Profit share-out dispute goes to High Court as mediation bid fails

A HIGH Court dispute over the share-out of multi-million euro profits, from a residential development on part of Kildare’s K Club hotel and golf course grounds, is to proceed today after mediation efforts failed yesterday.

The case centres on claims by estate agent Arthur French that his partner in the venture, developer Seamus Ross of Menolly Homes, has not divulged the “true profit” from it. Mr French, who operates French Estates, claims the profit has been “significantly understated”, at €28.9 million, with another €17.4m having been “wrongfully paid”, permitted to be paid, or diverted, by Mr Ross to his company, Menolly.

The case was due to open yesterday when, following an inquiry from Mr Justice John MacMenamin, the court was told by counsel for Mr French that the matter appeared to have gone beyond the point of having a mediator appointed.

Mr French alleges the understatement of the profit results from several factors, including overstatement of construction costs, mis-allocated fees, the charging of a Menolly “management” fee of €3.6m and other costs.

Menolly had been unable to explain “serious irregularities” on the face of documents submitted by it which related to the

development which was completed in September 2006, he claims.

The proceedings are being taken by Mr French, of Churchfields, Straffan, Co Kildare, against Mr Ross, of Barberstown House, Clonsilla, Dublin, Menolly Homes and Brisa Developments Ltd, both of Main Street, Lucan, Co Dublin.

Mr French is seeking damages or an account of profits for alleged breach of contract and of fiduciary duty. He operates the estate agency, French Estates, and claims he had secured an option to buy lands at Ladycastle, part of the K Club grounds. He sought a partner for a residential development on the lands and claims he entered an agreement with Mr Ross, principal beneficial shareholder of Menolly Homes.

Mr French claims the agreement provided that the net profits would be divided equally between him and Mr Ross, although the profits might be drawn through Menolly, in Mr Ross’s case, and through French Estates in Mr French’s case.

Brisa was incorporated as the legal vehicle to effect the development and the development lands were sold to it [Brisa] for €21m on foot of an agreement of June 30, 2003, Mr French claims.

Menolly constructed the development and it was anticipated that the development would yield a profit of €49.7m.

Because of concerns about expected profits, Mr French says he sought financial information about the development from January 2007.

Mr French’s accountants assessed the true profit as €46.4m. However, Brisa’s draft financial statements for the year ended 2007 disclosed a profit of €29.98m.