DDDA seeks security for costs from Donatex over €108m claims

THE Dublin Docklands Development Authority has brought a preliminary application aimed at having developer Bernard McNamara’s company Donatex Ltd provide security for the costs of their legal action alleging the authority exposed them to claims of more than €108 million over the purchase of the Irish Glass Bottle site at Ringsend.

The motion for security of costs was mentioned yesterday before Mr Justice Peter Kelly who listed it for hearing on February 10.

The motion was due to have been heard next Monday, but the sides have agreed to defer it on terms including requiring Donatex to file a replying affidavit by January 22.

The action against the DDDA has been brought by Mr McNamara and Donatex arising from their involvement in the €412m purchase of the IGB site.

Earlier this week, judgment for some €62.5m and some €98m was entered respectively against Mr McNamara and Donatex arising from failure by Donatex to repay loans given to it by private investors for the IGB site acquisition. During those proceedings the court heard neither Mr McNamara nor Donatex could pay the sums sought.

Mr McNamara and Donatex had last November initiated their action against the DDDA. They claim, because of a High Court finding in 2008 that the DDDA acted outside its powers in how it fast-tracked permission for another docklands development at North Wall Quay, the DDDA was never entitled to enter in November 2006 into an agreement involving Mr McNamara and developer Derek Quinlan related to development of the IGB site.

They allege the DDDA was unable to perform its obligations under that IGB agreement and therefore frustrated the ability of Mr McNamara and others to develop the site, meaning very substantial losses for them.

Mr McNamara said he faced potential claims totalling more than €108m on foot of loans raised from Anglo Irish Bank and private investors with Davy Property Holdings Ltd and on the basis of guarantees given by him related to those loans.

Mr McNamara claims the Dublin Port Company and South Wharf plc had in September 2006 advertised the IGB site for sale by tender.

He claims then DDDA chief executive Paul Maloney approached him a month later about becoming involved with the authority in submitting a bid for the IGB site. Mr McNamara claims he initially indicated he was not interested as he believed it would not be possible to generate a profit from the site.

He alleges Mr Maloney had further meetings with him and made several representations, including that the DDDA could “fast-track” any application for permission for development without the planning risk of third party observations or appeals to An Bord Pleanála. On that basis he said he would be prepared to consider a joint bid with the DDDA for the site.

Beebay Ltd was incorporated and used by himself and the DDDA to bid for the IGB site. Mempal Ltd, a company controlled by Derek Quinlan, later acquired an interest in Beebay. In November 2006, Donatex held 41%, Mempal 33% and DDDA 26% of Beebay.

In late January 2007, Beebay’s tender was accepted and it acquired the site for €412m with funds of €288m from Anglo Irish Bank (later converted into a joint facility provided by Anglo and Allied Irish Bank), €57.5m from Donatex, €32.1m from the DDDA and €46.3m from Mempal.