Former Smart Telecom chief executive Oisin Fanning has failed to stop Anglo-Irish Bank securing a court order for possession of his luxury home on 24 acres in Co Kildare following his failure to repay loan and interest amounts of some €8.6 million.
Ms Justice Elizabeth Dunne ruled today the Bank is entitled to an order for possession of Forenaghts House, Forenaghts, near Naas where Mr Fanning, his partner, Pearl Roche, and her four grown up children live.
The judge put a three month stay on execution of the order on condition Mr Fanning make a €400,000 interest repayment by April.
If he does so, the judge said she would consider further extending the stay to allow Mr Fanning look at ways of meeting his debt either through the sale of Forenaghts and/or through the impending sale of a property in France.
Although the loan of some €8 million was given to allow Mr Fanning to buy €5 million worth of shares in Smart Telecom and to re-finance a €2.9m loan on Forenaghts, the loan was secured on his home, the judge found.
She rejected Mr Fanning’s claim the loan was given on the basis of assurances from businessman Brendan Murtagh, who took over Smart in 2006, that Smart would repay it.
She also ruled against an application from Mr Fanning to adjourn the re-possession matter until separate proceedings in relation to the purchase of the shares are determined.
The bank was entitled to an order for possession because this was a commercial loan which had to be repaid over 12 months and it was clearly intended it would be funded by the €5m investment in Smart which unfortunately did not work out, the judge said.
Both Mr Fanning and Ms Roche were fully aware the loan was secured on the house and had gone through careful steps with the bank before signing the loan agreement, the judge added.
Ms Justice Dunne said it was difficult to accept Mr Fanning’s contention the bank did not intend to rely on the security provided by the house. She also ruled any beneficial interest Ms Roche may have in the house was to be covered by the re-mortgaging.
The judge said there was no evidence to support Mr Fanning’s claim the loan would not have been provided were it not for assurances from Mr Murtagh.
“I simply do not believe such a loan would be provided on that basis. What amounted to, at best, a collaborative agreement between Mr Murtagh and Mr Fanning, cannot allow the plaintiff (Anglo) not to enforce its security.”
While Mr Fanning had made a distinction between the homeloan and commercial loan aspect of the matter, the judge said she could not see how the bank could get its money except by an order for possession.
After the decision, counsel for Mr Fanning asked for a stay on the possession order on grounds Forenaghts is the home of Mr Fanning, Ms Roche and her three sons and a daughter, the youngest of whom is 18.
Counsel said Mr Fanning was offering to make a €400,000 repayment on the full amount due in April as the bank was aware he had other property in his ownership including a “significant property” in France which is currently up for sale.
Counsel for Anglo said the bank had already lost out on getting the best value from the sale of the house because of a “rapidly declining” property market. While, “on humanitarian grounds”, it was agreeable to a normal three to four month delay over a possession order, the bank was anxious to expedite the matter because even at present market prices, it would suffer a substantial loss.
Ms Justice Dunne said she would stay her order until April 30th by which date Mr Fanning must make the €400,000 repayment. If he did, she would consider extending the stay. If he did not, “we are into a different situation,” she said.
In its action, the bank claimed the loan to Mr Fanning and Ms Roche was secured on the basis of the bank having first legal claim over 15 million Smart shares and over Forenaghts House.
Mr Fanning claimed he was not responsible for the repayments and alleged he was pressurised into taking out the loan by Mr Murtagh who insisted he, as CEO of Smart, would have to be seen to be investing in it as part of a €44 million fund-raising drive.
The judge also heard Mr Fanning bought the house in 1995 with his then wife Susan Fanning. Mrs Fanning was represented in court today in an observer’s capacity.