FitzPatrick and former Anglo employee win €287k loan case
A Stg£250,000 (€287,000) loan made in 2006 by the former Anglo Irish Bank to its now bankrupt former chairman Sean FitzPatrick for property investments in London does not have to be repaid into his estate by a former Anglo employee, the High Court has ruled.
Both Mr FitzPatrick and former Anglo employee Mark Redmond had disputed claims by the court-appointed official managing Mr FitzPatrick's bankruptcy, the Official Assignee, that the money was repayable by Mr Redmond for the benefit of creditors of Mr FitzPatrick.
In a judgment yesterday, Ms Justice Elizabeth Dunne said she accepted the "consistent" accounts of Mr FitzPatrick and Mr Redmond related to the intention behind the Stg£250,000 investment.
Mr FitzPatrick had told the judge that in late 2006 he invested the Stg£250,000 in the Woolgate Exchange office property in London to give "a chance of money" to Mr Redmond, then aged 24, from Tallaght, Dublin, whom he described as "a bright young kid".
Mr Redmond had joined Anglo in 2000 from school. He could have made thousands "or nothing – which is what it turned out to be", Mr FitzPatrick said.
Both Mr FitzPatrick and Mr Redmond, whose tasks in Anglo included managing investments of Mr FitzPatrick and his family, had denied claims that the Stg£250,000 sum was a "loan" from Mr FitzPatrick to Mr Redmond and was repayable by Mr Redmond into Mr FitzPatrick's estate following the latter's adjudication as a bankrupt.
The High Court heard that the Stg£250,000 loan had been repaid to Anglo from some €10m in bank accounts held by Mr FitzPatrick – who was adjudicated bankrupt in 2010 with estimated debts of €150m and assets of €47m – and his wife.
The judge ruled that while some documents were consistent with the existence of a loan and there was no doubt that Mr FitzPatrick drew the sum on a loan account, the evidence was consistently that Mr FitzPatrick was providing the £250,000 sum for a second investment in Woolgate, that he was to get back that amount and that Mr Redmond was to get the benefit of any profit.
She also accepted that both men had intended, if the investment did not prosper, that Mr FitzPatrick was to take the consequences.
While there was no doubt that the provision of Stg£250,000 by Mr FitzPatrick was a loan, the "critical point" was that Mr Redmond only had to repay if the investment realised more than Stg£250,000, which it did not.
That meant the "loan" was a limited or sole-recourse loan.
The judge added that she accepted there was "no real possibility" that Mr Redmond could have invested in Woolgate through his own resources.
Mr FitzPatrick had also made an investment in a property in Victoria, London and facilitated Mr Redmond in obtaining Stg£100,000 from Ulster Bank so that he too could invest in it, the judge said.
Mr FitzPatrick had guaranteed Mr Redmond's investment for €100,000. That property was expected to be sold for Stg£70,000 and Mr Redmond had indicated he would make up any shortfall related to his share in the investment.
Arising from a court examination last March of both men, the Official Assignee Chris Lehane had argued that Mr Redmond was indebted to Mr FitzPatrick for some Stg£285,000, including interest, arising from the Woolgate investment.