McFeely received €3.75m based on 'sham' lease, UK court hears
DISGRACED Priory Hall developer Thomas McFeely received almost £3m (€3.75m) in income generated from a London apartment block that he jointly controlled after he had helped to devise a "sham" lease agreement, a court has been told.
Details of the transactions have been revealed in a UK High Court case in which receivers were seeking to have the lease agreement declared void.
One of the defendants in the case -- Filtons Leasing (London) -- purportedly entered into a bona fide lease agreement in October 2010 with another company called Ashwood Enterprises. The McFeely brothers, Thomas and Conal, hold the 28-storey apartment block -- Athena Court in east London -- under trust for the Isle of Man-registered Ashwood.
That supposed lease agreement with Filtons -- which saw the firm rent out apartments at the 300-unit scheme -- was to extend over two years, including the period of the Olympic Games this summer.
But receivers appointed by Bank of Ireland in relation to a Derry firm jointly controlled by the McFeely brothers, that had borrowed about €61m to develop Athena Court, insisted that the lease was an "obvious sham" whose object was to disguise the true relationship between the Filtons companies and the McFeely brothers.
It was alleged by a director of Filtons Leasing (London), Moshin Kothia, that Thomas McFeely -- who was declared bankrupt in the UK in January -- had insisted that all the rents due under the two-year term of the lease be paid up front before the Filtons firms subtracted any profits.
The gross amount payable to the McFeelys under the lease agreement was £3.3m (€4.1m).
Mr Kothia told the court that £140,000 of that, representing approximately 5pc of the funds collected, less sums paid for maintenance fees, was retained by Filtons as a commission.
But the judge hearing the case, Justice Peter Smith, said that while the Filtons firms could have called the McFeely brothers to give evidence in the hearing, they chose not to.
"During the course of the hearing, from time to time one or other of the brothers was present and was seen giving instructions to Mr Kothia," noted the judge in his ruling.
He said it was "quite clear" that Mr Kothia could have called the brothers to give evidence as to the structure of the alleged lease agreement, but this was not done.
"There was a strong suggestion that the McFeely brothers had a major hand in the defendants' defence and a similarly strong suggestion that the McFeely brothers intimidated the defendants," said the judge.
He said the £120,000 handed to Thomas McFeely in March should have been paid to the receivers. He also agreed that the lease was a sham and void, adding that the Filtons firms "cannot be trusted to collect any further rents or have any role in managing the property".