Business Irish

Saturday 23 September 2017

You're on your own, judge tells 50 investors in Anglo property action

Tim Healy

A LANDMARK case over expected losses among 50 wealthy Irish people from an investment project involving the purchase and renovation of two New York hotels has been dismissed by the Supreme Court.

An investment agreement between the former Anglo Irish Bank and the 50 meant "you're on your own" rather than "Anglo would mind them" as the investors argued, one of the Supreme Court judges said yesterday.

Anglo had in 2006 solicited Century Homes co-founder Gerard McCaughey and the other investors from among its "best customers" as persons with a personal fortune of more than €5m or incomes exceeding €500,000 a year and they were unlikely to be "innocents abroad", Judge Adrian Hardiman said.

He ruled the terms of a "commitment agreement" signed by the investors and/or what was in a "black brochure" concerning the investment created no liability to Mr McCaughey from the bank, which later became the now dissolved Irish Bank Resolution Corporation (IBRC).

He also upheld findings that no case of fraud was established.

The "breathtakingly broad" terms drafted by the bank in the investment agreement stated the investors had all the material they wanted concerning the proposed investment, he said.

They were also not relying on any representations, had made their own decisions based on their own appraisals and may not have been given complete information but still wished to proceed, he said.

Pathfinder

The "black brochure" referred to the investment as one of "high-risk" and also referred to 10 risk factors, although not a zoning risk, and stated prospective investors should consult their own legal, financial and tax advisers.

Mr Justice Hardiman yesterday delivered the three-judge court's judgment upholding the High Court's dismissal of the "pathfinder" action by Mr McCaughey over the investment project backed by Anglo's private banking arm involving purchase and renovation of the Beekam Tower and Eastgate Tower hotels.

Mr McCaughey, with addresses at Sandymount, Dublin, and Manhattan Beach, California, sued Anglo and the Anglo-owned Delaware-based Mainland Ventures Corporation (MVC) over the Anglo Irish New York Hotel Fund, a private equity investment.

He was among 50 people who invested an average $1m in the hotels fund in 2006 and yesterday's decision has adverse implications for 22 similar actions.

The bank denied all the claims against it and also denied it owed any duty of care at all to the investors.

The investors had lost their entire investment although the bank retains a substantial asset, Judge Hardiman noted.

Irish Independent

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