Monday 19 February 2018

Battle in the docklands - Ronan and Crean at war over Spencer site

Hostilities commence between property developers' companies over 6,000 tonnes of waste from the landmark riverside site

Spencer Dock on the River Liffey
Spencer Dock on the River Liffey
Gavin McLoughlin

Gavin McLoughlin

Growth has returned in the Irish property market, and some of the old faces are back with a bang, too. Johnny Ronan, probably the most high-profile of all Irish property developers, exited Nama two years ago and has assembled an exciting mix of new projects.

Perhaps the juiciest of the lot is a site at Spencer Dock on Dublin's quays, where Ronan (63) has plans for a mixed-use development, including offices, apartments and a hotel.

But he's not having it all his own way. As the property cycle marches on, so too does time. And so the old dog finds himself in competition with the young pup.

Ronan has been embroiled for some time in a row with a young developer looking to make his fortune in the small and highly-competitive Irish property scene.

Pat Crean (36) has a far lower profile than his erstwhile business partner Greg Kavanagh. Crean and Kavanagh were the duo behind New Generation Homes - Kavanagh the founder and Crean the chief executive. Kavanagh exited the business late last year, leaving Crean in control of most of the group's former assets under the moniker of Marlet Property Group. His profile is probably only going to get higher now.

An interesting wrinkle in the row is that both sides have been backed by UK-based M&G - an arm of the insurance giant Prudential. M&G helped finance Ronan's exit from Nama, alongside Colony Capital, while M&G is Crean's major financial backer.

Crean and Kavanagh were the underbidders when Ronan won control of Spencer Dock - but they beat him to another piece of land on the other side of the Liffey, known as the Hickey site.

Both sides ended up in court over that property, where Ronan had bought up the freehold interests for a number of strips of land on the site. Crean's side had the leasehold interests and was accused by Ronan of breaching covenants relating to them.

Ronan slapped his adversaries with forfeiture notices - ruled to be invalid by Mr Justice Hedigan in the High Court. Counsel for Crean's side had argued that such a ruling was required to "ensure the defendant cannot implement its game plan and try and frustrate the plaintiff in the acquisition of the freeholds of the premises in the first instance, and then in pursuing this development and selling the units in the development". Strong stuff.

Dublin City Council had granted Crean permission for a six- to seven-storey apartment block comprising 91 units, and a seven-storey block with space for shops, offices and a gym.

A further six-storey development comprising two blocks, one with space for shops and offices and another with shops and 45 apartments, was also proposed. A new street extending from Cardiff Lane to Hanover Street East would be constructed under the plan, too.

It is a signature project for Crean, carrying much prestige, as well as potential profit - and the legal row, which continues, threatens much delay.

A source close to Ronan provided insight into Ronan's thinking as to how a resolution might come about: "It's Ronan's land and nobody will be able to build on it unless they reach an agreement with him."

The High Court ruling was last November and since then, things seemed to have quietened down. Until now.

In early March, a letter was sent by Philip Lee solicitors to the directors of the Spencer Place Development Company - Ronan and others.

The letter was on behalf of Integrated Material Solutions (IMS), a company linked to Crean, and said IMS was about to buy a landfill site in north Co Dublin.

The letter said IMS had been told that more than 6,000 tonnes of waste from the Spencer Dock site had arrived at the landfill, and that the waste was hazardous.

"As you know, given that you are the owner of the site from which the hazardous waste has been produced, and because you are the developers of that site and therefore the producers of this hazardous waste, you are liable for the remedial actions and redress required to rectify this matter," the letter says.

"The purpose of this letter is to seek your confirmation that you will take the urgent redress steps required to provide our client with comfort that you are assuming liability for the Spencer Dock waste... in the event that you fail to do so, then our client will have no alternative but to immediately commence High Court proceedings to seek the requisite relief."

The letter says disruption caused by the alleged delivery of hazardous waste would lead to delays in completing the sale of the business, which would cause damage to IMS.

The letter said IMS was also looking for assurance that Ronan's side would "address any future liability which might arise in connection with this unauthorised dumping".

Three steps were listed in the letter under the heading 'Action Required': remediate the facility in accordance with a plan to be agreed between the parties, compensate for the alleged loss and damage, and provide an indemnity for any future claim arising from the alleged misclassification of the waste.

Ronan's acquisition of the Spencer Dock site has not been without controversy.

His and Richard Barrett's Treasury Holdings had controlled the site prior to the crash. When Nama brought it to market, he narrowly prevailed ahead of Crean in the auction process.

Last month, TD Richard Boyd Barrett told the Dail that he had received a folder relating to the site that was "sent anonymously to us, probably by rival developers".

Boyd Barrett was angry about Ronan getting control of the site again after it had been through Nama. He said that the suggestion in the files he had received was that Ronan had got back the sites for around €42m, when comparisons with similar sites would have put the value at €100m-€120m.

"This can of worms must be opened and fully investigated and every sale and disposal of Nama assets has to be investigated," Boyd Barrett told the Dail, adding that he thought the Spencer Dock transaction was one of a number of cases that "stink to high heaven".

Ronan's lawyers Eversheds Sutherland sent a robust reply to Crean's side a week after the letter of early March.

"At the outset, having considered the claims made in your letter... it is clear that there was no transfer of hazardous waste as you assert," the letter reads.

"Your client has no interest in the waste licence... and more generally, your client's claim appear [sic] spurious, contrived and fabricated for ulterior purposes. Separately, we will be writing to your client's servants/agents in relation to these collateral purposes."

The letter denies that the waste was hazardous. "Test results seen by our client do not confirm that the waste sampled was hazardous waste," the letter reads.

It said Ronan's side would not commit to remediating the waste, would not pay any compensation, and would not be providing the indemnity sought.

In a statement to the Sunday Independent, IMS said that it planned to issue legal proceedings imminently against Spencer Place Development Company.

"The Environmental Protection Agency is investigating and IMS is cooperating fully with them. Our primary objective is to secure a satisfactory resolution of this matter and we will work with the EPA", IMS said.

Ronan declined to comment for this story. But there is little doubt he will have more to say on the matter.

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