Priory Hall developer loses bid for exemption

Thu, Oct 27, 2011, 01:00

PROPERTY DEVELOPER Larry O’Mahony, adjudicated bankrupt in the UK earlier this year with debts of £197 million, mostly owed to Irish Nationwide Building Society (INBS), has lost a bid to be taken out of High Court proceedings concerning the Priory Hall apartment complex.

While refusing to discharge Mr O’Mahony, the president of the High Court indicated essential responsibility for carrying out works to address serious fire safety concerns at the complex rests with developer Tom McFeely and Coalport Building Company Ltd, which built the complex in 2006 and whose directors are Mr McFeely and his brother Noel.

Dublin City Council earlier this month secured orders from Mr Justice Nicholas Kearns against Mr O’Mahony, Mr McFeely and Coalport requiring evacuation of the complex and remedial works to be completed by the end of November.

Yesterday, the judge ruled there was an adequate basis for Mr O’Mahony being a party to the case, including his being registered as an owner of the Priory Hall lands and being described on a legal document in 2007 as a “lessor” of an apartment there.

Owners and occupiers of lands are affected by the Fire Safety Act 1991 and, while he accepted Mr O’Mahony had raised issues concerning the consequences when ownership of lands is transferred, he would not remove him from the case, the judge said.

Gary McCarthy SC, for Mr O’Mahony, had argued his client had no responsibility for Priory Hall on grounds including he was not involved in building it and had a written agreement of March 2009 with Mr McFeely to transfer his ownership of the Priory Hall lands to Mr McFeely. INBS, which has a charge over the lands, prevented that transfer.

Mr O’Mahony never had any role in Coalport, had no entitlement to engage in remedial works at Priory Hall and had no ability to pay for such works, counsel added.

While refusing to remove Mr O’Mahony, Mr Justice Kearns said he would make no executive orders against him in circumstances where Mr McFeely and Coalport had undertaken to carry out the remedial works. He agreed to return Mr Mahony’s passport on his undertaking to attend court if required, and discharged an earlier order freezing his assets.

In his judgment, Mr Justice Kearns said Mr O’Mahony had in 2004, before Priory Hall was built, undertaken with Mr McFeely that there would be full compliance on fire safety. When a fire safety notice was served on the two men in 2009, Mr O’Mahony had not challenged its propriety and he was convicted under that notice at the District Court.

The District Court had differentiated between the responsibilities of Mr McFeely and Mr O’Mahony and the High Court was cognisant of that, the judge said. The District Court found Mr O’Mahony had a lesser role and gave him a lesser penalty.

While there were suspicions about the paperwork concerning what could be described as the “divorce” of Mr McFeely and Mr O’Mahony, it was not argued this arrangement was bogus, he added.

Earlier, Mr McCarthy argued his client had the “deepest sympathy” for the Priory Hall residents, but was not responsible for their plight.

Mr O’Mahony was involved in a number of business ventures with Mr McFeely from 1996, but the two men fell out in late 2007 and went separate ways, counsel said. They drew up an agrement in March 2009 for the division of assets. Mr O’Mahony got the Plaza Hotel in Tallaght and Mr McFeely got other properties, including Priory Hall. The agreement provided for each to indemnify the other concerning any debts of the properties acquired by them.

Mr O’Mahony had nothing to do with Priory Hall after 2007, counsel said. Having been adjudicated bankrupt in the UK last April, he could not offer any funds towards remedial works as his assets worldwide were under control of the UK bankruptcy process.

A statement of affairs showed Mr O’Mahony had a deficit of £197 million in liabilities over assets, with some £178 million of that owed to the INBS. His assets were estimated at about £145,000.

Mr O’Mahony was appealing his conviction over non-compliance with a fire safety notice concerning Priory Hall, counsel added.

Conleth Bradley, for the council, said it did not accept Mr O’Mahony had nothing to do with Priory Hall after 2007. Mr O’Mahony was the owner of the lands on which Priory Hall was built and remained the owner despite the agreement with Mr McFeely because INBS would not permit his name be removed from the folio. Mr O’Mahony also gained financially from the Priory Hall development, he said.

The judge will be updated tomorrow on the progress of the remedial works at Priory Hall, to be completed by November 28th with weekly work targets to be met in the interim. About 240 residents remain evacuated from the complex.