Wednesday 7 December 2016

Reilly group to pay €2m after nursing home deal goes sour

Tim Healy

Published 07/02/2012 | 05:00

Peter Mathews TD and Health Minister James Reilly with newborn Alex Kavanagh during a tour of Mount Carmel
Hospital in Dublin yesterday
Peter Mathews TD and Health Minister James Reilly with newborn Alex Kavanagh during a tour of Mount Carmel Hospital in Dublin yesterday
Greenhill Nursing Home, Co Tipperary

HEALTH Minister James Reilly and four others have agreed to pay almost €2m to investors after a nursing home deal went sour.

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The group, including Dr Reilly's party colleague Anne Devitt, was sued by eight investors -- including doctors and solicitors.

They claimed that Dr Reilly and the other four had agreed, in November 2000, to buy the Greenhill Nursing Home in Carrick-on-Suir, Co Tipperary, for €1.95m plus VAT.

This would have released the eight investors from bank debts arising from the purchase of the property, a court was told.

The Commercial Court heard that it was intended that the nursing home would not be sold until after the 10th anniversary of its first use as a nursing home.

Under the agreement of November 2000, the defendants, including Dr Reilly, were to buy the nursing home, thus releasing the eight investors from all bank liabilities. It is alleged that Dr Reilly and the other defendants did not fulfil their part of the agreement.

The case was settled yesterday when Dr Reilly and the four others consented to judgment orders for the money being made against them.

Mr Justice Peter Kelly in the High Court said the orders for judgment had to be made in public, but other terms of the settlement could remain confidential.

Under the settlement, Dr Reilly and the other defendants have all consented to judgment for €1,904,607 being entered against them, plus interest and costs, with a stay on execution of the judgment applying until April 30, 2012.

They have also consented to indemnify the eight investors concerning any liability to Bank of Ireland.

It was claimed that 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 eight investors claimed.

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

The orders are against Fine Gael members Dr Reilly, of Seafoam, South Shore Road, Rush, Co Dublin, and councillor Anne Devitt, of Lispopple, Swords, Co Dublin.

The orders are also against Paul Kelly, of Mountjoy Square, Dublin; Dilip Jondhale, of Pococke Upper, Johnswell Road, Kilkenny; and Ciaran Flanagan, of Grattan Court, Inchicore Terrace South, Dublin 8.

The eight who sued them were: Michelle Mellotte, Tullamore, Co Offaly; Orla Higgins, Ashfield Road, Ranelagh, Dublin; John Caulfield, Belgrove Road, Clontarf, Dublin; John McGreevy, Mount Prospect Avenue, Clontarf; John Whately, Ardee Road, Dundalk, Co Louth; Garry Smyth, Ailesbury Grove, Dundrum, Dublin; Tom Murphy, Wynestown, Oldtown, Co Dublin; and Michael Morris, Chelmsford, Celbridge, Co Kildare.

Promoted

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

The parties later entered into a building agreement with Conclan Ltd for €1,598,350, plus a lease agreement.

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 (€1.95m).

As those borrowings were insufficient to pay for the entire development, the eight made an investment in the project, Ms Higgins said.

Mr Murphy invested IR£30,000 (€38,100) while the others all invested IR£60,000 (€76,200) each. The nursing home was built and leased as agreed and had 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 said. That meant the bank had greater recourse to them concerning the relevant borrowings.

Irish Independent

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