A Galway builder who owes €16m to a bank that provided finance for a development project in Co Clare left for Australia last year without telling his partner and co-borrower in the project, a court was told last week.
Martin Roche, who was in his mid 20s when he started making serious money out of the building trade -- and his partner, businessman Donal O'Connor -- planned to build 25 shops and offices, a creche and nearly 100 homes in the landmark development in the village of Clarecastle, outside Ennis, Co Clare.
But last week the High Court was sifting through the wreckage of the Clarecastle project, with Zurich Bank applying to the courts for summary judgement for nearly €16m against Mr O'Connor, of Stradbally East, Clarenbridge, Co Galway.
Summary judgement for that amount was previously entered against Mr Roche, of Aille, Loughrea, Co Galway.
Mr Justice Peter Kelly heard evidence that sharp differences have arisen between the two businessmen, including the claim made in an affidavit by Mr O'Connor that his partner in the project had left suddenly for Perth, Australia, without his knowledge.
Mr O'Connor successfully repelled the court application by the bank for a summary judgement against him after Mr Justice Kelly ruled that Mr O'Connor had made out an arguable defence that the bank prematurely called in its loans. However, the judge added that Mr O'Connor may have achieved a "Pyrrhic victory" in succeeding in having his case sent to a full hearing as the loans at issue were, in any event, due for repayment in the next four weeks.
He made directions for a full hearing of proceedings between Zurich Bank and Mr O'Connor -- but also indicated that when the loans became due for repayment on two dates this month, the bank would be entitled to apply for judgement orders.
The bank claims it advanced around €8.46m in June 2007 to MJ Roche Construction (Clarecastle) Ltd to finance the commercial and residential development at Clarecastle, Co Clare.
A receiver was appointed over the company last July.
Both defendants were directors of that company and the terms of the June 2007 loan required them to provided a joint and personal guarantees, supported by security, the bank said.
It claims both defendants also entered into a guarantee in September 2007 guaranteeing payment on demand of all present, future, actual or contingent liabilities of the company to the bank.
It is claimed the €8.46m facility was later increased to a maximum €11.96m with a final repayment date of May 2010.
However, an event of default had occurred, entitling the bank to terminate the facility and demand immediate repayment last June, lawyers for the bank claimed.
It was alleged Mr Roche had left for Australia in circumstances which threatened the completion of the development and the potential of having the loans repaid.
An email had been sent by Mr Roche from Perth in Western Australia.
Repayment was demanded in June last year but was not made and more than €7.3m was due and owing under that facility, counsel for the bank claimed.
After alleged default on repayments on another facility, the bank claims a further €8.9m is also due and both defendants are required to discharge that sum. The total is just over €16m.
In his defence to the case, Mr O'Connor argued that Mr Roche had left for Australia in March 2009 without any warning.
He also alleged Mr Roche had obtained company cheques for some €330,000 and appeared to have unilaterally informed those working on the Clarecastle development that work should cease. Mr O'Connor said he had later recovered the €330,000, which he had handed over to the bank.
He also made a series of allegations about the conduct of the bank after this, alleging that its conduct was "completely at odds" with its decision to terminate the loan before their due repayment date.
Further sales of the development would have been achieved were it not for the bank's actions, Mr O'Connor's affidavit to the court stated.