Anglo Irish Bank allegedly agreed, for a payment of €10 from building giant Sisk, to pay the liabilities to Sisk of another building company which now stand at some €3.2 million, the Commercial Court heard yesterday.
John Sisk & Sons Ltd are now suing Anglo and the company, Fordmount Developments (Savoy) Ltd (FDSL), for that €3.2 million sum.
In admitting the case to the Commercial Court yesterday, Mr Justice Peter Kelly observed it was alleged Anglo had agreed in May 2006, for a fee of €10 from Sisk, to ensure all obligations of Fordmount to Sisk related to construction works for the "Savoy project" in Limerick would be met.
Earlier, Brian O'Moore SC, for Sisk, said there had been efforts to resolve the matter but these had failed. Maurice Collins SC, for Anglo, said the bank would be fully defending the case.
In its action, Sisk alleges breach of contract by FDSL and Anglo arising from agreements relating to the construction of a hotel, apartments and retail units in Limerick city, the "Savoy project".
Sisk claims the Savoy project was one of several projects in which it was involved with FDSL. It claims variations of the main construction contract were agreed. By March 2008, some €38.53 million had been paid.
Sisk claims the final account on the Savoy project was agreed in July 2008 for a sum of €42.7 million, a credit of €82,000 was allowed, leaving FDSL owing €4.09 million. Sisk claims FDSL had asked that balance would be paid through a related company, Fordham Developments Ltd, a further payment was made by that company and in September 2008 some €3.2 million was owed.
It is alleged FDSL later failed to make payments under an agreed schedule for repayment but, in May 2009, Sisk agreed not to issue proceedings provided it was given a letter of undertaking from Michael Daly, a director of FDSL, and interest payments were discharged. When the first of the interest payments was not made, Sisk claimed the entire €3.2 million became due and owing.
Sisk says the claim against Anglo arose because it had, on August 23rd 2005, provided Sisk with a letter confirming a loan facility was in place for an amount "at least equal to the contract sum (as defined in the construction contract)" which would be available to FDSL.
Sisk claims it and Anglo, about May 30th 2006, entered into a collateral agreement under which Sisk gave Anglo certain warranties in relation to the construction works in consideration of a fee of €10. Sisk claims that agreement provided Anglo would ensure all monies were paid to FDSL so as to enable FDSL meet its contractual obligations to Sisk under the main contract.
As FDSL had failed to meet its contractual obligations to Sisk, Anglo had breached its obligations under the collateral agreement, Sisk claims. Anglo had refused to accept any liability under that agreement, it added.
