Pool firm in €1m arrears paid €4.5m to subsidiary

A High Court judge has said it is "difficult to see" how €4.5 million could have been paid for unspecified services to a subsidiary of the company that secured the contract for the National Aquatic Centre during a time when the parent company was in rent arrears of some €1 million.

Mr Justice Peter Kelly made the comment after senior counsel Denis McDonald, for Campus and Stadium Ireland Development Limited (CSID), said he was concerned that the situation regarding management of the €62 million centre at Abbotstown was growing "murkier and murkier".

CSID, whose shareholding is held by the Taoiseach and two Government Ministers, in 2003 awarded the contract for the State facility to Dublin Waterworld Limited (DWL).

Counsel said his client was in no better position now in relation to knowing who was managing the centre than when it initiated legal proceedings.

Mr McDonald said Dublin Waterworld Ltd (DWL) had claimed to be making no profits at the facility and to have lost income of some €1 million. It had also defaulted on rent payments. At the same time, CSID had been told DWL had paid a subsidiary, Dublin Waterworld Management Limited (DWML), for services in relation to the centre which were not precisely set out.

He said there was a very general claim that DWL manages the centre but avails of services of DWML in relation to certain management functions of the centre.

It was contended by DWL that the centre was not being operated by DWML and that the services being provided by the latter included hiring of staff and payment of overheads. However, the income received by DWML was €4.5 million.

There was nothing to indicate how DWML could be receiving such sums, counsel said.

DWL has argued many of its problems arose after the roof of the centre was blown off and has claimed repair work since had disclosed design and construction faults with the roof and other parts of the centre.

The centre had been closed since January and this severely curtailed DWL's earning capacity.

In an affidavit, John Moriarty of DWL said it had suffered losses as a result of defects in the building and this would be the subject of future proceedings.

Senior counsel Hugh O'Neill, for DWL, said all rent monies due to date had now been paid. His client was making the case that it had been trading at a loss and this argument would be advanced. His side needed more time to quantify a counterclaim against CSID and to furnish documents. He could not put the matter any further at this point.

Proceedings by CSID against DWL, with registered offices in Tralee, Co Kerry, in which CSID is seeking an order for possession of the aquatic centre, were before Mr Justice Kelly yesterday for case-management purposes.

The pool building was leased by CSID to DWL in 2003. Mr Justice Kelly has previously commented that it was "nothing short of astonishing" that such a valuable State asset was leased to a company with a share capital of €127 and, according to accounts to the end of 2003, no fixed assets.

Part of the CSID claim against DWL has been sent to arbitration and, at a hearing today, the arbitrator, Dermot O'Brien, will hear arguments as to whether DWL has a €10 million VAT liability in relation to the National Aquatic Centre. Mr O'Brien will give his decision by the end of this week.

In a separate hearing, architect Peter Keane has been asked to determine issues regarding repair and maintenance of the premises.

The remaining parts of the CSID claim, including for alleged breaches of the lease regarding rent and the establishment of a sinking fund, are proceeding in the commercial division of the High Court but a date has yet to be fixed for the hearing.

Directing that the documents be provided within two weeks, the judge rejected arguments that these documents were "voluminous" and said they should be readily accessible if the centre was being operated in accordance with the lease requirements. He also directed that the particulars of the counterclaim be provided by Thursday of this week and returned the case for further directions on July 11th.