Ms Justice O’Malley said the proceedings have a somewhat complex history but all of the cases related to borrowings by Joseph Sheahan and his brother Frank Sheahan Jr.
The loans in question, the judge said, were offered between 2005 and 2008 and nearly all related to buy-to-let properties with another loan relating to the purchase of a property in 2006.
The loans were called in on November 1, 2011 and the receiver apopointed in respect of various properties between November 2011 and September 2012. The judge said it was accepted by the Sheahans that they entered into the various agreements and drew down monies on foot of them. Letters of demand in relation to various loans were issued in November 2011.
In the first case, the receivers sought an order for possession of certain properties. An order was also sought against Joseph Sheahan for possession of a property bought in 2006 and the bank also sought an order for possession of a site at Leslie’s Arch, Old Quarter, Ballincollig, Co Cork.
Ms Justice Iseult O’Malley said the conclusion must be that the bank intended to be bound only by the written terms of agreement and that the borrowers knew it.
She said it might well have been that if the expectations on all sides as to the continued rise of the property market had been borne out the issue would never have come to a head.
The properties would either have been disposed of for a profit enabling to the loans to be paid off or the bank might have ageed to an extension of the interest only payments on the basis that its security was continuing to appreciate in value.
“The undoubted fact that neither Joseph nor Frank Sheahan Jr had, at the time of being given loans, the income to support capital repayments on all their loans supports the view that everyone concerned assumed that something of this sort would happen,” she said.
However the court must find that the contracts entered into were not founded on those assumptions.
Ms Justice O’Malley ruled that the decision to call in the loans and to appoint a receiver in the event of non payment was made by an appropriately authorised person.
Ms Justice O’Malley said the Sheahans were a well known family from Cork and Frank Sheahan Sr was a successful businessman with substantial experience in property investment.
His son Joseph set up a mortgage brokerage, Mymortgages, and his other son Frank Sheahan Jr was a well-known profesionall rugby player.
The brothers had challenged the validity of Bank of Ireland Mortgage Bank’s appointment last year of Michael McAteer as receiver over the properties.
The appointment came after BoI demanded that loans on the properties be repaid in full after the borrowers defaulted on obligations to make repayments on mortgages.
The properties bought by the Sheahans were all purchased with loans from BoI Mortgage Bank before being rented out by the Sheahans and their company.
Yesterday, the judge indicated another case relating to guaratees alleged to have been given by Frank Sheahan Sr had by agreement of all sides been held over.