A HIGH Court dispute over the share-out of multimillion euro profits from a residential development in 2006 on part of Kildare’s K Club hotel and golf course grounds is set to proceed today after efforts to send it to mediation failed yesterday.
The case centres on claims by estate agent Arthur French that his partner in the venture, developer Séamus Ross of Menolly Homes, had not divulged the “true profit” from it.
Mr French, who operates French Estates, claims the profit has been “significantly understated” at €29 million and that some €17.4 million has been “wrongfully paid” or diverted to Menolly.
The case was due to open yesterday before Mr Justice John MacMenamin. After some talks between the sides, the judge was told by counsel for Mr French the matter appeared to have gone beyond the possibility of mediation. The judge said he would adjourn the matter to today when it will proceed but, he added, the parties might use the adjournment to see if there was any other way of achieving a resolution.
In his action, Mr French alleges understatement of profit resulting from several factors, including overstatement of construction costs, misallocated fees, the charging of a Menolly “management” fee of some €3.6 million and other costs.
Menolly had been unable to explain “serious irregularities” on the face of documents submitted by it related to the development completed in September 2006, he claims.
The proceedings are by Mr French, of Churchfields, Straffan, Co Kildare, against Mr Ross, of Barberstown House, Clonsilla, Dublin; Menolly Homes and Brisa Developments Ltd, both of Main Street, Lucan, Co Dublin.
Mr French is seeking damages or an account of profits for alleged breach of contract and of fiduciary duty. The defendants deny the claims.
Mr French operates the estate agency, French Estates, and claims he secured an option to purchase lands at Ladycastle, part of the K Club grounds. He sought a partner for a residential development on the lands and claims he entered an agreement with Mr Ross, principal beneficial shareholder of Menolly Homes.
Mr French claims the agreement provided the net profits from the development would be divided equally between him and Mr Ross, although the profits might be drawn through Menolly, in Mr Ross’s case, and through French Estates in Mr French’s case.
Brisa was incorporated as the legal vehicle to effect the development and the development lands were sold to Brisa for €21 million on foot of an agreement of June 30th, 2003, Mr French claims.
Menolly constructed the development and it was anticipated, prior to construction, that the development would yield a profit of €49.7 million.
Mr French says he sought financial information about the development from January 2007. Draft financial statements for the year ended June 2007 disclosed a profit of over €29 million. Mr French’s accountants assessed the true profit from the development as €46.4 million.