McKillen optimistic on hotels ruling reversal

ANALYSIS:The Irish property developer will press for an appeal of his High Court defeat in London

PROPERTY DEVELOPER Patrick McKillen has argued that there “is a real prospect” that the Court of Appeal in London will overturn his High Court defeat over control of three luxury hotels.

Refused leave to appeal Mr Justice David Richards’s verdict, lawyers for McKillen made clear that he will seek permission to do so directly from the Court of Appeal within 21 days.

Richard Hill QC, appearing for the Belfast-born developer, said there “is a real, as opposed to fanciful, prospect” that the Court of Appeal will find in his favour.

Hill argued that an agreement between financier Derek Quinlan and the billionaire Barclay brothers, David and Frederick, broke a shareholders’ agreement.

Under a 2004 accord made when Claridge’s, the Berkeley and the Connaught hotels were bought, along with the later sold-off Savoy, shareholders enjoy first refusal rights on other holdings if they are put up for sale.

An agreement last year between the Barclays and Quinlan “amounted to a transfer, or an attempt to transfer” control of Quinlan’s stake in the hotels contrary to that agreement, he said.

“Taken together, it is plain on the court’s findings of fact that Mr Quinlan sought to do all that was thought possible to put ownership and control of his shares in the company in the hands of the Barclay interests,” said Hill.

He argued that there was “a real prospect” that the Court of Appeal may rule that McKillen could have afforded to pay for Quinlan’s shares, if they had become available to him.

In his ruling, Mr Justice Richards said he did not believe that McKillen could have found the money, even though McKillen, according to Hill, had given “unequivocal evidence” that “he would have done whatever it took to acquire the shares”.

Though the judge refused McKillen’s application to him to allow an appeal, he acknowledged that the property developer’s case was not “so unreasonable that it should never have been brought”.

The judge rejected calls by the Barclays, Quinlan and others that McKillen should be ordered to pay indemnity costs – a measure used by the courts to deter unarguable cases.

However, the judge said his decision on indemnity costs should not be seen to detract in any way from the findings reached in his August 10th judgment.

Pointing to the judge’s ruling, counsel for the Barclays, Lord Grabiner, said it was “a ringing vindication of the Barclays’ position and integrity”.

Both before and during the case, Grabiner said McKillen had sought to embarrass the twins by claiming that he was suing them for conspiracy to defraud.

“To describe [his] claim as weak, speculative and thin would be to give it too much credit,” said the barrister, adding that McKillen had not produced “a shred of evidence”.

Counsel for Quinlan, Stephen Auld QC, said it often seemed in the case – which began last October – that McKillen “appeared to occupy a parallel universe”.

Facts and documents “when inconvenient to his case, were simply ignored”. Much of his case was “wholly unrealistic”, while the nature of his claims changed over time, said Auld.

In written arguments submitted to the court, Auld said that McKillen’s “highly tactical” conduct “extended throughout (and still does) to positioning in the press, particularly the Irish press, which bears no (or little) relation to the facts (or now to the Judgment).

“Mr McKillen’s attitude seems to be that, so long as there is something left to play for, he is still in the game (whatever game he now appears to be playing),” Auld wrote.

The legal bills incurred in the trial are “double of what was estimated in January” and have “hugely and disproportionately increased” because of McKillen’s conduct, he said.

Counsel for four Barclay-owned companies, Stephen MacLean, said McKillen had “been comprehensively out-fought”, adding that his tactics were to blame for the £20 million legal bill generated.

Following the agreement to transfer control but not ownership of Quinlan’s shares to the Barclays last year, McKillen had been “unable to accept defeat gracefully”.

MacLean drew the judge’s attention to a Sunday Independent interview given by McKillen after the August ruling, where he criticised the judgment. The judge said it was “not relevant”.