DÚN LAOGHAIRE-Rathdown County Council has told the Commercial Court it is very concerned about €57 million given to companies controlled by developer Liam Carroll.

The funds were handed over under a joint venture agreement for a science and technology park in Cherrywood.

The council has an obligation to safeguard the public funds if it believes they are “in jeopardy” and that is why it has brought court proceedings, Pauline Walley SC, for the council, said yesterday.

County manager Owen Keegan said in an affidavit that the eight defendant companies made the “astounding” assertion earlier this week that the council has no beneficial interest in the lands at Cherrywood where buildings had been constructed under the joint venture.

This was “a clear attempt by the companies to enrich themselves unjustly and is wholly unconscionable”, he said. This, and the declared insolvency of companies in Mr Carroll’s Zoe group, were facts which the council could not ignore.

Mr Keegan added that the council had been assured by solicitors for the defendants that these eight firms were not affected by the application for court protection for the Zoe companies (which will be decided today).

The council claims it is entitled to a one-third share of the Cherrywood development and profits from it. But it alleges the defendant firms had breached the August 1997 joint venture agreement (JVA) by creating additional charges with banks over the properties and lands without either the council’s knowledge or consent.

The council also says it is concerned many properties built by the companies on the site were built on the parts of the site not owned by the council. A “meaty” good faith clause of the JVA required neither party to act to the detriment of the other. But the council was concerned this was what had occurred, Ms Walley said.

In his affidavit, Mr Keegan said the council had trusted assurances given by the eight companies on June 16th last that the banks were on notice of the council’s interest in the Cherrywood development and the council’s interest was protected.

However, in a letter of July 29th last, it transpired, the eight companies denied the council had any claim to any beneficial interest in the lands and buildings. This was despite the previous assurances and the fact the council had paid over €57 million of public monies.

Other concerns included that the defendant had charged twice for works for which €1.22 million was already paid, Mr Keegan said. The council was concerned about this and other claims for payment for works done.

Mr Justice Peter Kelly said he was satisfied the matters raised by the council had the required urgency to allow him permit the council to apply at short notice to have its proceedings transferred to the Commercial Court.

The judge listed the application for transfer for hearing on August 6th when the defendants, eight companies and two banks, will have a chance to be represented.

The case is against Cherrywood Science and Technology Park, Cherrywood Properties, Cradder, Frescatti, Giotti, Vienesse, Nervana and Precidence, all with addresses at Chapel House, 21-26 Parnell Street, Dublin 1. It also includes two banks, Bank of Scotland (Ireland) and AIB.

The banks have been joined as defendants because the council wants a declaration all charges or other securities created by the companies in favour of the banks are subject to the council’s legal and beneficial interest.

Outlining the background, Ms Walley said the JVA was entered into in August 1997 with Cherrywood Properties and Cradder to develop a science and technology park at Cherrywood on the basis of one-third interest to the council and two-thirds to the companies.

Cherrywood and Cradder were then owned by Monarch Properties which was later acquired by Dunloe Ewart; Mr Carroll later acquired Dunloe Ewart via various companies around 2001, she said.

While the council agreed to a charge in favour of Anglo Irish Bank in 2003, for which permission was sought from the council, it had not agreed to other charges subsequently created in 2008 and 2009 without its knowledge or permission, Ms Walley said.