Wednesday 15 July 2009

Developer claims secret Carroll deal sabotaged project

THREE PROMINENT developers – Larry O’Mahony, Thomas McFeely and Liam Carroll – are being sued for €140 million in damages at the Commercial Court over alleged involvement in secret deals related to a planned €300 million development at The Square centre in Tallaght.

“The story is not a pretty one,” Paul Sreenan SC, for Redfern Ltd, said when opening its action before Mr Justice Brian McGovern yesterday. Redfern is a company involving prominent solicitor and developer Noel Smyth, which alleges Mr O’Mahony and Mr McFeely broke a binding agreement with it for the proposed Tallaght development by, unknown to Redfern, entering a secret deal with Mr Carroll, who had a rival development in Tallaght.

Mr Sreenan said Mr O’Mahony and Mr McFeely had broken the deal with Redfern of August 4th, 2005, and “double dealt” with Mr Carroll. Counsel said Mr Carroll had, in one stroke, sabotaged the entire joint venture project. Mr Carroll’s insistence on his name being kept secret was almost pathological, counsel added.

There was now “nil prospect” of developing as planned given the financial difficulties of Mr O’Mahony and Mr McFeely and the economic climate, and his client was entitled to substantial damages, Mr Sreenan said.

Redfern, following agreements with Square Management Ltd, had been in a key position to develop The Square centre some years ago but the “missing piece of the jigsaw” related to securing ownership of what was known as the Lowe licence, required to secure access to large areas of the shopping centre, counsel said.

Mr Smyth had spent two years seeking to buy the Lowe licence from businessman Seán Davin, the original owner of Lowe Taverns Ltd, but believed Mr Davin was seeking too much: €36-40 million.

Counsel said Mr Smyth learned in March 2005 Mr McFeely and Mr O’Mahony had bought the Lowe licence from Mr Davin for €55 million, with finance from Bank of Scotland Ireland, and held that interest through a company, Aifca Ltd. After “torturous” negotiations brokered by former trade union leader Phil Flynn, who was acting for Mr O’Mahony and Mr McFeely, counsel said a binding agreement was signed with Redfern in August 2005, essentially involving the disposal of the Lowe interest to Alburn, a subsidiary of Redfern, and a joint venture development of the centre.

It is alleged that, while Mr Smyth was progressing the development, Mr O’Mahony and Mr McFeely brokered another deal behind his back with Mr Carroll, causing Aifca’s shares in Lowe to be transferred to Tafica Ltd, a company controlled by Mr Carroll.

“They kept this deal secret for quite some time,” counsel said, adding the details had emerged only after defences were filed in this case. It is claimed an implied term of the agreement meant none of the sides would do anything to hinder or prevent the due completion of the agreement, and therefore Mr O’Mahony and Mr McFeely were not entitled to dilute or assign their ownership or control of Aifca. Mr Carroll had also unlawfully interfered in another man’s contract, it is alleged.

The defendants deny the claims and in separate defences have alleged Redfern failed to complete the August 2005 agreement which caused serious financial difficulties for Mr O’Mahony and Mr McFeely, resulting in their reaching an agreement with Mr Carroll so as to refinance their borrowings. Mr Carroll and his companies also deny they have any liability under the August 2005 agreement, as they were not party to it.

The proceedings were initiated in July 2007 by Redfern, with registered offices in St Helier, Jersey, against Mr O’Mahony, Shrewsbury Road, Ballsbridge, Dublin; and Mr McFeely, Ailesbury Road, Dublin. Mr Carroll, of Sycamore Road, Mount Merrion, Co Dublin; Tafica Ltd, Chapel House, Parnell Street, Dublin; and Aifca Ltd, Upper Mount Street, Dublin, were later also joined as defendants.

Redfern claims Mr Carroll, Tafica and Aifca Ltd knew or must have known of the existence of the August 2005 agreement, and acted with the intention of interfering with due performance of that agreement and/or inducing Mr O’Mahony and Mr McFeely to breach it. Redfern claims it is the sole beneficial shareholder in Alburn, and, prior to the August 2005 agreement, Mr O’Mahony and Mr McFeely controlled Lowe Taverns (Tallaght) Ltd through their shareholding in Aifca Ltd. It claims the agreement provided for the sale of Lowe to Alburn in exchange for Redfern’s issue of shares in Alburn to Mr O’Mahony and Mr McFeely.

Redfern claims it, with the consent of the Mr O’Mahony and Mr McFeely, secured planning permission for development of phase III of The Square, valued at more than €300 million.

That proposed development, expected to be completed by August 2008, was for 1.3 million square feet of mixed-use development.

Irish Times

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