A BUSINESSMAN agreed to lend £1.35m to a house seller after pulling out of a record deal to buy his home at the height of Northern Ireland’s property boom, the High Court heard yesterday.
Catering distribution boss Nicholas McKenna said he wanted to help ensure Jim McDonald did not lose out on a bungalow he was planning to move to.
Mr McKenna, head of the Galgorm Group, is defending an action over an alleged deal to purchase Mr McDonald’s south Belfast home for £3.5m in 2007.
The disputed agreement was expected to make the six-bedroom Victorian property at Malone Park the highest-fetching residence on the market at the time.
Bidding on it had spiralled up from its original £2.25m asking price in less than two weeks.
The case brought by Mr McDonald, a former independent assessor of military complaints, centres on the enforceability of a contract drawn up.
Giving evidence yesterday, Mr McKenna told the court he withdrew his offer as soon as he realised the son he planned to buy it for was not interested.
“I contacted Jim McDonald on the Monday and told him that my deal was off,” he said.
“I was very sorry. It wouldn’t have been the normal practice that I bid on something and then would be breaking my word.”
Earlier in the hearing Mr McDonald, a widower with health problems, gave evidence that he put the house on the market to secure his family’s future.
The court heard how he had known the businessman for years, with both being members of the Knights of the Order of the Holy Sepulchre.
Mr McKenna said Mr McDonald had “his heart set” on the other bungalow and claimed he agreed to lend him £1.35m to ensure its completion.
“I started off at £1m but Jim talked me up,” he said.
He stressed that he never agreed to complete on Malone Park, but said a contract was drawn up as a form of security for the loan.
Mr McDonald disputes there was any loan involved.
Following the alleged arrangement the pair met at a top Belfast restaurant and discussed what would happen if the house was eventually sold for more, the court heard.
“He was still convinced that the house would go for in excess of £3.5m, the figure of £4m was mentioned by Jim,” Mr McKenna said.
“He asked me point blank what would happen here.
“I assured Jim that it would all be going to him.”
During cross-examination Mr McKenna confirmed that he runs a business employing 80 staff and with a turnover of several million pounds.
He owns around a dozen commercial properties, but said his knowledge of the residential market was confined to press coverage.
Asked by Mark Horner QC whether his solicitor son had advised him that the Malone Park deal was an open contract, Mr McKenna replied: “My son told me to send the contract back and forget about it.”
Lord Justice Coghlin, who is hearing the case, put it to him: “What you were doing in signing this contract against the advice of your son was to help this man out of the goodness of your heart.”
Mr McKenna responded: “That’s correct.”
Pressed by Mr Horner, he accepted that it would have been more simple to put together a mortgage arrangement.
Mr McKenna denied ever having been involved in any so-called “flipping” or quick selling-on of property.
He also told the court he carried out no research before deciding to make the £3.5m bid.
Mr Horner continued: “You knew nothing apart from what the general public knew about residential property prices in Northern Ireland and here you were offering to buy a house of this man for £3.5m in cash.”
Mr McKenna told him: “That’s correct.”
He also pointed out that the property had gone on the market at £2.25m, and that Mr McDonald informed him a £3.4m bid was on the property.
The barrister asked: “What if he had said the bid was £9.9m. Would you have capped it with £10m?”
In reply Mr McKenna said: “Certainly not. I would have been away home.”
The hearing continues.