Control of shopping centre to come at a high price

Developers Sean Dunne and Kevin Warren are ready for a long, tough court battle to decide ownership of Whitewater, writes Una McCaffrey

Somehow, the smallness of court number seven in Dublin's Four Courts doesn't quite match the largeness of the issues at stake for property developer, Sean Dunne and Kevin Warren, the investment syndicate builder. The two men, one as tough as the other, are fighting over millions of euro and the ability to say that one was right and the other wrong.

The matter at stake is Dunne's 50 per cent stake in the Whitewater Shopping Centre in Co Kildare. The holding, estimated to be worth at least €200 million, was the subject of sale negotiations between Dunne and Warren last year. Dunne claims a sale was never concluded, while Warren says it was. The price to be paid, according to Warren, is €37.5 million. Dunne says no way.

Both men want their stance to be validated by the High Court and have since the start of this week been spending lots of money on high-profile barristers to help them prove their case. So far, Dunne's main representative, Paul Gallagher SC, has dominated proceedings, with Dermot Gleeson SC on behalf of Warren only getting going yesterday afternoon when Dunne was giving evidence.

Until then, it had been a matter of Gallagher setting out Dunne's case. At its core, the developer's argument is that the two parties may have agreed a contract for the sale of the Whitewater site but that they never got as far as concluding a development contract for the centre itself. Without this development contract, the overall sale of the share in the shopping centre could not stand, according to Dunne .

Underlining this, according to Gallagher, was the "factual matrix" surrounding the site contract. The understanding, according to Gallagher's submissions, was that the "bulk" of the consideration due would be paid by way of the development agreement.

He claimed neither party had envisaged the overall sale would be governed only by the site contract. Instead, the sale would come under a "composite package" that would provide a completed shopping centre at the end. It was a matter of "common sense", according to Dunne's representative.

This thread was picked up when Dunne took the stand yesterday and claimed that he was "dumbfounded and astounded" last September when he discovered that Warren was claiming they had a binding sale contract for all of Whitewater.

Dunne said he had, by this stage, told his agents to call off sale negotiations because experience had told him they would not lead to an actual deal.

This was because there were too many points of difference and, on top of this, too many extensions to deadlines that had already been granted without achieving anything.

If any negotiations continued between the property agents of the two parties after this, they were without Dunne's imprimatur, he said. If yesterday's taste of Gleeson's examination of Dunne is anything to go by, the developer is likely to be pressed repeatedly on the times and details of instructions given, meetings attended and actions taken around this time.

Yesterday, Gleeson pressed Dunne into acknowledging that he had probably been wrong to say he could not attend a particular meeting with Warren because a previous engagement had overrun. Dunne was also forced to admit that a €100 deposit cheque sent by Warren in respect of Whitewater had not been sent back, despite the developer's assertion that he instructed this should happen.

In general though, Dunne has so far been a composed witness, recalling with good precision events of a year ago. Warren, who has sat attentively and quietly throughout proceedings can be expected to be equally polished when he gives his own evidence.

Both men are no strangers to pressurised litigation and are unafraid to take legal action when the need arises. Dunne has taken on Blacktie clothes hire owner Niall O'Farrell, and rival developer and solicitor Noel Smyth in the past. Warren may not have hit so many headlines, but he has proven his steel in situations such as a High Court dispute over profit-sharing at his company, not to mention the case currently at hand.

Discussions between Warren and Dunne on Whitewater began about a year ago, continued in sporadic fashion over the summer and ended badly in the middle of September. When talks started, the shopping centre was still largely underdeveloped, with Dunne building together with Seán Mulryan, another well-known developer.

Mulryan held (and continues to hold) the remaining 50 per cent, but he is not a party to the current case and is said to be taking a neutral stance. He will, after all, need to work with whoever wins the case. Last summer was busy for Dunne, although, as the court heard yesterday, he found time to take a six-week holiday. He was, at the time, up to his ears in exposure to Jurys Doyle. He not only owned shares in the company, but he was also in the process of buying the company's flagship properties.

He acknowledged yesterday that he was, at the time of the Whitewater negotiations, in the process of liquidating assets to help fund the Jurys effort.

Over the same period, Warren was, according to submissions made by Gallagher, busily preparing a brochure for potential investors who might be interested in getting involved in the deal.

As head of a company with €1.5 billion in assets under management, Warren is no stranger to how the business works.

The brochure spoke of a yield of 4.5 per cent, a level which puts the 2 - 2.5 per cent currently available on Dublin's Grafton Street well in the shade. The tenants due to go into the centre were also appealing, including Debenhams, Zara and H&M.

These retailers began trading last month in what is, by all accounts, a very attractive development.

Needless to say, the shoppers that descended on the centre as soon as it opened care little about who owns the ground beneath their feet. The same cannot be said, however, for the temporary residents of court number seven, for whom Whitewater means a lot more than the latest fashions.