O'Flynn Construction alleges that former employee Patrick Cox and others earned profits of at least €12.5 million by secretly diverting opportunities from the developer for their own benefit, the High Court heard yesterday.
Victoria Hall Management Ltd, O'Flynn Capital Partners, O'Flynn Construction and other companies in the Michael O'Flynn-led group are suing former employees, Mr Cox, Liam Foley and Eoghan Kearney, along with Foley Project Management Ltd, Rockford Advisors Ltd and Carrowmore Property.
O’Flynn Construction claims that while working for the group, Mr Cox, who now runs property business Carrowmore, competed with them and concealed and diverted “highly profitable investment opportunities” for the benefit of himself and the other defendants.
Senior counsel, Michael Cush, told the High Court that the O'Flynn group calculates that it lost €12.5 million alone from one deal involving a site on Gardiner Street, Dublin, used for student apartments.
Mr Cox bought this and sold it on in March 2016, to part of multinational student accommodation specialist GSA, in a transaction that involved Carrowmore handling construction of the first phase of the block.
The plaintiffs maintain that this is just one example of an opportunity that Mr Cox and the others diverted for their own benefit. An affidavit from the O’Flynn group’s solicitor, Patricia O’Brien, states that the defendants actively pursued development of Gardiner Street’s second phase while still working for the organisation.
Mr Cox told the group he was leaving in April, 2015. Its UK-based student accommodation business, Tiger Developments, originally employed him. This company passed to Carbon Finance, part of multinational investor, Blackstone in 2015, in a legal settlement .
Mr Cush told the court that Mr Cox’s contract specifically barred him from “making use of any trade secrets or confidential information” belonging to any part of the O’Flynn group while he worked there or any time thereafter.
His terms also required him to work for group companies other than Tiger. In 2014 he worked primarily for Victoria Hall.
“Mr Cox was specifically tasked with sourcing investment opportunities to be developed by O’Flynn Capital,” Mr Cush said.
A letter issued by Tiger Developments on July 14th 2014 gave Mr Cox approval “to engage in real estate activities” in Dublin, and while he would seek permission for any project worth €500,000 or more, the company could not reasonably refuse this.
Mr Cush told the court that the letter was central to Mr Cox’s defence as he was working on the Gardiner Street project at the time.
He indicated that the plaintiffs argue the letter was obtained through misrepresentation. Mr Cox states in an affidavit that any allegations made by the O’Flynn group about this letter are untrue.
The plaintiffs argue that Carbon passed – or assigned – the benefit of Mr Cox’s contract to the O’Flynn group. This gives other companies in the organisation the right to sue him for breach of the contract and to rescind the letter of July 2014.
However, Mr Cox's senior counsel, Marcus Dowling said his client never consented to Carbon doing this, which the law requires. As a result, he argued that the plaintiffs were not parties to the contract with Mr Cox and had no right to sue him.
“Some of the companies taking this action were not group companies at the time,” he said.
Mr Justice Denis McDonald allowed the plaintiffs to add Carrowmore Property Gardiner Street and Carrowmore Property Gloucester as defendants. He also allowed them plead that they are entitled to rescind the July, 2014 letter.
Mr Cox and the other men deny the claims.