Businessman Gerry McCaughey entitled to full hearing over Anglo loan repayment
Century Homes founder Gerard McCaughey is entitled to a full hearing of his claim he is not yet liable to repay a loan from Anglo Irish Bank for an investment fund related to two New York hotels, the Supreme Court has ruled.
However, Mr McCaughey had advanced no arguable defence to the claim by Irish Bank Resolution Corporation (IBRC), formerly Anglo, that he is liable for loans advanced in connection with another investment, the Woolgate Exchange Geared Property Fund, the three judge court also held.
The court delivered judgment yesterday on Mr McCaughey's appeal against a High Court decision IBRC was entitled to summary judgment concerning the Woolgate and Peninsula Real Estate ILP Fund. The issue of what orders should be made was adjourned to later.
Mr McCaughey had claimed he had a defence on grounds including, at the time the loans were advanced, he had a collateral agreement with Anglo the loans would not have to be repaid until the relevant investment projects came to an end.
Giving the Supreme Court judgment, Mr Justice Frank Clarke agreed with the High Court the Woolgate fund had come to an end and there was no defence concerning that fund which, the judge noted, had performed “disastrously”.
He disagreed there was no arguable case whether the New York fund had come to an end and ruled Mr McCaughey was entitled to a hearing on that ground.
When Mr Justice Peter Kelly ruled otherwise in the High Court, he did not have before him updated information concerning the New York investment that was subsequently put before the Supreme Court, Mr Justice Clarke noted.
Additional affidavit evidence put before the Supreme Court indicated a possibility of some return on the New York investment on foot of plans to convert one of the hotels, the Eastgate Hotel, into a residential property, he said.
In those circumstances, it seemed Mr McCaughey had an arguable case Anglo was not yet entitled to call in the loan, he held.
The judge rejected further arguments by Mr McCaughey he had an arguable defence on grounds of alleged mis-selling of the relevant loans and investment projects underlying them.
The High and Supreme Courts had previously rejected claims by Mr McCaughey alleging misselling of the New York hotels fund, the judge said.
At the Commercial Court in January 2013, Mr Justice Peter Kelly ruled Mr McCaughey was liable to IBRC for about €5.2m of €7.7 sought against him over various loans and facilities, including the Woolgate and New York funds.
Mr McCaughey had an arguable defence to the bank's claim for the remaining sum of about €2.5m and he was entitled to a plenary hearing concerning that amount, Mr Justice Kelly found.
After that ruling was given, lawyers for Mr McCaughey indicated he would appeal it.
The sides also came to an agreement under which Mr McCaughey consented to summary judgment for about €2.5m and over how remaining sums would be treated, including via set-offs relating to sums in other accounts held by Mr McCaughey and his agreement to repay certain amounts by certain dates.
The case related to five loan facilities advanced between 2006 and 2007 to Mr McCaughey, who now lives in Manhattan Beach, California, and whose Century Homes company has been taken over by Kingspan.