Carroll wins reprieve on €60m summary orders

THE HIGH Court has given property developer Liam Carroll a reprieve from a claim by Irish Nationwide Building Society for €60 million summary judgment orders against him under Mr Carroll’s personal guarantee over the liabilities of a development company controlled by him.

Mr Justice Peter Kelly ruled yesterday that the dispute between INBS and Mr Carroll should go to a full hearing because Mr Carroll had made out an arguable defence to the society’s claim arising from the society’s own conduct in relation to the putting in place of securities for the €60 million guarantee.

On that basis, the judge rejected the society’s application for €60 million summary judgment orders against Mr Carroll and directed the action go to full plenary hearing at the Commercial Court not before November next.

The INBS application arose from a September 2006 personal guarantee given by Mr Carroll and two other developers, Larry O’Mahony and Thomas McFeely, over loans given to Aifca Ltd, Mount Street, Dublin, for the proposed development of The Square shopping centre in Tallaght.

Aifca was a company of Mr McFeely and Mr O’Mahony which bought a licence required for development of The Square shopping centre in Tallaght. Mr Carroll later acquired a controlling interest in Aifca. Earlier this month, Mr Justice Kelly granted summary judgment for some €78 million to INBS against Aifca arising from non-repayment of loans but adjourned to yesterday the society’s summary judgment application against Mr Carroll over the September 2006 guarantee of Aifca’s liabilities.

Under those guarantees given by Mr Carroll, Mr McFeely and Mr O’Mahony, INBS claimed it granted a term loan facility to Aifca for €66.5 million and some €78.6 million was owed by Aifca under that facility. It claims the guarantee was for liabilities of a maximum €60 million.

Hugh Mohan SC, for Mr Carroll, argued yesterday that his client had a real defence to the summary judgment claim arising from its own conduct in relation to putting in place of certain securities required by the guarantee, namely the assignment of life insurance policies of €5 million each on Mr Carroll, Mr O’Mahony and Mr McFeely.

Tony O’Connor SC, for INBS, argued that there was no dispute the guarantee had been executed and the life policies were not assigned and Mr Carroll had no arguable defence to the society’s claim.

Mr Justice Kelly stressed that all he was required to decide at this stage was whether Mr Carroll had an arguable defence or real defence to the claim, not whether that defence was likely to succeed. He was satisfied Mr Carroll had made out a defence justifying the matter being sent to full plenary hearing.

Mr Carroll, he said, had claimed certain securities were required under the guarantee, including the assignment of life insurance policies on Mr McFeely and Mr O’Mahony. Mr Carroll also claimed the society had agreed, if those securities were put in place to the satisfaction of its solicitors, then Mr Carroll would be discharged from the €60 million guarantee and thereafter a €30 million guarantee would be out in place.

Mr Carroll claimed the society knew from its previous dealings with Mr McFeely and Mr O’Mahony that a life policy could not be assigned in relation to one of them because of health issues. Mr Carroll claimed the society had effectively waived the security relating to the life policies by its own conduct in going on to complete the Aifca facilities.

As a result, Mr Carroll claimed he was discharged from the €60 million guarantee. He also claimed the €30 million guarantee referred to was never executed.

The judge noted the society denied the required securities were put in place and denied it waived the requirement relating to the life policies. It also denied that its own conduct stopped it from pursuing its claim for the €60 million under the guarantee.

The judge said he was satisfied Mr Carroll had shown a fair or reasonable probability of having a real or bona fide defence and he would allow him make that case at a full plenary hearing.

He adjourned the case for further directions to November.