A dispute over the ownership of 16 apartments and three commercial units threatens their proposed sale for €5.1 million, the Commercial Court has been told in a case involving the former chief executive of the Windsor Motor group, Michael Herbert and his wife, Paula, and the developer of the apartments, Paul Walsh, and his wife, Breda.
The Walshes are claiming they have a 50 per cent entitlement to the properties in Bray, Co Wicklow, arising from an agreement made in 2012, but Mr Herbert, in an affidavit to the Commercial Court, has disputed that any such agreement was ever made.
In a successful application for entry onto the “fast-track” Commercial Court list last week, Mr Herbert said he and his wife had bought the properties in 2012 with the view that the rental income they produced would provide them with a pension up to the sale of the properties.
The properties, in a development known as Aubrey Court, on Parnell Road, Bray, are part of a larger proposed sale to LRC Europe for a total value of €8 million.
LRC is a European property group that has invested heavily in recent years in Irish residential property.
Proceedings initiated by the Walshes in January have now placed the sale to LRC in jeopardy, Mr Herbert told Mr Justice David Barniville by way of affidavit. Details of the case have not been previously reported.
Mr Herbert said he and his wife are the full owners of the properties but that they had various dealings with Mr and Mrs Walsh including discussions about a potential future split of the proceeds of a profit from the sale of the properties.
The Aubrey Court development, comprising a total of 34 apartments and three commercial units, was developed by companies operated by Mr Walsh and of which he and his wife were directors, including a company called Demeray Ltd.
During 2007, when he was in financial difficulty, Mr Walsh approached Mr and Mrs Herbert about a loan. The parties had had previous dealings. A loan of €300,000 was agreed, and a few months later a second loan, for the same amount, was also made.
In 2011, Bank of Scotland (Ireland) appointed a receiver over Aubrey Court. The following year Mr Herbert and his wife acquired 28 apartments in the development, and the three commercial units, from the bank’s receiver. They later transferred some of these apartments to third parties.
Stone Construction and Property Maintenance Ltd, of which Mr Walsh is the sole shareholder, acted for Mr Herbert and his wife, collecting rents and dealing with tenants, Mr Herbert said in his affidavit.
At the time of the acquisition, Mr Herbert said, he and his wife had an understanding with Mr Walsh that in return for having a share in the outcome of proceedings Demeray Ltd was taking against its former solicitors, Mr Herbert and his wife would give the Walshes half the net profits from the future sale of the apartments or, that a valuer would be appointed at a future date and a payment equal to the profit that would arise from a sale at that value, would be paid to the Walshes.
The understanding was arrived at verbally in 2012, and not documented in writing, Mr Herbert said.
To date no payment has been made to the Herberts arising from the proceedings against the solicitor’s firm, nor have any of the loans made to the Walshes been repaid, Mr Herbert said.
However, between 2012 and 2019, Mr Herbert and his wife made payments totalling €845,000 to Mr Walsh “by way of advances”, following requests from Mr Walsh for payments by way of advance against his share of the anticipated profits arising from the sale of the properties. These payments are in addition to the loans given earlier, Mr Herbert noted.
Mr Barniville, in admitting the case to the Commercial Court list, urged the parties involved to try to settle the matter via mediation.