AIB reaches deal with Nolan family group over €23m hotel investments
Transport giant had accused AIB of ‘misrepresentation’ over loans, write Dearbhail McDonald and Sarah McCabe
AIB Bank has reached a settlement with Nolan Transport and 13 members of the well-known haulage and logistics dynasty.
Nolan Transport, which owns and operates one of the largest fleets of road transport equipment throughout Europe, sued AIB in 2012, alleging that it had breached a number of loan facilities relating to the development of the Isaacs Hotel in Dublin and the Lismore House Hotel in Co Waterford.
AIB counter-sued the Nolan family seeking judgment of almost €23m arising out of a series of loans issued to the family in relation to the two hotels.
Law firm Byrne Wallace (formerly BCM Hanby Wallace), which had acted for AIB on a number of the loan facilities, was later joined as a third party to the proceedings.
This followed an application by AIB to join the law firm as a third party in the event that the court found against the State-owned lender.
Two years ago, the High Court sat for 33 days to determine a number of preliminary issues in the case, with final legal arguments heard in July 2015.
Judgment was issued last June dismissing the Nolans’ preliminary claims, paving the way for AIB to pursue the Nolans.
AIB was set to seek full judgment of €23m, with interest, on Tuesday.
However, a settlement was agreed last Friday when the matter came before High Court judge Mr Justice Robert Haughton who presided over the mammoth preliminary case.
Costs in the action will be determined in October.
However, details of the settlement were not revealed in court.
AIB became lenders to Nolan Transport around the start of the last decade.
The High Court heard the bank refinanced a loan first made by ACC Bank to the company, for the purposes of investing in the Isaacs Hotel.
It later approved loans in 2003, 2005, 2006 and 2009 for further investment in the Isaacs Hotel and the development of 1 and 2 Beresford Place and the Lismore Hotel.
Difficulties between the two arose around mid-2009 when repayments on some of these loans dwindled or stopped altogether as operating companies controlled by the promoters of the Isaac investments failed to pay rent, and ‘put and call’ options were not exercised on certain phases of the hotel in 2010 and 2011.
AIB issued a letter of demand to the Nolan family in October 2012, seeking the repayment of €12.8m.
The High Court heard that this encompassed personal loans outside of the Isaacs Hotel or Lismore developments.
The Nolans, however, claimed that AIB had agreed to certain arrangements for the loans, including ensuring a “sinking fund” — contingency funding — was available to the hotels’ promoter/ operators for various purposes.
AIB’s failure to uphold these arrangements put it in the wrong, the Nolans argued.
In a 251-page ruling on the preliminary issues, Judge Haughton said AIB never agreed to maintain a “sinking fund” or other commitments linked to loans on the Isaacs Hotel or Lismore Hotel, as claimed by the Nolans.
The judge ruled that AIB did not represent that an adequate sinking fund would be put in place by Basil Good and Richard Evans, who promoted the Isaacs Hotel-related property investments and who were to operate the hotel.
Judge Haughton also ruled that AIB did not represent to the Nolans that it would provide finance for the exercise of options.
The Isaacs investments were designed to allow the Nolans to benefit from capital allowances available at the time for specific categories of business, including hotels, known as Business Operation Schemes, as well as claiming building allowances on listed buildings.
In relation to the Lismore Hotel, that property, the court heard, was to be developed by the “Lismore Partnership” — an SPV in which the Nolan family had an initial 75pc stake, later reduced to 55pc.
The High Court heard extensive evidence on a series of disputed letters that were alleged to have been sent by Ann Nolan, who acted as solicitor for both Nolan Transport and the Nolan family in respect of a number of the developments.
Joan Nolan and Sally Nolan also had a large part to play in the developments as they dealt with the financing end of the projects, said Judge Haughton, who noted that the three women communicated most frequently with AIB.
It is not the first time that the Nolan family has experienced difficulties with its investments.
Four years ago the family was awarded almost €15m by a Jersey court after they fell victim to fraud when they invested in a raft of investments sold by a businessman.
The court described Irishman Gerard Walsh, who induced the Nolan family to invest in the schemes, as a “fraudster” and noted his own business empire collapsed in 2009. One company which Mr Walsh was behind, Arkaga, at one time controlled Cork City FC.
Between 2005 and 2006, the Nolan family had a total of €15m in eight schemes presented to them by Walsh as investment opportunities in an array of assets including German nursing homes, a ferry company, a TV production firm and IT businesses.
But the investments were all destined to fail badly.
Three years ago, Nolan Transport was fined €1m after it pleaded guilty to safety breaches when one of its trucks shed its load in Co Kilkenny. Two women were killed.
In 2011, the firm was refused a licence to operate in Wales after its drivers and vehicles notched up over 4,000 breaches of traffic and vehicle safety legislation.
AIB and Nolan Transport did not comment on the action.