costs of the application.

The proceedings by the society against Mr Kelly were admitted to the Commercial Court earlier this week and adjourned until yesterday after the sides indicated they might reach an agreement.

Earlier this year, the judge admitted to the court separate proceedings in which Mr Kelly is seeking judgment for €6.1 million against Mr Byrne over the handling of a property deal in Co Wexford.

Mr Byrne has rejected Mr Kelly’s claims and has counter-claimed for sums of €30 million, including claims for a beneficial interest in the Co Wexford property and other properties in Dublin and in Greenwich, England.

In the EBS action, the society claimed most of the loans issued to Mr Kelly related to residential investment properties in Dublin.

It said Mr Kelly was represented by his solicitor, Mr Byrne, who was to put in place securities in favour of the society over various properties.

However, no securities were put in place in its favour in relation to some properties, or there were such delays in putting securities in place – in some cases delays of five years – that it had lost its priority to a first charge over such properties, the bank claimed.

It claimed Mr Kelly had executed mortgages in favour of Bank of Scotland Ireland over some of the properties and BoSI had since appointed a receiver to some of those.

As a result of the alleged failure of Mr Kelly and Mr Byrne to put the appropriate securities in place, the society said it would be unable to recover all of the loans.

However, its own solicitors had put in place security over two commercial investment properties and it intended to enforce that security shortly.

In its action, EBS claimed Mr Kelly has failed to discharge his obligations under the loan agreements.

As some of the mortgages were only created in recent months, and long after the drawing down of the monies, it also claimed there must be a doubt about the enforceability of those.

Since February 22nd last, Mr Kelly had defaulted in the repayments of sums due on the loans from the society and, in those circumstances, the society claimed it was entitled to call in the loans.