FORMER CHIEF executive officer of Smart Telecom Oisín Fanning has failed to stop Anglo Irish Bank securing a court order for possession of his 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 yesterday 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 that Mr Fanning makes 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, through the sale of Forenaghts and/or through the impending sale of a property in France.
Although the loan of some €8 million was forwarded to allow Mr Fanning to buy €5 million worth of shares in Smart Telecom and to refinance a €2.9 million loan on Forenaghts, the loan was secured on his home, the judge found. She rejected Mr Fanning’s claim that 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 repossession 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 that it would be funded by the €5 million 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 that any beneficial interest Ms Roche may have in the house was to be covered by the remortgaging.
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 home loan 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 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” 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 prices, it would suffer a substantial loss.
Ms Justice Dunne said she would stay her order until April 30th. If Mr Fanning made the €400,000 repayment, she would consider extending the stay. If not, “we are into a different situation”.
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.
The judge also heard Mr Fanning bought the house in 1995 with his then wife Susan Fanning.
Speaking outside the court afterwards Mr Fanning said the ruling would have a huge impact on him personally and that it was “very upsetting”. However, he said it was not “the end of the story”.
He added: “It was impossible for me to repay that loan within a year, impossible.” He said it was “remarkable that Anglo Irish take the view that I am worth pursuing” adding “there are people clearly not servicing maybe hundreds of millions in loans . . . the world knows what Anglo are like”.
* Mr Fanning and Mr Murtagh are involved in separate legal proceedings, yet to be heard, arising from the 2006 buyout of Smart.