DEVELOPER GERRY Gannon failed to complete the purchase of a lease on a building which formerly housed an investment subsidiary of the Friends First financial group, it was claimed at the High Court yesterday.

Liberty Asset Management (LAM) claims it was “trapped” into having to pay €120,000 per annum rent on its old offices at 54 Northumberland Road, Dublin, because Mr Gannon allegedly refused to complete an agreement to purchase LAM’s leasehold interest in the building.

The agreement was supposed to be part of a larger deal involving Mr Gannon renting LAM another premises and taking over the old LAM offices, which are beside his business address at 52 Northumberland Road, the court heard.

LAM is seeking orders requiring Mr Gannon to complete the May 2006 agreement to purchase the lease. It also wants damages for losses allegedly incurred from paying maintenance, insurance and €120,000 per annum rent on the now vacated building.

Mr Gannon denies he entered into any such contract and pleads, if he did, the contract was not enforceable because there was no complete memorandum of agreement. He says any correspondence between the parties was always subject to standard legal clauses whereby a contract would only exist subject to conditions.

The court heard yesterday the case arose after LAM wanted to move to larger premises in 2005 and entered negotiations with Mr Gannon, who had a large office premises available for rent at Richview Office Park, Clonskeagh.

Brendan Watchorn SC, for LAM, said, as part of those negotiations, it was agreed that Mr Gannon would take over the lease of 54 Northumberland Road while renting out the Richview offices to LAM on a 25-year lease.

Counsel said Mr Gannon waited until the Richview lease was signed before he failed to proceed with the Northumberland Road side of the deal. LAM was as a result “trapped into a situation” where it could not get out of the lease it held on Northumberland.

Kevin O’Shaughnessy, a former director of LAM in its property investment division, told the court the negotiations with Mr Gannon about the deal conducted were through auctioneer Iain Finnegan, of Finnegan Menton, who is Mr O’Shaughnessy’s brother-in-law.

When the deal progressed to the stage where lawyers were involved, Mr O’Shaughnessy said he believed it was “a done deal”, whereby Mr Gannon would take over Northumberland and LAM would get Richview. Mr O’Shaughnessy agreed, under cross-examination by George Brady SC, for Mr Gannon, that a problem over the subleasing of Northumberland became a deal-breaker. He said he knew Mr Gannon had been interested in acquiring Northumberland Road, but said he was not aware Mr Gannon wanted the freehold interest in the building or needed to be able to avail of a break clause in LAM’s lease arrangement with the owners of the building.

The hearing before Ms Justice Mary Laffoy continues.