A company of solicitor and property developer Noel Smyth has lost its action for €140m damages against three developers - Larry O'Mahony, Thomas McFeely and Liam Carroll - over their involvement in deals related to a planned €300m development at The Square shopping centre in Tallaght.
Mr Justice Brian McGovern today criticised the conduct of all the parties involved in the deals and said none 'emerge with much credit for the manner in which they conducted their business dealings with each other'.
Liability for the multi-million euro costs of the 63-day action will be decided later.
The case was brought by Redfern Ltd which had claimed it was in a key position to develop The Square some years ago, but needed to own what was known as the Lowe licence to secure access to large areas of the shopping centre.
Mr McFeely and Mr O'Mahony later bought the Lowe licence for €55m, with finance from Bank of Scotland Ireland, and held the Lowe interest through Aifca Ltd.
After lenghty negotiations brokered by former trade union leader Phil Flynn, acting for Mr O'Mahony and Mr McFeely, an agreement was signed with Redfern in August 2005 for disposal of the Lowe interest to Alburn, a subsidiary of Redfern, and for a joint venture development of the centre.
Redfern alleged Mr O'Mahony and Mr McFeely subsequently agreed another deal behind Mr Smyth's back with Mr Carroll - the Aifca Agreement - causing Aifca's shares in Lowe to be transferred to Tafica Ltd, a company controlled by Mr Carroll.
The defendants in separate defences denied any liability to Redfern Ltd.
Mr Justice McGovern ruled Mr Smyth, Redfern and Alburn, Mr O'Mahony and Mr McFeely had all breached the good faith obligations of the Redfern Agreement by their conduct and that the agreement had been repudiated by actions of all parties to it and was rescinded by the Phil Flynn brokered agreement of August 2006.
He also found the Redfern Agreement was unenforceable on various grounds, including that loans being offered by Anglo Irish Bank in February 2007 to Alburn for the Tallaght development were strictly on the basis Mr O'Mahony and Mr McFeely would not be participating in that development.
He was not impressed by the 'wilful concealment' by Mr Smyth of the conditions attached by Anglo for that loan when he was corresponding with South Dublin County Council and its legal adviser about the matter. The Redfern Agreement also could not be implemented as the Council had passed a resolution prohibiting Mr O'Mahony and Mr McFeely becoming directors of Alburn, the judge said.
The judge found Mr O'Mahony made the first approach to Mr Carroll for help in bailing out himself and Mr McFeely in relation to their loan obligations to Bank of Scotland Ireland. He was also satisfied Mr Carroll got involved in efforts to obtain alternative finance to discharge the Bank of Scotland Ireland debt because he knew he could use the consequent Aifca Agrement as a means to supplant Mr Smyth or his companies in the redevelopment of The Square or could frustrate Mr Smyth's plans.
Mr Carroll's motives in becoming involved were 'self-serving' and the 'elaborate steps' taken by him to ensure his involvement was kept secret from Mr Smyth lent credence to that, he said.
He said Mr Carroll could only be liable for damages if, at the time he became involved, the Redfern Agreement still subsisted. The judge ruled that when the Aifca Agreement between Mr Carroll, Mr O'Mahony and Mr McFeely was concluded in September 2006, the Redfern Agreement was no longer subsisting.
In those circumstances, Redfern had failed to establish a breach of contract or procurement of a breach of contract and no damages liability arose.
