Dunnes must pay builders of shopping centre €20m for anchor deal
DUNNES Stores was yesterday ordered by a High Court judge to pay around €20m to a company which built a shopping centre in which the supermarket chain agreed to be the anchor tenant.
Mr Justice Peter Kelly dismissed a bid by Dunnes to set aside an arbitrator's award for €20.2m, arising out of an agreement between the supermarket owners and Holtglen Ltd to build the Ferrybank Shopping Centre in southern Kilkenny. The centre was completed in August 2009.
Dunnes had instituted arbitration proceedings claiming breaches of a development agreement by Holtglen which in turn counterclaimed for payment. Holtglen claimed it was then entitled to stage payments due under the development agreement, plus other sums for which it had counter-claimed.
It said it has very large borrowings in connection with the Ferrybank development and it was "of the utmost importance" it was paid by Dunnes as soon as possible. Holtglen later became insolvent.
Last October, the arbitrator, while upholding some of Dunnes complaints of breaches of the development agreement, found Holtglen had remedied those matters and Dunnes was therefore not entitled to terminate the development agreement.
Dunnes applied to the Commercial Court to set aside the arbitrator's findings, claiming that as Holtglen was now insolvent, it was precluded from claiming the money due.
During the hearing, the court was told Holtglen's loans to Bank of Ireland had been transferred to a NAMA company, National Asset Loan Management (NALM), and all Holtglen's related security rights, assets and interests had been transferred to NALM.
In his judgment yesterday, Mr Justice Kelly said this meant that NAMA had stepped into the shoes of Holtglen and its insolvency was now an irrelevance. "It also means that any concerns Dunnes may have in relation to future obligations not being honoured had evaporated", he said.
The judge also found the arbitrator had not been guilty of any error of law in the approach he took to the construction of the agreement between Dunnes and Holtglen. Despite the fact that the shopping centre was completed nearly two and a half years ago, Dunnes had only paid "a fraction" of the money due for the work, he said.