Developer fails to regain possession of Dublin city site

Developer Brian Cunningham has lost his High Court bid to regain possession of a site off Dublin’s Parnell Street from a company which was sold the property after his firm went into receivership.

Ms Justice Deirdre Murphy, describing Mr Cunningham’s application as “entirely unmeritorious”, said no evidence had been provided to back up his claim the receiver did not achieve the best possible price for numbers 17, 18 and 19 Moore Lane which had been used as a car park. They were sold for €550,000.

Mr Cunningham is director and holder of half the shares in Keelgrove Properties Ltd which went into receivership in December 2012.

The other half of Keelgrove was owned by Treasury Holdings, which went into liquidation the previous October. Mr Cunningham said he had fallen out with Treasury’s principals, Johnny Ronan and Richard Barrett.

Mr Cunningham claimed that as a consequence of Treasury’s liquidation, he became entitled to its shares in Keelgrove by virtue of a provision in the shareholders agreement.

He argued there was no validity to a 1997 mortgage between Keelgrove and Bank of Scotland (BoS) which took the mortgage over from Equity Bank. He also challenged the validity of the subsequent appointment by BoS of receiver Tom Kavanagh over the Moore Lane properties which was subject of the mortgage.

He further claimed the sale of the property to Kendlebell Mid-West Ltd should have been notified to Keelgrove.

Mr Cunnigham sought directions from the court whether the best price had been achieved for it, a declaration the receiver had no power to sell, and an order restoring possession to Keelgrove.

Ms Justice Murphy said the car park was taken over by Kendlebell in May 2014 after it bought the properties from the receiver.

Mr Cunningham asserted he had an oral lease granted to him by Keelgrove before it went into receivership and claimed he is a creditor of Keelgrove for €412,611.

He said he used £164,000 his own money to buy the Moore Lane properties, with the rest of the funding coming from Treasury and the mortgage.

A maximum loan facility of £1 million was advanced for the purchase on the basis of a charge over Keelgrove’s assets.

Mr Cunningham and Richard Barrett executed the mortgage deed on behalf of Keelgrove, the judge said.

Mr Cunningham maintained, at the time he executed the mortgage on behalf of Keelgrove, he was not in fact a director of the company and therefore it was not a valid legal mortgage. However, BoS said it was valid and later demanded repayment of €831,000.

Around December 2012, Mr Barrett and Mr Ronan were apparently removed from their directorships of Keelgrove at a board meeting, the judge said.

Mr Cunningham said he then had an oral arrangement with Keelgrove to rent the Moore Street properties for €200 per month once an issue over planning permission for use of them as a car park was resolved.

Kendlebell, which had bought the properties, disputed this.  Mr Cunningham later brought his proceedings against Kendlebell, the receiver and BoS.

Dismissing his application, Ms Justice Murphy said various reliefs sought by Mr Cunningham relating to the validity of the receiver’s appointment were not appropriate for the relevant part of company law under which he brought the case.

Even if she was wrong in that, she believed Mr Cunningham and Keelgrove were not entitled to succeed.  Keelgrove, as it is in receivership, had no standing to do so and Mr Cunningham, who had standing, had not supported his application with evidence.

No evidence has been adduced to substantiate the claim the receiver did not achieve the best price possible for the sale of the properties at Moore Lane.

There has been no evidence “beyond bare assertion of impropriety in the sale” to Kendlebell and Mr Cunningham “sat back” and did nothing for 18 months before he decided to assert his rights, she said.