Bank seeks possession of landmark Dublin building

A BANK is seeking possession of a landmark Dublin building providing serviced office space for businesses in a dispute related to alleged subletting of the premises and changes to upward-only rent review clauses.

Danske Bank, trading as National Irish Bank (NIB), is seeking possession of Fitzwilliam Hall where Glandore Business Centres Ltd provides 60 executive office suites in a Georgian building at 25-26 Fitzwilliam Place.

National Irish Bank claims right of possession arising from agreements entered into with Michael Kelly who, it claims, is a director and shareholder of Glandore Business Centres and of another company, Glandore House (Ireland) Ltd, which allegedly sublet the property.

The bank obtained judgment by consent against Mr Kelly for about €64.8 million last November over unpaid loans.

It is claimed the Fitzwilliam Place business centre building was used as security on various loan facilities provided to Mr Kelly between 2006 and 2010.

Glandore Business Centres says it is in lawful occupation of the property and has refused to give it up. Yesterday the proceedings against Glandore Business Centres Ltd were entered into the Commercial Court list on consent of the parties.

After being told by Kelly Smith, for the bank, and Brian O’Moore SC, for the company, there were discussions which could resolve matters, Mr Justice Peter Kelly agreed to adjourn the case for four weeks.

In an affidavit, Ivan Nymann Nielsen, senior relationship manager with NIB, said the loan facilities to Mr Kelly provided various covenants including limitations on the leasing of the Fitzwilliam Place building.

In April 2006, the bank approved a draft agreement with Mr Kelly whereby certain works would be carried out on the building and Mr Kelly would then grant Glandore House (Irl) Ltd a lease for 25 years at an annual rent of €1.5 million – subject to upward-only rent reviews.

Following completion of the works, Mr Kelly in May 2007 granted a lease to his Glandore House company in terms that were different from those to which the bank had agreed, Mr Nielsen said. That same day, Glandore House assigned its interest in the lease on most of the property to Glandore Business Centres for €1, without the consent of the bank.

The remaining part of the building was included in another lease the following year, June 2008, again without the consent of the bank, he said.

When Mr Kelly defaulted on his loans, the bank appointed a receiver to the business centre in August 2011 and obtained judgment in November for some €64.8 million.

The receiver later discovered the upward-only rent review provisions had been removed and annual rent review provisions introduced, Mr Nielsen said.

There were also handwritten alterations purported to permit the subletting of the property without the bank’s consent, he added.

The leases were solely executed by Mr Kelly purportedly acting both in personal capacity as lessor and on behalf of both Glandore Business Centres Ltd and/or of Glandore House (Irl) Ltd, Mr Nielsen said.