Cowen among investors in dispute

 

TALKS TO end a legal dispute about a €12m property deal involving Taoiseach Brian Cowen and nearly 70 other Irish investors are close to a settlement.

The investors, including Mr Cowen, bought individual flats in a Leeds apartment block off the plans in 2005 in a deal orchestrated by property developer, Enda Hunston, funded by mortgages taken out on AIB’s Ballsbridge branch.

Mr Cowen, who was then minister for finance, has properly registered the existence of his investment in the Dáil’s Register of Members’ Interests ever since. His spokesman declined to comment on the matter last night.

Although the properties were bought individually, a consortium – the Carrs Mill Partnership – was quickly formed afterwards to enable the building to be leased to Leeds University as student accommodation. A legal dispute over the Leeds property has emerged because the owners of the freehold title on the property, the Newcastle-based Adderstone Property Group say the investors did not have permission to sub-let to the university.

The solicitors for the investors, Dublin-based Lavelle Coleman say the original freeholder – which is understood to be Middlesbrough firm, Mandale Properties using a company called Bowes Mill Investment Ltd – “was approached to give consent to the proposed letting to Leeds University which, it was confirmed at the time, would not be problematic. Accordingly, the partnership assumed the legal requirements had been complied with and were unaware that, although consent in principle was obtained, a formal written consent licence was not recorded.”

The investors – although they bought as individuals – had “pooled their leases” to ease the creation of a long-term letting arrangement with the university, Lavelle Coleman said.

Adderstone, however, say that proper consent was not given. Speaking for the company yesterday, legal advisor Paul Hutton said the previous freeholder did recall there had been some contacts with the investors about letting the property entirely to Leeds University, but said there was no paper record that went further than that.

The original terms of the freehold make it clear the property can not be sub-let without the permission of the freeholder.

Adderstone says the university has changed the locks on the property and it does not have access to the building – even though it remains legally liable for actions that occur on the property.

Letters were sent over a month ago to Mr Cowen and the other investors to a Merrion Square address given by Mr Hunston, but the letters have been returned saying that the individuals “are unknown at this address”. Adderstone has also written to AIB.

The investors have been told they face “forfeiture action with a view to repossessing the property” for non-payment of ground rent, non-payment of service charges and breach of the lease terms for sub-letting. However, there is confusion about whether the freehold ground rent has been withheld by the investors, or whether it has been refused by Adderstone pending settlement of the entire action.

Last night a spokesman for Lavelle Coleman said “We are very close to negotiating this issue and I would not want to make any comment that would interfere with that.”