Bitter family dispute worthy of a box office blockbuster

 

They may control almost half of the cinema screens in the State but business relations between the Wards and the Andersons are at breaking point

It’s a bitter family business row more suited to the plot of a movie shown in one of their cineplexes. The Wards and Andersons are best known as the families behind Ireland’s largest cinema group. But last Monday High Court judge Mr Justice Peter Kelly urged the two families to bring their “extraordinarily bitter” dispute over the company behind the well-known Dublin cinemas, the Savoy and the Screen, to a mediator.

The business certainly requires a referee to step in and broker a resolution between the sons of the group’s founders, half-brothers Leo Ward and Kevin Anderson. The first time the two Pauls – Paul Ward and Paul Anderson, fellow directors of jointly held companies – were in the same room for months was in the courtroom for the legal proceedings.

No board meetings have been held and the directors cannot agree even to sit around a table to approve accounts for the year to October 2011, which are overdue.

Their boardroom remains dysfunctional following a failed attempt at mediation last April to secure an agreement on the division of assets between the families.

Mr Justice Kelly said earlier this week that he believed that, instead of battling it out in court over a business that is effectively 50-50 owned by the Wards and the Andersons, mediation was a better route. The judge said that, while he could not compel the sides to go to mediation, the festering of such a bitter commercial dispute in the courts was of no benefit to anyone.

The row is so bitter and long-running that conversations over a lunch and by phone as far back as 15 years ago have been dragged up in counter-claims.

Deepening rift

Relations started breaking down a decade ago. The only reason the two sides opened a cinema in Cork together in 2005 was because they were both vying to build it.

It wasn’t always this way. Kevin Anderson and Leo Ward had good relations from the time they established the business in 1948 and bought their first cinema in 1955.

But the next generation didn’t inherit these close ties. Kevin Anderson retired as a director of companies in the business about five years ago, while Leo Ward has ceased to have a daily involvement over the past 18 months, leaving the running to the two Pauls and their families.

While the two families have interests in a range of companies, Paul Ward and Paul Anderson sit on the boards of Galway Multiplex and Dublin Cinema Group, the company that owns and runs the Savoy and the Screen.

Affidavits filed in court reveal the deepening rift. The final straw that led to the breakdown between them was Paul Ward’s legal claim that Anderson, on behalf of his family’s company, Omniplex Holdings, had entered an agreement to develop a new multiplex in the St Stephen’s Green Centre in Dublin city centre.

Last December Ward brought a derivative action – a type of case taken by a shareholder on behalf of a company – against Anderson. He has claimed Anderson breached his fidicuiary duty and did not act in good faith towards DCG over the proposed St Stephen’s Green Centre cinema. Anderson has rejected the charge, claiming that both families have for many years pursued their own ventures through their own companies, without any involvement from the other family.

He has argued that, even though potential difficulties may prevent the project from ever going ahead, the St Stephen’s Green project is “qualitatively different” because it has little potential to compete with DCG’s cinemas.

The Wards and the Andersons already run separate cinemas in Dublin that compete with their city-centre cinemas, Anderson argued, and the closest cinema to St Stephen’s Green is the Screen, which is an “art-house”-type cinema and would not be in competition with the new cinema, he says.

Anderson has rejected Ward’s claims against him, saying that the families have always operated on the basis that they were free to pursue their own interests in whatever way they see fit, even if this affects a jointly owned cinema company.

“Had there ever been a suggestion otherwise, I would have declined to persist in business with the Ward family,” said Anderson. “I have no doubt but that Kevin Anderson and Leo Ward were of the same view.”

Anderson said the St Stephen’s Green opportunity came his family’s way because of the expertise they developed from the construction of the Swan shopping centre in Rathmines and that DCG had no rights whatsoever in this expertise.

There was “never any question of DCG being in a position to exploit the St Stephen’s Green opportunity”, he said, and he claimed that Ward’s action was an “attempt to expropriate, through the medium of DCG, a share in my family’s hard-won knowledge and experience”.

Ward’s legal challenge marked “the crossing of the Rubicon”, said Anderson in an affidavit. “It is impossible now to contemplate going back into everyday business with people who have questioned my honesty, all the more so since this was done in such a public arena,” Anderson told the court.

“I say this with considerable regret, as I have worked for decades with Leo Ward, whom I respect greatly. But as Leo began to step back from the business, circumstances and the relationship between the families changed significantly.

“Ultimately, the recent court proceedings are only the low point in a descent that has been ongoing for a number of years.”

Joint control

Paul Anderson, who lives on Dublin’s Shrewsbury Road, has worked in the business since he left school in 1966. From 1984, he and Paul Ward had a business relationship through their joint control of DCG. But he said, in reality, the real work on the Ward side of DCG was done by Leo Ward, who booked the films for cinemas in the business.

“My relationship with Paul Ward was, however, generally cordial, although it has deteriorated over the years,” he said in his affidavit.

The first incident to sour relations between the men was in 1997. That year Anderson met executives from property company Dunloe on Harcourt Street in Dublin to finalise a contract to develop cinemas at the Bloomfield Shopping Centre in Dún Laoghaire. Dunloe told him that Leo Ward, who had been in discussions on the cinema, had withdrawn from negotiations and had no interest in proceeding.

Dunloe and Anderson finalised a deal that day and shook hands. The following day Anderson told Ward over lunch at the Cope Restaurant in Dublin that he had completed the deal on Dún Laoghaire.

Worsening relations

That afternoon he received a telephone call from Ward. He wanted Anderson to withdraw from the deal to allow his father, Leo Ward, to step back in and to develop the new Dún Laoghaire cinema as a joint Ward/Anderson project. Anderson withdrew but as soon as the contracts with Dunloe were signed, Paul Ward refused to offer the Andersons any interest in the project, Anderson told the court.

“I was very disappointed by Paul Ward going back on his word in relation to Dún Laoghaire, but I accepted the outcome with as much grace as I could muster,” he said.

Relations went from bad to worse in 2003 when, on December 1st, without warning, the Wards abandoned the head office of the business on Upper Abbey Street in Dublin, from where they had operated for 20 years, to set up their own offices in Dún Laoghaire.

The first Anderson heard of the move was when Paul Ward called him the night before, at 11pm on Sunday, November 30th.

The following morning, Kevin and Paul Anderson discovered that the Wards had taken computer hardware and software, company records and other equipment without permission, as well as seven key head office staff to Dún Laoghaire.

The books of DCG and other companies jointly owned by the families were also removed. Under threat of litigation, the Wards returned all of the books of the jointly held companies but no computer hardware or software, Anderson said in his affidavit. “This episode marked what was then a new low point in relations between the families,” he said.

No contact

Anderson told the court that a difficult relationship was “made more difficult” when Leo Ward retired in 2007 from the boards of various companies and was replaced by Paul Ward’s wife Mary, a solicitor who had worked at Ward Hutchinson Solicitors but who became actively involved in the business.

He complained that Mary Ward was appointed to the board of DCG on September 12th, 2007 without a board meeting being convened or without consulting the other directors. He said he learned of her appointment the following February.

“To date, DCG continues to operate, despite the fact that there is basically no contact between the owners, except through solicitors,” said Anderson in his affidavit.

He and his family run all aspects of the business except booking films and paying wages to staff in the Savoy, Screen and Tullamore cinemas, which the Wards manage from their office in Dún Laoghaire.

“However, the fact that the owners of the company are not on speaking terms creates obvious potential for future difficulties,” he said. “If anything were to go wrong in relation to any of the matters handled by either family, it is difficult to see how the problem could be resolved.”

Leo Ward, one of the patriarchs of the business, seems to have acted as a conciliator between the families. Since he retired and was replaced by Mary Ward, “a fundamental split has occurred in the partnership,” Anderson told the court.

Prior to his departure, “almost all problems could be resolved by a quick meeting or a telephone call; since then the atmosphere has completely changed,” said Anderson.

This was evident at a board meeting of Galway Multiplex at 2.30pm on June 15th, 2012. Anderson said Paul Ward walked out of the meeting because Anderson would not stand down as chairman. According to Anderson, Ward departed with words to the effect: “I will not take part in any meetings at which you are chairman.”

From the “harsh and bitter way the words were spoken”, he took this to include all companies where they are directors, said Anderson.

Given his “irreoncilable differences” with Paul and Mary Ward “an orderly separation” of the business is required “in everyone’s interest” and that this is best done by winding up DCG, said Anderson.

Ward is unwilling to go down this route, at least initially; he wants to prosecute his claim for damages against Anderson first for alleged breach of duty, for acting in bad faith and against the interests of DCG over the proposed cinema in the St Stephen Green’s Centre.

In what is highly unusual for a dispute coming before the Commercial Court, there is a solvent business at the centre of the case. Anderson said that there will even be a surplus left after DCG’s liquidation to distribute to the shareholders.

Since Monday’s court hearing the Wards have reached out to the Andersons (through their respective solicitors, of course) saying that Bill Shipsey SC, who has experience resolving disputes involving big businesses, is available to mediate over the coming fortnight.

Given the plot so far, a mediator will need an Oscar-winning cameo to guarantee a happy ending.

Cine-wars What's at stake?

The sons of the co-founders of the Ward Anderson cinema group, half-brothers Leo Ward (93) and Kevin Anderson (97) , have fallen out over one of the country’s best known businesses. They are the “two Pauls” – cousins Paul Ward (63) and Paul Anderson (64).

There is no overall Ward Anderson group company.Cinemas across the business are owned by different members of the families, some jointly, and through various companies. Combined, the families own 25 cinemas and 140 screens – almost half of cinema screens in the Republic of Ireland.

Although the families have interests in a range of companies, Paul Ward and Paul Anderson sit on the boards of only two, Dublin Cinema Group (DCG) and Galway Multiplex Limited. At the centre of this legal dispute is DCG which operates two of their most high-profile cinemas, the Savoy on O’Connell Street (pictured) and the Screen near the quays in Dublin. Galway Multiplex owns cinemas in Galway city and Oranmore.

Paul Anderson and Paul Ward each own 25 per cent of DCG with 50 per cent owned equally by two companies, Borthwick Investments (an Anderson family company) and Movern Holdings (a Ward family company).

DCG is the main company in the group in which there is common ownership between the families. The firm also owns the Omniplex at the Bridge Centre in Tullamore. It owns half of the shares in the Omniplex in Santry, 75 per cent of shares in the Omniplex at the Mahon Point centre in Cork, and 3 per cent of Omniplex Holdings, which is otherwise owned by the Anderson family. The remaining half of Santry is owned equally by Borthwick and Movern, while the remaining 25 per cent of the Cork cinema is divided evenly between Paul Anderson and Leo Ward.

Omniplex Holdings runs three cinemas in the Republic, including The Swan in Rathmines, Dublin, and several in Northern Ireland.

Anderson and Leo Ward own Cameo Cinema, owner of Omniplex cinemas in Clonmel, Kilkenny, Carlow, Longford, Tralee and Wexford. Both also own 25 per cent of companies that operate theKillarney and Ballina Omniplexes.

The Andersons own 50 per cent of Omniplex cinemas in Galway and Oranmore, the Wards 22 per cent. Paul Ward’s sisters own the rest.

The Wards own the IMC Cinemas in Dún Laoghaire, Tallaght, Athlone, Ballymena, Dundalk, Killarney, Mullingar and Thurles.