ALLIED IRISH Banks has secured an order requiring a businessman to pay €2.4 million under guarantees of loans relating to the purchase of a Co Dublin hotel.
AIB had claimed Daragh Heagney, St Peter’s Terrace, Howth, Co Dublin, was liable for the €2.4 million under guarantees of 2005 and 2007 for banking facilities to Balmain Ltd, of which he was a director and which purchased the Baily Court Hotel, Howth, in 2003 for €3 million. After Balmain failed to repay some €7 million in loans, AIB called in the guarantees, capped at €2.4 million.
Mr Heagney opposed the bank’s claim on grounds alleging that, some two years after AIB appointed a receiver and closed the hotel, it was “in bits” and practically unsaleable.
Among various claims, he alleged the bank failed to fund receiver Jim Luby adequately and was, as a result, prevented from enforcing its legal rights on foot of loan guarantees.
The president of the High Court, Mr Justice Nicholas Kearns, yesterday rejected the claims and ruled AIB was entitled to judgment for €2.4 million.
Dismissing arguments that the bank failed to fund the receiver adequately, the judge noted, by the time the hotel was bricked up and put “into mothballs” in 2010, a sum of €175,000 had been spent on receivership and security fees, plus repairs to the hotel roof.
As the bank was already out of pocket to the tune of €7 million, it could not seriously be suggested it was obliged to continue clocking up expenses in the clear knowledge these would never be recovered from Mr Heagney or from any sale of the hotel, he said.
There was no breach of duty by AIB or Mr Luby in his capacity as receiver or as agent of the bank.
The judge rejected Mr Heagney’s claim the hotel was in “perfect” condition in June 2009 and accepted the receiver’s evidence of damp on his walk through of the premises on the day of his appointment.
Similar findings were reported by would-be purchasers who decided not to proceed further in negotiations, he noted.
The judge found the premises were in “a less-than-good condition” at the time of Mr Luby’s appointment. That was hardly surprising as, for some considerable time, it had not operated as a hotel but functioned on some sort of ad-hoc basis at weekends only, he said.
He found the receiver carried out his duties responsibly and could not be faulted because the state of the market, combined with the reported condition of the hotel, made a sale “virtually impossible”.
Neither the receiver nor bank were negligent in refusing to accept an offer €1.4 million for the premises in May 2010, he said. Both the bank and the receiver had, in an overall way, taken reasonable care for the interest of Mr Heagney, he found.
Noting the terms of the guarantees specifically precluded any set-off related to the sums due, he said he had no alternative but to give judgment for €2.4 million.