Belfast Telegraph

Thursday 23 October 2014

House builder must repay £800k personal guarantee

Construction industry bosses are feeling the pain as the downturn bites

The High Court has enforced a £800,000 personal guarantee against a Co Down house builder who hoped to rely on a “clerical error” referring to a different company.

Raymond Acheson from Waringstown was pursued for a personal guarantee to Ulster Bank against borrowings of his company, Euro Construction Corporation.

That business went into administration two years ago owing the bank £2.7m. The bank called in the guarantee in November 2009.

In his evidence Mr Acheson said the guarantee, which he gave in 2007, referred to his southern-registered Euro Construction Company, so he was not liable for the debts of the Corporation.

But the bank said the reference to Euro Construction Company was a ‘clerical error’ and that it had lent money only to the Corporation, registered at Mr Acheson’s home address.

In an affidavit, the bank’s associate director Seamus McGuckin said it was the “clear intention” of the parties that the guarantee was security for the Corporation’s borrowings.

But Mr Acheson, who bought land in the Republic with the money he borrowed, said there was not enough information for the court to allow it to interpret the document as referring to the Corporation rather than the Company.

At the end of his February judgment, which has only now been made public, Mr Justice Weatherup said there was “no arguable defence” to Ulster Bank’s claim.

“The funds are shown to have been made available by the plaintiff and to be due by the Corporation to the plaintiff.

“The defendant was the guarantor of the Corporation’s debt to a limit of £800,000. The guarantee was called in.

“The defendant has not paid on foot of the guarantee. I am satisfied that liability has been established against the defendant and that the defendant has not raised any arguable case by way of defence.”

He added that Euro Construction Company had been dissolved in 1986.

Mr Acheson — who is not connected with Raymond Acheson, the managing director of paving and concrete company Acheson & Glover in Co Tyrone — was |ordered to pay £830,443.83, |the sum of the guarantee plus interest.

Insolvency solicitor Maria Glover of Napier and Sons said personal guarantees had been a non-negotiable “routine feature” of business lending for some time and were “prevalent” during the recent property boom.

“Few directors ever believed that they would be called in, never mind withstand legal challenge, and are now faced with crippling liabilities which threaten their own personal solvency.”

In February this year Northern Bank chief executive Gerry Mallon said: “We look at all forms of collateral which a customer has provided , and if an element of that is a personal guarantee, as our shareholders would expect, we pursue that personal guarantee.

“It is part of the collateral which is given to us as one of the |terms of lending and there is no reason why we should not pursue that.

Brothers Michael and John Taggart, whose building business collapsed in 2008, have also |appealed against a court judgment upholding their personal guarantees of £8.5m, also to Ulster Bank.

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