A COMPANY owned by a leading property development group is being sued over its failure to complete the €74.5 million purchase of development land in south Dublin. Simon Carswelland Mary Carolanreport.
Irish Life has brought High Court proceedings aimed at compelling Galway company Karleigh, which is owned by Lalco Holdings, to pay €60 million due under the terms of a contract for the €74.5 million sale of six acres of land and premises at Burton Hall, Sandyford Industrial Estate.
Karleigh, which has an address at Dock Gate, Merchants Road, Galway, says that while it is willing to complete the contract, it cannot raise the remainder of the money required to do so, Irish Life has claimed.
Lalco Holdings, which is owned by Galway property developer John Lally, paid a deposit of around €15 million on the land. Irish Life claims that Lalco had agreed to act as guarantor for all liabilities of Karleigh under the contract. Irish Life's proceedings against Karleigh and Lalco were admitted to the Commercial Court this week by Mr Justice Peter Kelly.
Speaking to The Irish Times, Lalco's finance director Paul Higgins said the company would be "mounting a full defence in due course" but said he could not comment further.
Sources close to the company said it would take issue with the claim made by Irish Life about Lalco's difficulties in raising money to complete the purchase.
Irish Life is taking the case to force the purchaser to conclude the deal as agreed or to acknowledge breach of contract and forfeit the deposit of around €15 million. The property is owned by the Pensions Irish Property Fund, one of a number of unit-linked funds which Irish Life manages for investors.
Irish Life claims that it accepted a €74.5 million tender from Karleigh for the Burton Hall lands on November 20th, 2006, and that it wants orders for specific performance of that contract.
It claims it was an express term of the contract that the sale would be completed and the balance of the purchase price paid on December 14th, 2007, but that Karleigh indicated that month it had difficulties raising the money required.
Lalco unveiled plans last year to build 477 apartments, a leisure centre and 180,877 square feet of offices on the Burton Hall site. The development has been planned in two blocks ranging from five to 15 storeys in height.
Lalco Holdings, which is headquartered in Galway, has been one of the most prolific land purchasers and developers in recent years. The company purchased another plot of land at Sandyford - the former FAAC Electronics site of five acres - in 2006 for €110 million, paying €30 million over the guide price, according to a press clipping posted on Lalco's website.
Mr Lally owns the Hilton Hotel opposite Kilmainham Gaol next to the apartments and offices he built on the old Nestlé factory in Dublin 8. He is also planning to build a five-star hotel at Humewood Castle in Kiltegan, Co Wicklow. He owns the Hilton Hotel in Limerick, which he built as part of a residential development on the former Jurys site on the Ennis Road. He also owns the Barnacles youth hostel chain, the Harbour Hotel in Galway, the Pelham House office block in south Dublin and residential developments in Mayo, Dublin and Galway.
Speaking to The Irish Timesin May 2006, Mr Higgins said Lalco's portfolio was worth between €500 million and €600 million, and that it hoped to increase this to €1.2 billion the following year.
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