Gene Kerrigan: 'I'm sorry for you, it's no consolation, but you are not alone'
So said a judge to a shopkeeper who owes €32m. Gene Kerrigan hears the human stories from a shipwrecked economy
There was a man sitting in the middle of the courtroom, clutching a large notebook stuffed with loose sheets of paper. He was wearing a casual red jacket and an open-necked blue-striped shirt.
He looked like many another hard-working citizen. Maybe a maths teacher, a taxi driver or the manager of a small factory. In fact, he was a shopkeeper. From Castleblaney. And he owes a bank €32m.
Before the court could get to that matter, it had to deal with a dispute over a mere €6m. And, before that, Judge Peter Kelly had to ensure that the celebration of the Diamond Jubilee of Queen Elizabeth II would not adversely affect an impending court case. This is Court 1 of the Four Courts, where some debris from the shipwrecked economy washes up on the Commercial List.
The potential problem arising from Her Majesty's celebration took less than three minutes to fix, with agreement from all sides. The neighbouring jurisdiction changed the date of a public holiday, all the better to hail Her Majesty. That might have raised a doubt in an imminent court case about whether a schedule of "business days" was being adhered to. A tiny detail, but complex webs are woven from tiny details. Better to sort it out beforehand.
The dispute over the €6m was one of those cases in which Person A sues Person B and wins, and is waiting for the money. The court had ordered that Person B draw up an affidavit of assets -- a sworn list of monies and properties, from which the €6m could be paid. The document handed in, Judge Peter Kelly said, was two pages long, with references to notes that weren't provided. "It tells you nothing," the judge said. This "purported compliance" with a court order wasn't good enough. And breaching a court order is a jailing offence.
The judge said he'd read the trial judge's judgement. He told Person B's lawyer: "Your client didn't come out of it looking well at all." He had a week to provide a proper affidavit. As this case ended, Judge Kelly said: "Could you come up to the front, Mr McConnon?" And the man in the red jacket went up and sat with his notebook where his barrister would sit, if he had a barrister.
Since the late Nineties, Jim McConnon owned and operated a Supervalu shop on Main Street, Castleblaney, Co Monaghan. In 2004, intending to expand his business, Mr McConnon bought a site behind his shop. Gradually, it being the Celtic Tiger era, the idea of building a shopping centre took shape. He'd need parking space, so he bought another nearby site in 2005. The two sites, along with his shop, would make a fine Castleblaney Centre.
At that stage, property was stunningly expensive. McConnon bought one site for €3.2m, the other for €3.3m. Groundworks cost €1.6m, and before long he had spent the guts of €10m -- borrowed from AIB. Plans, drawn up by appropriate professionals, pitched the total cost of the shopping centre at €32m. And, in late 2006, AIB pulled out.
By April 2007, the plan was in big trouble. Mr McConnon wasn't having much luck finding finance at acceptable terms. One day, he got an unsolicited phone call. Zurich Bank wanted to talk to him. Next day, two officials arrived in Castleblaney to discuss terms. He showed them his plans.
According to evidence at a court hearing, within 24 hours Mr McConnon was handed a Term Sheet, with the heads of agreement. Zurich Bank was in for €32m. The deal was effected two months later, and by December 2007 Mr McConnon was drawing down the money. He continued to work on the Castleblaney Centre through 2008 and into 2009, drawing down money even as the economy imploded. By March 2009, the dream was over.
Before the bubble burst, a professional valuation appraised one site as being worth €15,500,000 and the second site as being worth €14,500,000. In a judgement in the case, given in March of 2011, Judge Birmingham said: "The enormity of the difficulties that the project encountered may be seen from the fact that the defendant has averred that the current value of the Castleblayney Centre is in the region of €1m to €2m."
Zurich Bank wanted its loan repaid. Mr McConnon -- who then had the aid of a full set of lawyers -- put up four defences. In the High Court, Judge Birmingham dismissed one after another, in great detail, and gave summary judgement for the bank.
At the end of his judgement, Judge Birmingham commented: "The decision to advance funds in the amount involved seems extraordinary, indeed bordering on the bizarre. The speed with which the decision was taken to offer the loan seems quite remarkable. However that said, it must be stressed that this was not a question of a bank forcing funds on a reluctant, but gullible, borrower."
Mr McConnon went on to sue Zurich Bank, stating grounds for his claim that the loan was void. And last week he sat where his barrister used to sit and listened as Judge Kelly read out a detailed explanation of why he must dismiss each of those grounds, quoting case law. He pointed out that Mr McConnon was free to appeal this judgement. Then, the lawyer for the bank was on his feet, asking to be awarded costs. The bank was entitled to costs, the judge agreed.
"I'm sorry for you," Judge Kelly said to Jim McConnon. Every day of the week, he said, he was dealing with people in similar circumstances. "I know it's no consolation to you, but you're not alone."