Former housebuilders Michael and John Taggart owe Ulster Bank a £5 million (€6.9m) personal guarantee, a Belfast High Court judge ruled on Friday.
Mr Justice Burgess held the brothers liable as he rejected their multi-million pound counter writ for alleged negligence they say led to the collapse of their property empire.
He described Michael Taggart’s evidence in the case as being “flawed, inconsistent and implausible”.
Finding no deceit on the part of any bank official, the judge dismissed claims that the brothers were kept in the dark about credit concerns. He said: “It remains a mystery to the court as to why two highly intelligent businessmen with seemingly considerable wealth, when faced with what in the scheme of their affairs were relatively modest financial demands to put right the covenants they entered into with the banks, did not take any steps to do so.”
The Co Derry brothers sued Ulster Bank for alleged improper conduct they contended contributed to the fall of the Taggart Group. Once a huge operation on both sides of the Border, with further interests in Britain, continental Europe and the US, the firm was decimated in the 2007 property market crash. Within a year it had gone into administration.
Unease within Ulster Bank
Michael and John Taggart insisted they could have sold off assets had they been warned of unease within the bank about the company’s finances. Ulster Bank issued counter proceedings for €4.3 million and £5 million it contended the brothers owed in personal guarantees over land purchases in Kinsealy, north Co Dublin in 2006 and in the Northern a year later.
Assertions that the latter guarantee may have been unnecessary were rejected. Mr Justice Burgess said: “I therefore determine that the 2007 guarantee is perfectly valid and binding and that the amount due under it is fully owed to the banks by the Taggart brothers.”
During the trial the court heard how the businessmen’s property portfolio once extended to a Luxembourg shopping centre and luxury apartments in Florida and on the borders of Monte Carlo.
Michael Taggart, who spent three weeks in the witness box, described his career path in the construction industry from purchasing a plot for one house to winning an Entrepreneur of the Year award.
He insisted his company would not have gone bust if bank concerns had been disclosed sooner.
‘Bouncing into excess’
In mid-2007 Taggart Group had assets in the region of £600 million, compared with debts of around £245 million, the court heard. But counsel for Ulster Bank argued that the firm was warned more than 20 times in four months that its banking facilities were “bouncing into excess”.
The court also heard a director at the construction group believed it was regularly getting itself into “financial messes”.
Delivering a 145-page judgment, Mr Justice Burgess said any concerns had not arisen “out of the blue” in June 2007.
Michael Taggart and the board were aware throughout all of the relevant period, he held, with having sought extensive information on accounts and forecasts from 2006. Turning to mid June, he said the picture disclosed to the court was “somewhat chaotic”, with no evidence of any attempt to correct the problems or bring banking agreements under control.
Dominant figure
The judge described Michael Taggart as the dominant figure in the company, determined and ambitious with an intimate knowledge of the state of its business at all times. He said it gave him no pleasure to categorise his evidence as “at times falling short of the truth, either by way of omission or more directly”.
Mr Justice Burgess continued: “It (the court) recognises the undoubted trauma and distress that the descent from great success to virtual ruin must have had on him and his family.
“The events occurred during a time of a febrile market in land and property - which with the benefit of hindsight was unsustainable, and I venture to suggest should have triggered alarm bells for anyone with any professional insight.”
