Solicitors pursued by Anglo for €64m have 'arguable defence'
Published 21/07/2010 | 05:00
THREE solicitors being pursued by Anglo Irish Bank for €64m over personal guarantees on €165m loans have an arguable defence, Mr Justice Peter Kelly ruled yesterday.
Anglo had argued in the Commercial Court that the three had no defence to its application for summary judgment orders for €21.4m each over loans made to companies and partnerships linked to the Fordmount property group.
The solicitors argued they had a defence on grounds including assurances given by Anglo officials to the Fordmount group managing director Michael Daly that their guarantees over certain loans would never be relied upon.
They also claimed Anglo advanced loans when it had concerns about how the affairs of the partnerships were being conducted by Mr Daly.
Mr Daly, who is being separately sued by Anglo for €84m, has claimed he was regarded as a favoured developer by Anglo and was told he had access to loan funds of more than €650m.
Anglo's proceedings against Mr Daly will be heard early next year after a court previously refused the bank summary judgment orders.
Yesterday, Mr Justice Kelly refused Anglo's application for the summary judgment orders against Dermot O'Donovan, Michael Sherry and Adrian Frawley, all partners in the Limerick-based firm Dermot G O'Donovan & Partners.
A fourth partner, Thomas Dalton, previously consented to summary judgment against him for the €21.4m sum.
The judge said that because it was not "very clear" the three defendants have no case, they were entitled to a full hearing of the action.
His decision was not "a warranty" as to the strength of the solicitors defence, "still less as to their ultimate prospects of success", he added.
The full action will now be heard early next year in the Commercial Court and Anglo may seek to have it heard in tandem with the proceedings against Mr Daly.
Mr Justice Kelly said all three defendants were experienced solicitors familiar with personal guarantees and their consequences.
They had all sworn in affidavits they never had any doubt Anglo would not seek to enforce the guarantees.
There was no document or note indicating anyone from Anglo made such representations to them as there could not be since no official from the bank had, he said. The representations were made by Mr Daly who was never an officer or employee of Anglo.
The judge noted Mr Daly had said the guarantees would never be relied upon and were just "a box-ticking exercise" for Anglo's credit committee. The solicitors said they genuinely believed that and appeared to believe Mr Daly had a special status with Anglo. He had told them of being taken on several golfing trips by Anglo including one of "huge cost" involving travel on the Orient Express.
The judge noted Anglo had described the solicitor's claims as incredible and said they could not have genuinely believed the guarantees were unenforcable. There were flaws in the defence advanced, he added.
However, were it not for the fact Mr Daly's case had already been sent for full hearing, the judge said he would be very inclined to refuse the defendants leave to defend.