TEN people involved in property partnerships have sued Ulster Bank and First Active over the alleged mis-selling of debt swaps for more than €65m.
It involved the alleged sale by the financial institutions of derivative agreements or swaps to hedge "notional liabilities".
Mark Colgan, one of the 10, said he had only a "basic" knowledge of swaps but had agreed a swap for €15.5m by phone while lunching in Davos, Switzerland, during a skiing trip in January 2008 on which he had been invited by the Ulster Bank property team.
That swap was agreed to hedge a debt on property at Sandyford in Dublin, he said.
It is claimed the defendants had not adhered to the Central Bank Code of Conduct for Investment Business in relation to how the disputed swaps were put in place.
The 10 plaintiffs are seeking to rescind the swaps and also want the defendants to make good any loss or liability resulting from alleged misrepresentations concerning the swaps.
The action was transferred to the Commercial Court yesterday by Mr Justice Peter Kelly.
The 10 were involved in two overlapping partnerships, the Colgan-Ryan Partnership and the Oval Partnership (named after one of the properties of that partnership, the Oval Building in Ballsbridge, Dublin 4).
The members of the Colgan-Ryan Partnership were listed in court documents as David Colgan; Mark Colgan; Davis Colgan; Patrick Ryan; Ronan Ryan; Desmond Ryan; Deirdre Ryan; and Padraic Ryan, all with an address at Sandyford Office Park, Dublin 18.
They are suing over a swap instrument of June 2007, which expires next November, and another instrument of January 2008 which has expired.
The members of the Oval Partnership, which was involved in a €75m commercial development in Ballsbridge and a €25m development at Bray Retail Park, are Patrick Ryan; David Colgan; Mark Colgan; and Davis Colgan; and property developers Philip Monaghan and Finian McDonnell.
They are suing over a May 2007 swap, which has expired.
In an affidavit on behalf of all the plaintiffs, Mark Colgan said the action was essentially about the mis-selling of the derivative agreements to both partnerships.
Mr Colgan said the Colgan Ryan partnership entered into an agreement in October 2006 with Ulster Bank for two credit facilities totalling €41m to buy properties at Sandyford Business Estate and Leopardstown Retail Park.
He began general enquiries about May 2007 into interest rate fluctuations with Anglo Irish Bank and Ulster Bank, he said. The Oval Partnership had loans of €100m with Anglo and the bank indicated some form of hedging would be required as precondition of reviewing essential bank facilities.
Ulster Bank was willing to provide advice about interest rates and potential hedging, he said. His own knowledge of swaps was "basic" – he erroneously believed a swap was the same as booking a fixed rate and that belief was never corrected by either defendant at any material time, he said.