Saturday 16 December 2017

Supreme Court backs Gayle Killilea company ruling

Gayle Killilea
Gayle Killilea

THE Supreme Court has backed a ruling that a private company owned by businessman Sean Dunne's wife, Gayle Killilea, will not have lodge up to €600,000 in legal costs in advance of a legal action.

Last November, the High Court ruled Ms Killilea's company, Mavior, would not have to provide security for legal costs for its action against another company over an alleged outstanding bill of €1m for repair works on two flooded hotels which were run by a company controlled by her husband called MJBCH.


Mavior is suing Zrko Ltd, a special purpose vehicle set up  by Ulster Bank for holding the legal and beneficial interest in the Tower Hotel and Ballsbridge Inn which were flooded in a storm in 2011.  MJBCH had an agreement with Zrko to run and manage the hotels.


Ulster Bank is taking separate bankruptcy proceedings against Mr Dunne over a €164m debt allegedly arising out of guarantees he executed for loans for the redevelopment of the Jurys Hotel site, also in Ballsbridge.


Following the flood damage to the Tower and Ballsbridge Inn on October 24, 2011, Mavior claims, it was agreed between Zrko and MJBCH that MJBCH would organise the repair and reinstatement works.


MJBCH then made an agreement with Mavior for it (Mavior) to do the works which were carried out, it is claimed.


Zrko made three separate payments for the work but there is now a balance due of more than €1m, Mavior claims.


Zrko disputes the terms of the alleged contracts, both between it and MJBCH, as well as the actual existence  of any contract between it and Mavior.


Mavior, unlimited and registered in Ireland, was formerly a limited company called Mountbrook Homes.  It was re-registered as unlimited prior to carrying out repair works on the hotels.


While Mavior does not have to file public accounts, the last accounts of Mountbrook showed it had a loss of about €453,000, said Zrko.


Zrko also says it has paid for repairs to the hotels but claims the works were substandard and no further money is owed.


After Ms Killilea's company sued for the alleged outstanding €1m, Zrko then asked the High Court to order it provide security for costs claiming her company may be insolvent and unable to meet the legal bill should it lose the action.


Ms Justice Mary Finlay Geoghegan ruled last November that Mavior was not obliged to provide such security, which the judge said would be between €500,000 and €600,000.


Zrko appealed and yesterday the Supreme Court said it agreed with Ms Justice Finlay Geoghegan's rulilng.


Mr Justice Frank Clarke, on behalf of the three-judge court, said the High Court judge was "completely correct" in her analysis and conclusions.


She was correct in concluding that Mavior was not a nominal entity or plaintiff as had been argued by Zrko.


Zrko had put forward a number of arguments to back up this claim, including that the affairs of the company (Mavior) were conducted in a way which suggested "little more than a formal distinction" between it

(Mavior) and Mr Dunne and/or Ms Killilea, the judge said.


"However, the affairs of many companies which have only one shareholder of substance are conducted in that way", Mr Justice Clarke said.


It may well be so that the "ultimate winner", if Mavior's action succeeds, will be Ms Killilea but this is because of independent obligations which the company owes to her in her capacity as a shareholder or creditor of the company, he said.

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