Former house-building tycoons Michael and John Taggart owe Ulster Bank a £5 million personal guarantee, a High Court judge ruled on Friday.
Mr Justice Burgess held the brothers liable as he rejected their multi-million pound counter-writ for alleged negligence which they say led to the collapse of their property empire.
He described Michael Taggart’s evidence in the case as being “flawed, inconsistent and implausible”.
Finding no deceit on the part of any bank official, the judge dismissed claims that the brothers were kept in the dark about credit concerns.
He said: “It remains a mystery to the court as to why two highly-intelligent businessmen with seemingly considerable wealth, when faced with what in the scheme of their affairs were relatively modest financial demands to put right the covenants they entered into with the banks, did not take any steps to do so.”
The Co Londonderry brothers sued Ulster Bank for alleged improper conduct which they contended had contributed to the fall of the Taggart Group.
Once a huge operation on either side of the Irish border, with further interests in Britain, Europe and the United States, the firm was hurt by the 2007 property market crash.
Within a year it had gone into administration.
Michael and John Taggart insisted they could have sold off assets if they had been warned of unease within the bank about the company’s finances.
Ulster Bank issued counter-proceedings for 4.3m euros and £5m which it contended that the brothers owed in personal guarantees over land purchases in Kinsealy, north Co Dublin, in 2006, and in Northern Ireland a year later.
Assertions that the latter guarantee may have been unnecessary were rejected.
Mr Justice Burgess said: “I therefore determine that the 2007 guarantee is perfectly valid and binding and that the amount due under it is fully owed to the banks by the Taggart brothers.”
During the trial the court heard how the businessmen’s property portfolio once extended to a Luxembourg shopping centre and luxury apartments in Florida and on the borders of Monte Carlo.
Michael Taggart, who spent three weeks in the witness box, described his career path in the construction industry from purchasing a plot for one house to winning an ‘entrepreneur of the year’ award.
He insisted his company would not have gone bust if bank concerns had been disclosed sooner.
In mid-2007 Taggart Group had assets in the region of £600m, compared with debts of around £245m, the court heard.
But counsel for Ulster Bank argued that the firm was warned more than 20 times in four months that its banking facilities were “bouncing into excess”.
The court also heard that a director at the construction group believed it was regularly getting itself into “financial messes”.
Delivering a 145-page judgment, Mr Justice Burgess said any concerns had not arisen “out of the blue” in June 2007.
Michael Taggart and the board were aware throughout all of the relevant period, he held, with having sought extensive information on accounts and forecasts from 2006.
Turning to mid June, he said the picture disclosed to the court as “somewhat chaotic”, with no evidence of any attempt to correct the problems or bring banking agreements under control.
The judge described Michael Taggart as the dominant figure in the company, determined and ambitious with an intimate knowledge of the state of its business at all times.
He said it gave him no pleasure to categorise his evidence as “at times falling short of the truth, either by way of omission or more directly”.
Mr Justice Burgess continued: “It (the court) recognises the undoubted trauma and distress that the descent from great success to virtual ruin must have had on him and his family.
“The events occurred during a time of a febrile market in land and property – which with the benefit of hindsight was unsustainable, and I venture to suggest should have triggered alarm bells for anyone with any professional insight.”
Michael Taggart always seemed to lay the blame at the door of others, according to the judge.
“At times listening to him I concluded that he believed what he was recounting was accurate, even in the face of insuperable evidence that it could not be,” he said.
In Mr Justice Burgess’ view the property boss needed a scapegoat – centring his accusations on senior Ulster Bank official Gary Barr.
Finding no evidence to back claims of deceitfulness, the judge instead said Mr Barr “went the extra mile” to help the Group through cash crises of its own making.
He did, however, admonish the official for the “crass” decision to access the Facebook account of Michael Taggart’s wife long after he had stopped dealing with the firm.
“Even against the backdrop of highly personal attacks on him by the Taggart brothers, that action on his part was indefensible and something of which he should be thoroughly ashamed,” the judge said.
But confirming the overall verdict, he said signals within the company were “flashing red” from the start of 2007, if not sooner.
“I found no evidence of mendacity or deceit on the part of any official in the banks, or that any of them made any misleading statement to the Taggart brothers or any member of the Group in connection with the facilities or the operation of those facilities,” he added.
“Yet apart from the granting of the 2007 guarantee and apart from the introduction of £1.4m in September 2007, there is no evidence that any of that wealth which the court was told was so readily available was ever introduced into the Group.”
Rejecting the Taggarts’ claims about being kept in the dark, he said: “The evidence is that they were fully aware throughout of those concerns.”