Developer entitled to full hearing of fund's €16.8m judgment claim, court rules

By Ann O'Loughlin

A judge has ruled that Northern Ireland developer Patrick Kearney has raised an arguable defence to a fund's claim for about €16.9m summary judgment against him, with the effect he is entitled to a full hearing.

Mr Justice Brian McGovern said Stapleford Finance Designated Activity Company had not made out its claim it was entitled to summary judgment orders and the court would instead direct a full plenary hearing of the matter.

The dispute between Stapleford, of Victoria Buildings, Haddington Road, Dublin, and Mr Kearney, Bedford House, Bedford Street, Belfast, centres on a November 2014 settlement agreement to address his liabilities under loans advanced by Anglo Irish Bank Corporation in 2009, later purchased by the fund.

Mr Kearney agreed to a settlement under which an alleged debt of €19.2m was compromised by his agreeing to pay €2.36m and agreeing to release security held by him over certain subordinated bonds of AIBC to the fund.

Stapleford alleged, in breach of the settlement, Mr Kearney did not disclose, when executing the settlement, he was in the process of executing a transaction to dispose of the bonds for €6m.

Mr Kearney disputes that and says the fund was well aware he intended to sell the bonds and of their price.

As a result of the alleged breach of the settlement, Stapleford wrote to Mr Kearney in July 2017 informing him of the alleged breach and seeking a written proposal for payment of the alleged outstanding liability of just over €16m. It demanded payment of that sum in September 2017 and sought summary judgment when its demand was not met.

Mr Kearney opposed summary judgment and said he had defences to the claim.

In his ruling, Mr Justice McGovern said it seemed the principal issue was whether Mr Kearney complied with his duty of utmost good faith which involved a court deciding whether the fund was aware he was going to sell the bonds and had been told they were worth more than the debt or whether it was, in fact, aware of the amount they were sold for.

The judge said there is a clear conflict of fact about those issues.

The matters raised involved interpretation of the settlement agreement and that was best done at a plenary hearing, he said.

Mr Kearney also contended the facility underpinning the settlement agreement was one connected with a share support scheme which, he claimed, raises questions of potential illegality, the judge noted.

That issue could also not be addressed at a summary hearing and must be decided at the plenary hearing.

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