William Fry opposes discovery of Clerys documents

Law firm it cannot release files relating to operating company for ‘legal reasons’

Clerys was controversially sold and liquidated on the same day in June 2015. Photograph: Dara Mac Dónaill

Clerys was controversially sold and liquidated on the same day in June 2015. Photograph: Dara Mac Dónaill


A law firm which acted for the group that owned Clerys before its controversial sale and liquidation on the same day in June 2015 is opposing an application requiring it to discover documents concerning the conduct of the affairs of Clerys’ operating company.

The documents, sought for forthcoming disqualification proceedings against two former directors of the operating company, OCS Operations Ltd, include documents concerning the conduct of its affairs before the sale on June 12th 2015.

William Fry says it cannot, for legal reasons, release the documents being sought by the joint liquidators of OCS Operations, Kieran Wallace and Eamonn Richardson of KPMG.

The liquidators insist the firm can legally release them.

OCS Operations is part of the OCS group and the two directors – Rafael Klotz and Malcolm MacLennon MacAulay — were also directors of other companies within that group. They deny they acted in breach of their duties and insist they acted honestly and responsibly in the conduct of the company’s affairs.

William Fry, represented by Declan McGrath SC, says its client was not OCS Operations and it was instead instructed by the holding company, OCS Investment Holdings Ltd (OIHL) and US-based Gordon Brothers, the parent and ultimate parent of the OCS group.

It claims it cannot, for legal reasons, discover documents which might, in addition to referring to OCS Operations, also touch on affairs of the OCS group.

The firm says it asked OIHL and Gordon Brothers if they would consent to release of the documents but that consent was not forthcoming and both entities also refused to waive any claim of privilege.

If the documents are owned by the parent, the subsidiary has no claim to them just because they are part of a common group, counsel argued.

‘Former client’

Mr Justice Robert Haughton, noting William Fry had received some €730,000 from OCS Operations for services and had referred to OCS Operations in an affidavit as its “former client”, said he considered, for a “host of reasons”, OCS was a client of William Fry. He added that he understood the difficulties of William Fry as OIHL and Gordon Brothers had refused to consent to discovery or waive privilege.

Mr McGrath said among other concerns of the firm was the wide and “oppressive” nature of the discovery sought and the fact the liquidators had refused to meet the estimated €200,000-plus costs of making discovery. A lot of the problems arose because the liquidators sought discovery from William Fry rather than the parent firms, he said.

Earlier, James Doherty SC, for the liquidators, argued that they are legally entitled to discovery of documents relevant to the operating company even if some of those were prepared jointly for the group.

The discovery request was prompted by the liquidators’ awareness that William Fry was involved in advising the group and Grant Thornton had recommended to the directors that specific legal advice should be taken concerning the relationship with Clerys concessionaires and other aspects of the group’s operations between December 2014 and June 2015 when it was sold to Natrium, he said. They wanted documents concerning the sale of the OCS group and advices about lending facilities.

The objective was to put the liquidators into the same position as the directors would have been on the date of the sale of the business, by reference to advice and information provided by William Fry, he said.

’Unique position’

Everything the liquidators were seeking was made available to OCS Operations as part of the OCS group operations between 2012 and 2015, he argued. The liquidators faced a “unique position” as neither the seller nor purchaser of the OCS group was prepared to let them see documents available to the companies at that time.

William Fry’s assertion that OCS Operations was not its client and it had no files in the name of OCS Operations, other than a company secretary file, came as a “surprise”, he said. OCS Operations discharged invoices to William Fry over a period from September 2012 to June 2015 and it was clear very significant work was done by William Fry for the company.

Mr McGrath said that work was done on the instructions of OIHL and Gordon Brothers. Internally within the OCS group, fees for work done were allocated among the group companies and invoices were allocated accordingly and there was nothing improper in that.

The hearing will resume on January 29th.