Fund seeks €1.7m judgment against former AIB director Bernard Somers over loan

By Ann O'Loughlin

A fund's application for a €1.7m judgment against former AIB and Central Bank director Bernard Somers in relation to a loan secured on various assets, including his home in Foxrock, Dublin, has been adjourned by the Commercial Court.

Launceston Property Finance DAC issued a demand on October 4 for repayment, within two days, of some €1.76m allegedly outstanding on a €3.62m loan. When that was not paid, it issued proceedings.

When lawyers for Launceston applied today to have its summary judgment application entered into the Commercial Court, Mr Justice Brian McGovern adjourned it to March 12, 2018.

Noting Mr Somers has said he had an agreement under which he will meet his liability by March 1, 2018, the judge said he did not want the court's fast-track procedures being used in a way "oppressive" of someone not trying to avoid their responsibilities.

The fund would know by March 12th if Mr Somers was "as good as his word" and if there were any outstanding issues of dispute.

Apart from Mr Somers' claims of overcharging of interest, he accepted liability and maintains he has a standstill agreement under which he would discharge the debt by March 1st, the judge said. While Launceston denied any such agreement, an email from its agent Pepper Assets Servicing agreed the loans would continue to the end of February 2018.

In these "unusual" circumstances, he wondered what was the fund's "rush" and if this was an attempt to put "additional pressure" on. He also assumed the fund bought the loan "at a discount".

Launceston's proceedings are for summary judgment against Mr Somers and his wife Marguerite, of Old Bawn, Kerrymount Avenue, Foxrock.

Counsel for Ms Somers said the fund accepts her liability under the loan is limited to her interest in the Foxrock property, the sole owner of which is Mr Somers. There was an issue whether the value of the claim against Ms Somers met the €1m threshold for admission to the Commercial Court.

Gary McCarthy SC, for Launceston, argued there is a dispute concerning the debt which he believed would extend beyond March 1st because Mr Somers alleges overcharging of interest over a long period. If Mr Somers was saying he would pay off the full sum claimed by March "we would not be here".

Mr Somers wanted to defend the application on foot of a standstill agreement which the fund denies and the claims of overcharging of interest, he said.

Bernard Dunleavy SC, for Mr Somers, said his client has paid almost €10m to Anglo arising from facilities, it was "at least likely" there would be issues about overcharging and he will pay the correct sum due and owing.

He was not asking the court to shut out the fund "forever" but it was not entitled to seek judgment now given Mr Somers' agreement to repay the debt by March 1st. While there would be an issue as to the precise sums due, the fund might also accept by March next his client has been overcharged a "significant" sum.

In light of Mr Somers swearing to the existence of the standstill agreement and independent documentary evidence of that via the email from Pepper, there was no case for summary judgment before March 1st.

The case arises from a 2010 loan for €3.62m made by Anglo Irish Bank Corporation Ltd to the couple. The fund accepts Ms Somers' liability was limited to her interest in their home, described by the fund as a "very valuable" asset.

After Anglo's collapse the loan was transferred to Irish Bank Resolution Corporation and acquired by the fund in 2014.

Launceston claims the loan was not drawn down for purchasing a family home but that the couple's home was security for it.

The fund claims it had engaged with the couple over alleged failures to make repayments in line with the loan facility terms. It claims certain repayments were made and, following lengthy negotiations, a debt repayment strategy was agreed in July 2015 which involved the €1.54m proceeds of sale of a property at Upper Mount Street being paid to the fund.

Because the loan security included the family home, the fund says the loan was referred to its Mortgage Arrears Resolution Process under the Central Bank's Code of Conduct on Mortgage Arrears, but the fund's agent Pepper later classified the couple as not co-operating with the meaning of the code.

Pepper also informed Mr Somers of its intention to visit the family home between dates in August and September last, but did not do so after Ms Somers wrote asking no such visit take place, it said.