Bank of Ireland seeks court orders for €17.4m against property developer

BANK of Ireland is seeking judgment orders for €17.4 million against a property developer under personal guarantees provided by him over certain loans to three of his companies.

It is also seeking possession of unsold residential properties on a site in Athlone.

The action against Pearse Gately, of Millicent South, Sallins, Co Kildare, was transferred to the Commercial Court yesterday by Mr Justice Peter Kelly.

The case arises from personal guarantees allegedly executed by Mr Gately and others over loans made on dates in 2004, 2006 and 2007 to his companies, Gateway Properties (formerly RRI Developments), G&K Building Company and Ichleigh Developments.

The loans included a €13 million loan made to Gateway in March 2006 for the purchase of a 7.5 acre site at Monksland, Athlone, Co Westmeath, and a €26m loan to refinance existing loans and to fund the completion of a development at The Waterways, Sallins, Co Kildare.

The bank claims the final repayment dates for the loans were December 2006 in the case of Ichleigh, December 2007 for G&K and December 2008 for Gateway. The bank demanded repayment from all three companies on dates in March and May last year but claims all three companies had failed to make payment.

Arising from those failures, the bank appointed Kieran Wallace as receiver over all three companies in May last year, John Hennessy SC, for the bank, said.

In that same month, the bank also demanded payment of some €17.3m from Mr Gately on foot of his personal guarantees but no payments were made. With interest, more than €17.4m is due, the bank claims.

The bank has also brought a claim against Mr Gatley and another of his companies, Obaire Developments, Tully, Baylin, Athlone, for possession of a number of properties at Sli No Coiste, Athlone, on foot of charges in its favour allegedly executed by Mr Gately.

Despite demands from Mr Wallace as receiver, Mr Gately had refused to deliver up possession, the bank claims.

It is also claimed Obair had entered into an agreement with Mr Gately in July 2005 whereby Obair was granted a licence to occupy the properties for the purpose of constructing and transferring residential units.

The bank claims it never consented to the licence agreement and any interest which may have been acquired by Obair is subject to charges in the bank’s favour.

Mr Gately has disputed that claim in High Court proceedings initiated last year in which he claims he cannot deliver up possession because the residential units built were not his property.

John McCarroll, for Mr Gately, in opposing the actions being transferred to the Commercial Court, said it was extraordinary for the bank to say it did not know of or approve the licence. If that were the case, the bank’s underwriting polices were called into question, he said.

Transferring the case, Mr Justice Kelly said he was satisfied the best way to deal with all the matters was in the Commercial Court.

Related proceedings against Fintan Shorthall, of Shannonfield House, Barrymore, Athlone, Co Westmeath, over personal guarantees provided by him relating to the liabilities of Gateway were also admitted to the court yesterday.

The bank is seeking judgment for some €1.35m against Mr Shorthall and Mr Justice Kelly gave his counsel until Friday to outline the nature of any defence which may be mounted to the claim.