Sunday 18 November 2018

Clinic disputes have left investors with headaches

The case is before Ms Justice Teresa Pilkington at High Court
The case is before Ms Justice Teresa Pilkington at High Court
Gavin McLoughlin

Gavin McLoughlin

The Galway Clinic was established to bring top-class medical care to the west of Ireland. But for its shareholders, the business affairs of the clinic have caused plenty of headaches.

The High Court has this week heard the details of a bitter dispute at boardroom level. On one side is Dr Joseph Sheehan Sr, a Chicago-based Irish medic who came up with the idea for the clinic, and his son Joseph Sheehan Jr. On the other side, Dr James Sheehan, the brother of Joseph Sheehan Sr, and the businessmen Larry Goodman and Brendan McDonald.

The court has heard how, around the year 2000, Joseph Sheehan Sr approached his brother with the idea for the clinic. The men had experience in the sector via their involvement in the Blackrock clinic. James Sheehan said he was reluctant to get involved in a business project with his brother given previous difficulties - but he eventually agreed on the basis that the clinic would be set up as a charity.

The brothers began work on the project but financial difficulties emerged and construction stopped. Property developer Bernard McNamara - who knew James Sheehan from the RCSI where both men had been patrons - made an offer that would have enabled the clinic to go ahead but would have wiped out the Sheehan brothers' shareholdings, and left them on the hook for heavy debts.

Then came a call that James Sheehan said he was very happy to receive. His personal friend Larry Goodman had read about the problems in the newspaper, and asked if he could help. Mr Goodman agreed to inject funding into the project in a manner that would allow the Sheehan brothers to hold 50pc of the business between them.

The court heard that Mr Goodman didn't want to hold 50pc himself, and decided to take 40pc via his vehicle Parma Investments and transfer 10pc to Brendan McDonald, another businessman who had been successful in the electrical sector. Some years later, Mr McDonald became ill with cancer. He decided to transfer his shares to Mr Goodman's Parma Investments.

Joseph Sheehan Sr objected to the manner in which the transfer was done - claiming it violated a shareholders' agreement and that he was being kept in the dark. Relations between both sides were at a low ebb - with a number of connected disputes under way.

Just how bad things got were reflected in an email sent by Joseph Sheehan Jr to Brendan McDonald. The email insulted the parental status of Larry Goodman's children, who are adopted.

To Mr McDonald, it expressed a wish that he would "enjoy the remainder of the time you have left".

Discussing the email, Dr Joseph Sheehan Sr said "we all say things we shouldn't say" and that he did not condone the email.

Throughout the case both sides have accused the other of seeking to do them down from a business point of view. Joseph Sheehan Sr said he was an oppressed minority shareholder being kept in the dark about what was going on in the company.

On the other hand, Brian O'Moore SC, for Parma Investments, said Joseph Sheehan Sr's proceedings were motivated by "a long-standing dispute with Mr Goodman and a desire to hamper him".

This case is one of a number of disputes between Mr Goodman and Joseph Sheehan Sr.

The latter has taken court action against Goodman companies over expansion plans at the Galway clinic, and over efforts by a Goodman company, Breccia, to enforce security over shares owned by Joseph Sheehan Sr in the company behind the Blackrock clinic.

Each side has come in for judicial criticism in disputes surrounding the clinic.

In one case, Mr Justice Michael Twomey said he would be prepared to consider what is known as an 'Isaac Wunder order' against Dr Joseph Sheehan Sr. Such orders are designed to deter vexatious cases, and mean that the recipient has to apply for leave from the court in order to institute fresh proceedings against particular parties. Judge Twomey was critical of the amount of court time being taken up by proceedings relating to the Blackrock clinic.

In a separate case related to Blackrock clinic, Goodman company Breccia was criticised by Mr Justice Robert Haughton, who said it had not come to court with "clean hands" and had displayed a "lack of candour". Judge Haughton later withdrew from the matter, with Breccia having applied for him to recuse himself on foot of the comments.

This week, the Sheehan brothers sat in court, watching as each gave evidence contradicting the other. Dr James Sheehan spoke on Thursday of the "huge upset" a deterioration in relations with his brother has caused him.

The case will continue before Ms Justice Teresa Pilkington in the High Court on Tuesday.

Irish Independent

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