The High Court has dismissed businessman Dermot O’Rourke’s claim for €21.978 million against three borrowers, ruling that he was not entitled to enforce the loan agreement when proceedings began or when the case was heard.
Ms Justice Finlay Geoghegan’s judgment concerned a €10 million loan made in August 2006 to Thomas Considine, Patrick Sweeney and Gerard Prendergast to help finance their purchase of Millennium Park, lands at Naas, County Kildare. The loan was due for repayment on 9 August 2009. The defendants did not repay it on that date.
O’Rourke sought the principal and accrued interest, including interest at 32% from 9 August 2009. The defendants disputed his right to sue because he had assigned the loan agreement to Bank of Scotland (Ireland) Ltd (BOSI) in February 2008 as security for liabilities he owed the bank. They also challenged the contractual interest rate, but the court did not need to decide that dispute to dispose of the claim.
The court found that the 2008 transaction was an absolute assignment, giving BOSI the rights and benefits under the loan agreement. The agreement’s clause 16 restricted assignments by requiring the prior written consent of a majority of the borrowers. In June 2010, BOSI purported to reassign the agreement to O’Rourke. The borrowers’ consent to that reassignment had not been sought.
Justice Finlay Geoghegan held that clause 16 applied to the reassignment, including one to the original lender. As a result, the purported reassignment did not transfer the agreement’s benefit back to O’Rourke. He therefore had no right to sue when proceedings commenced and still was not entitled to the agreement’s benefit at the hearing.
The judge stressed that the dismissal did not end the borrowers’ obligation to repay the loan: they remained liable under the agreement to whoever was entitled to its benefit. She also expressed the view that the agreed interest terms should apply, noting that the loan was a commercial agreement between businessmen who were not consumers and did not have unequal bargaining power. That view was not necessary to the order dismissing the claim.
The case had entered the High Court Commercial List in December 2009. The defendants were given leave to defend, and the matter proceeded beyond the initial summary judgment application. The final order was to dismiss O’Rourke’s claim.