Harry Crosbie, High Court, Summary Judgement, Recievers, Banks, Loans

Harry Crosbie, High Court, Summary Judgement

The High Court has ruled Nama is entitled to €77 million summary judgment orders against businessman Harry Crosbie.

Mr Justice David Keane ruled today Mr Crosbie had failed to show any reasonable prospect of a bona fide defence to the Nama claim such as would entitle him to a full court hearing of the claim.

In those circumstances, he ruled Nama is entitled to summary judgment but adjourned final orders for a week to let the sides consider his ruling.

Nama moved to enforce the €77 million loans after Mr Crosbie failed to disclose substantial assets to the agency when first asked to do so, the Commercial Court was told during the summary judgment application last month.

A letter sent by solicitors for Nama in August 2012 said full and complete disclosure was a requirement of Nama’s January 2012 Memorandum of Understanding with Mr Crosbie and his “lack of candour” in dealings with Nama was “simply not acceptable”, especially when Mr Crosbie and related companies collectively owed Nama more than €420 million.

Nama was terminating the memorandum, reserving all its rights and wanted Mr Crosbie to take various steps, including resigning directorships of companies and sell various properties, the letter saud.

Mr Crosbie had argued Nama was effectively trying to bankrupt him and it was not entitled to summary judgment. He argued Nama was bound by an agreement set out in a letter of August 24th 2012 relating to management and disposal of assets and liabilities of Mr Crosbie and companies connected with him. Nama obtained some €35 million from the sale of assets under that agreement but and was now seeking to resile from aspects of that agreement, he said.

That alleged agreement was the basis for Mr Crosbie’s defence to summary judgment and he argued, on foot of it, he was entitled to a full plenary hearing. Mr Crosbie also rejected claims by Nama he misled it as to whether he had unencumbered assets.

Under the August 24th 2012 agreement, Mr Crosbie, his wife and son resigned as directors of several companies and Nama agreed to release charges and any claims by it concerning Mr Crosbie’s home at Hanover Quay, Dublin or the home of his son Simon.

The businesses of two companies were also to be transferred to Simon Crosbie for “nominal consideration” subject to sale of sites in Dublin Port, with proceeds to be given to Nama. Harry Crosbie was also to sell property in Dublin Port to Dublin Port Company.

The agreement also provided, without prejudice to Rita Crosbie’s claim to full ownership of a property at Eze, France, Mr Crosbie would try to sell a 50 per cent interest in that within 18 months. The agreement stated Nama would not object to the proceeds of sale being used to discharge Mrs Crosbie’s debts relating to her house in Wexford.

Mr Crosbie was to arrange for sale of three apartments in Villefranche sur Mer, France and for his 45 per cent of the sales proceeds to go to Nama. Nama was also to try and settle Mr Crosbie’s debts with KBC and ABN AMRO banks. The agreement also stated Nama has no interest in the property or business of Cafe H.

In his judgment today, Mr Justice Keane found the letter could not be construed as establishing a reasonable prospect of bona fide defence to the claim for summary judgment. The letter could not be read as meaning Nama had relinquished its entitlement to call in the loans or to seek a money judgment, he said.

Nama’s claim arises from personal debts of €55 million of Mr Crosbie and his guarantees of the liabilities of Shoal Trading Ltd and Ossory Park Management Ltd (OPML). The agency took over AIB loans of Mr Crosbie and his companies in 2010.

It is not seeking judgment concerning other sums due under a separate €353 million facility for development of the Point Village. Recourse for the €353 million is limited to assets provided as security, plus an additional personal recourse amount.

Nama appointed receivers in April 2013 on foot of an unmet demand for repayment under the loans and guarantees. Earlier this year, it served a further demand on Mr Crosbie seeking payment by March 17th last of €77 million.

Danske Bank, High Court, Summary Judgement, Recievers

Danske Bank

Danske Bank is now the most aggressive financial institution in the State when it comes to pursuing its debtors through the courts for summary judgment, an analysis of official court records has shown.

Danske is more than seven times as likely as either of the pillar banks, AIB and Bank of Ireland, to resort to court action against its customers, when the number of cases is measured against the size of the banks’ loan books.

A total of 1,354 cases for summary judgment – where the plaintiff applies for a fast-track ruling from a judge without a trial or witnesses – were recorded on the High Court database in 2014 to the end of last week. Danske, which is winding down its Irish loan book, accounts for almost one in five such applications.

Banks criticised Edmund Honohan, the Master of the High Court and a brother of Central Bank governor Patrick Honohan, has repeatedly criticised banks for their increasing use of summary judgment applications in debt cases.

Mr Honohan has questioned whether the fast-track procedure gives bank borrowers a fair chance to mount a defence.

Danske has issued summary proceedings against 263 of its borrowers so far this year.

This compares to 237 for the AIB group, including its EBS subsidiary, and 245 for Bank of Ireland, including a handful by its building society ICS.

However, Danske’s gross loan book – which is in the region of €7 billion, including the €3.4 billion of loans held in its “non-core” bad bank – is dwarfed by the gross loan books of the two pillar banks.

Bank of Ireland’s gross Irish loans are about €53 billion, while AIB’s domestic book is €48 billion.

Bank of Scotland, which is also winding down its Irish operations, has filed 44 summary judgment cases this year, which suggests it may be cutting deals with many of its indebted borrowers instead of pursuing them through the courts.

Ulster Bank has filed 90 cases so far in 2014, while Rabobank-owned ACC has filed 44 summary judgment proceedings against its borrowers.

The subprime lender Start Mortgages, KBC bank, IBRC and Investec have all resorted to summary judgment in fewer than 20 cases each. Permanent TSB has filed three such cases.

Of AIB group’s 237 applications, just 78 were made in the name of its mortgage bank, suggesting it is primarily using the summary judgment tactic against other borrowers, such as small business owners, and for individual unsecured loans.

About 94 of Bank of Ireland’s 245 applications were from its mortgage bank, suggesting its approach regarding when to seek a summary judgment is similar to AIB’s.

Human rights Writing in The Irish Times earlier this year, Edmund Honohan suggested that the increased use in recent years of summary applications is not “in the interests of justice”, adding that their use had been rare when he practised as a barrister.

He has described summary procedures as “plaintiff favoured” and perfunctory”, and suggested earlier this month that some Irish summary judgments could run foul of European human rights law.

“Not many [people] will know that a High Court case will often consist only of the judge reading the sworn written evidence of both sides and [summarily] judging the case on that basis alone,” said Mr Honohan.

“The number of cases being dealt with summarily is on the rise. Should we be concerned? . . I think so.”

Danske said its strategy was to work with distressed borrowers to “achieve the best outcome for both” parties.

“Legal action is only taken by the bank as a last resort in the case of a non-performing loan where the customer is not co-operating with bank,” it said.

AIB and Bank of Ireland were unavailable for comment.