A BUSINESSMAN has lost his application for judgment orders for more than €22 million against three other businessmen over their failure to repay a €10 million loan advanced to them to help buy lands at Millennium Park in Co Kildare for a record €315 million.
The agreement for the €10 million loan made to the three by Dermot O’Rourke in 2006 provided it was repayable over three years, at 30 per cent interest per year. He claimed about €22 million was due over failure to repay it by August 2009 and he was also entitled to 32 per cent interest on the outstanding sum as of 2009.
Ms Justice Mary Finlay Geoghegan yesterday ruled Mr O’Rourke, Keredern House, Naas, was not entitled to the judgment orders against Thomas Considine, Coast Road, Oranmore, Co Galway; Patrick Sweeney, Main Street, Loughrea, Co Galway and Gerard Prendergast, Moortown, Naas, Co Kildare.
This was based on construction of a 2008 assignment of the loan by Mr O’Rourke to Bank of Scotland Ireland so as to address liabilities of his to the bank, and a purported reassignment by BOSI of same to Mr O’Rourke in 2010.
She stressed her conclusion did not exempt the defendants from an obligation to repay the loan to the person entitled to the benefit of the loan agreement. That agreement must be applied in accordance with the interest terms set out in it, she also stipulated.
The case arose from the sale in 2006 of lands at Millennium Park by Mr O’Rourke and developer Gerry Conlan to the defendants.
Mr O’Rourke alleged that, in an agreement of August 2006, he agreed to provide the defendants with a loan of €10 million for use in buying Millennium Park lands.
He claims it was agreed the loan, plus all accrued and unpaid interest, would be repaid by August 9th, 2009. It was agreed the loan would bear interest of 30 per cent per annum on the principal, and any amount not paid after the due date would attract 32 per cent interest, he claimed.
The defendants failed to repay the loan by August 9th, 2009, or since, and Mr O’Rourke brought proceedings over that.
The judge said Mr O’Rourke had in 2008 assigned the loan agreement to Bank of Scotland Ireland as security for liabilities of his to that bank. BOSI had brought its own proceedings against Mr O’Rourke seeking summary judgment over loans, but declined to be joined in these proceedings.
In this case, the defendants opposed summary judgment on grounds including Mr O’Rourke had assigned the loan agreement, with their consent, to BOSI in 2008. They also argued he was not entitled to recover interest at the “unconscionable” rate of 30 per cent, and that the 32 per cent rate which he sought to apply to the loan after August 2009 was a penalty and not recoverable.
The judge said Mr O’Rourke had in 2010 entered into a deed of reassignment of the €10 million loan with BOSI under which BOSI purported to reassign to him all of its rights in the loan agreement. He made a further demand for repayment from the defendants.
The judge ruled the 2008 assignment to BOSI was an “absolute assignment” and found, after that date and prior to the purported “reassignment” of the loan in 2010, he had no right to sue the defendants for recovery of the money. When he issued proceedings in late 2009, he had no right to sue the defendants, she found.
While the 2006 loan agreement did not restrict BOSI reassigning the loan agreement to Mr O’Rourke, the purported reassignment in 2010 was ineffective to vest in him the benefit of the loan agreement, she also ruled.
A clause in the 2006 loan agreement preventing assignment of the loan without prior written consent of the majority of borrowers had to be construed as applying to BOSI in 2010 when it purported to reassign the loan to Mr O’Rourke, she found. In this case, the consent of the defendants was not sought.
