Nursing home action settled

A legal action against Minister for Health Dr James Reilly, Fine Gael councillor Anne Devitt and others brought in connection with an alleged contract to buy a nursing home in Co Tipperary has settled, the Commercial Court has heard.

The case was mentioned to Mr Justice Peter Kelly at the Commercial Court today by Bernard Dunleavy, for the plaintiffs, who said it had settled subject to a final issue. The judge agreed to counsel's request to list the matter for mention again next Monday.

The plaintiffs had claimed, under an agreement of November 2000, Dr Reilly and four others were to buy the Greenhills nursing home for €1.95million, plus VAT, and were also to secure the release of the plaintiffs — who include doctors and solicitors — from all liabilities to Bank of Ireland concerning the property.

It was claimed notices served in April and May 2011 requiring that agreement to be performed had expired and the defendants were in default. The nursing home was a commercial success and a valuable business asset, the plaintiffs claimed.

The proceedings were transferred to the Commercial Court list last July but were adjourned on consent to facilitate mediation.

The case is against Dr Reilly, "Seafoam", South Shore Road, Rush, Co Dublin and four other people — Paul Kelly, Mountjoy Square, Dublin; Dilip Jondhale, Pococke Upper, Johnswell Road, Kilkenny; Ciaran Flanagan, Grattan Court, Inchicore Terrace South, Dublin 8, and Anne Devitt, Lispopple, Swords, Co Dublin.

The plaintiffs are Michele Mellotte, Tullamore, Co Offaly, and Orla Higgins, Ashfield Road, Ranelagh, Dublin, both solicitors; John Caulfield, Belgrove Road, Clontarf, Dublin, John McGreevy, Mount Prospect Avenue, Clontarf, Dublin and John Whately, Ardee Road, Dundalk, Co Louth, all doctors; Garry Smyth, a civil engineer, Ailesbury Grove, Dundrum, Dublin; Tom Murphy, an IT consultant, Wynestown, Oldtown, Co Dublin and Michael Morris, Chelmsford, Celbridge, Co Kildare.

In an affidavit, Ms Higgins said Dr Jondhale and a medical colleague, Dr Vasudha Jondhale, had promoted the development of a residential care facility for elderly persons as a tax efficient investment in summer 2000.

By autumn 2000, the parties who were to take the lead role in the project had been substantially identified and the defendants, except Ms Devitt, were denominated the Recourse Co-Owners, she said.

She said Mr Kelly in November 2000 transferred to the plaintiffs and other defendants an interest in a portion of property at Greenhills, on which the 54-bed nursing home was to be built, for shares of €55,000 and also transferred the balance of the property to the same parties in shares for a consideration of €220,000.

The parties later entered into a building agreement with Conclan Ltd for €1,598,350, plus a lease agreement, with Dr Jondhale and Vasudha Jondhale to operate the nursing home.

To fund the development, the parties entered into a credit agreement in November 2000 with Bank of Ireland to provide for borrowings of IR£1.5m (€1.95million). As those borrowings were insufficient to discharge the whole sum required for the development, the plaintiffs made an investment in the project, Ms Higgins outlined.

Mr Murphy invested IR30,000 while the other plaintiffs all invested IR60,000 each. The nursing home was built and leased as agreed and had been successfully operated since April 2001.

The parties also entered into a co-ownership agreement governing the investment which identified the defendants as the Recourse Co-owners, she sad. That meant the bank had greater recourse to them concerning the relevant borrowings.

The intention was the nursing home would not be sold until after the tenth anniversary of its first use as a nursing home when it was agreed a sale could be effected by the exercise of a put and call option by the non-recourse co-owners, she said.

Under that put and call option agreement of November 2000, the defendants were to buy the nursing home for €1.95million, plus VAT, and to release the plaintiffs from all liabilities to the bank concerning the property.

The nursing home was first used in April 2001 and the put and call option agreement was exercisable from April 2011,

Ms Higgins said the put and call option was served on Dr Reilly on April 4th last, and again in May 2011, requiring him to purchase the respective interests of the plaintiffs in the nursing home. It was also served on the other defendants and the period of two months for compliance with the option notices had expired.