Bank takes action against legal firm

Bank of Ireland is suing a firm of solicitors for allegedly failing to put in place the necessary charges to ensure the bank had security for loans advanced for several property deals.

The Bank claims it advanced loans of some €2.8 million and US $900,000 on the basis of it having a first legal charge over various properties.

It later learned other financial institutions had prior securities over properties in Galway while, it claims, there was no security at all in place for a development of 14 apartments in Co Sligo.

In transferring the case to the Commercial Court yesterday, Mr Justice Peter Kelly remarked, while it is not usual for a bank to sue its solicitor, such actions were becoming "less unusual".

The aciton is against Donal Downes, practicing as O'Dea & Company solicitors, Hardiman House, Eyre Square, Galway.

The case related to alleged agreements of the defendant firm to act for the Bank in connection with taking securities arising from the purhcase of a property at Bramley, Maree Road, Oranmore, Co Galway; a property at Lakeview, Claregalway; 14 apartments at Ballymote Road, Tubbercurry, Co Sligo and a property at Fearran Ri, Doughiska, Galway.

The Bank claims it advanced a loan of some US 875,000 to Mr Stephen Harris in May 2007 to assist in the purhcase of an apartment at Rockefeller Plaza, Manhattan, New York, to be secured by a first legal charge over the Claregalway property. In November 2007, it claims it advanced a €1.4 million loan to Mr Harris to assist in the purchase of the Oranmore property upon the security of a first legal charge over that property.

The Bank claims it also advanced loans to Mr Harris and Mr Bernard McKeon to finance the purchase of the Tubberycurry apartments which loans were to be secured on those apartments and on the Doughiska property. It is claimed Mr Harris mortgaged and charged the Claregalway and Oranmore properties in favour of the Bank while
Mr Harris and Mr McKeon charged the Doughiska property in favour of the Bank.

It claims the defendants had agreed to act as solicitors for the Bank in connection with the taking of security by the bank over the various properties but had not to date procured the registration of the securities over any of those properties.

The Bank says it had been in correspondence with the defendants for some time over the matter. In January last, it said solicitors for Mr Harris and Mr McKeon had informed it the Claregalway property was subject to a prior charge in favour of Bank of Ireland while the Doughiska property was subject to a prior charge in favour of KBC Bank.

Because of the alleged acts and omissions of the defendants, the bank claims it had and continues to suffer loss and damage and is unable to deal with the properties. It is seeking orders requiring the securities be put in place or damages.