ACCBANK has secured court orders against property developer Paddy Kelly and his three children requiring them to pay some €16 million arising from guarantees over property and other loans.
However, while Mr Justice Peter Kelly ruled ACCBank was entitled to the judgment orders, he directed ACC cannot register or execute those orders pending the outcome of claims that the bank’s handling of various issues exacerbated the Kelly’s financial difficulties and prevented them reducing their indebtedness.
Earlier, the judge remarked it was “no wonder the banks are in trouble” after hearing ACC had loaned some €1.5 million to Mr Kelly’s three children to invest in the bank’s own “SolidWorld” bonds which later plummeted in value.
The bank was lending its own money to invest in its own product but, if that product went down, where does that leave the bank? the judge asked. Rossa Fanning, for ACC, said such products were common across banks.
Paddy Kelly, Clonmore, Shrewsbury Road, Dublin, was not in court yesterday but his three children – Simon Kelly, The Old Rectory, Dunganstown, Co Wicklow; Christopher Kelly, Clarion Quay Apartments, IFSC, Dublin; and Emma Kelly, Harcourt Terrace, Dublin 2 – did attend. Their counsel Damian Keaney had urged the judge not to enter judgment for some €16 million against all four, saying that would be “calamitous” for them and that they had established credible arguments relating to ACC’s own conduct.
Most of the €16 million claim relates to guarantees allegedly given by the Kelly defendants over loans in late 2007 to Pressaro Ltd, with registered offices at Lower Baggot Street, Dublin, to buy what is known as the Cablelink/NTL property at Pembroke Place, Ballsbridge.
That property was valued at €27 million in 2007 but is currently on the market seeking offers of around €9.5 million.
ACC claimed the Pressaro loan was a short-term facility but no repayments of interest were made since March 2008. It claimed all four defendants entered into a guarantee in November 2007 over the Pressaro loan with some €16.9 million due and owing. The bank appointed a receiver over the assets of Pressaro last month.
The Kellys’ argued they had a credible defence on grounds including that when Pressaro could not sell the Cablelink property, ACC refused to consent to its being leased for 10 years for an annual rent of €500,000. Pressaro has initiated its own proceedings against ACC over the refusal of consent for the lease and over other matters.
As part of the €16 million claim, ACC also sought some €266,659 for loans to Simon Kelly to buy and refinance investment property at Tulfarris Village and to purchase two dual lifetime memberships to Tulfarris Golf Club. It also alleged some €270,000 was due in arrears of interest on loans of some €500,000 given to Simon, Christopher and Emma Kelly to buy SolidWorld investment bonds.
Simon Kelly has contended, had the bank responded positively to queries from him in summer 2008 about selling SolidWorld bonds, such a sale could have realised some €2 million and reduced the defendants’ indebtedness. He claimed ACC’s own website suggested some €2 million could be made from such a sale in early August 2008 but the bank had told him on August 12th, 2008 that the sale would realise only around €300,000.
In his ruling, Mr Justice Kelly said the bank was seeking summary judgment orders against the Kellys and they had to establish if they had a credible defence to that. There was no dispute the loan facilities were given and availed of and that guarantees were executed by the defendants, he said.
It should also be noted, he said, that the bank was not seeking recovery of the prinicpal amounts loaned for the SolidWorld bonds but was claiming for interest due. There was also no challenge to the appointment of a receiver to Pressaro.
The arguments advanced on behalf of the Kellys effectively amounted to a counterclaim rather than a defence to the bank’s application, the judge said. He could not say at this point whether the counterclaim would be successful but there was a triable issue raised concerning the withholding of consent for the lease and relating to the SolidWorld bonds.
In the circumstances, he ruled the bank was entitled to the judgment orders of some €16.2 million against Paddy Kelly, some €16.6 million against Simon Kelly and some €16.3 million each against Christopher and Emma Kelly.
However, he would exercise his discretion to stay registration and execution of the orders pending the outcome of the Pressaro case and on condition the defendants prosecute the Pressaro case speedily.
