Action against AIB settled

A COMPANY director has settled his action against AIB over allegedly exposing him to losses of at least €2.3 million as a result of negligence and reckless lending relating to a property development.

The settlement between Michael Fogarty, of Moneyquid, Killeigh, Co Offaly, and his company, Rocktop Developments Ltd, with AIB is subject to the consent of a third party, Ms Justice Mary Finlay Geoghegan was told yesterday. In those circumstances, the judge agreed to adjourn the matter to June 8th next for mention.

The case arose after Mr Fogarty and Rocktop provided guarantees over loans made by AIB in 2006 to two other men – Tony Browne and Michael Maloney – relating to a property development at Caisleán Cúirt, Thurles, Co Tipperary.

Mr Fogarty had carried on an engineering business with Mr Browne and Mr Maloney through Engtek Ltd until December 2005 when he resigned as a director of Engtek under a termination agreement.

Without legal advice and after a meeting of five or 10 minutes at AIB’s Roscrea branch on August 15th, 2006, Mr Fogarty said he agreed to guarantee the repayment by Mr Browne and Mr Maloney of their liabilities to the bank related to the Caisleán Cúirt development, subject to a limit of €4.5 million and also limited to his interest in Birchgrove House, Roscrea.

He had believed AIB would insist the conditions of the loan facility be met by the borrowers but, once he signed the guarantee, AIB recklessly advanced monies to the borrowers knowing or not caring that the loans had no rational connection with the value of the works being carried out, he claimed.

He claimed AIB recklessly provided a €800,000 second loan facility in October 2007 to the borrowers to complete the development, despite his telling Marian Hayes, manager of AIB’s branch in Roscrea, that he objected to AIB relying on his 2006 guarantee over those loans and that the €800,000 would not be enough to complete the development but was likely to result only in the debt to the bank being increased.