Reilly and others agree to €1.9m judgment

Health Minister James Reilly, Fine Gael Cllr Anne Devitt and others have consented to judgment orders for €1.9m being made against them at the Commercial Court under a settlement of proceedings over an alleged contract to buy a nursing home.

The case came before Mr Justice Peter Kelly at the Commercial Court yesterday when Bernard Dunleavy, for the plaintiffs, said it had settled on confidential terms.

Charles Meenan SC represented Dr Reilly while the other defendants were also represented by counsel.

When the judge said the settlement required a number of orders which had to be made in public court, Mr Dunleavy said he had been asked to tell the court the settlement was confidential.

The judge, reiterating the orders sought had to be made in public, made those orders in public but said other terms of the settlement, which did not require any orders, could remain confidential.

Under the settlement, Dr Reilly and the other defendants have all consented to judgment for €1,904,607 being entered against them jointly and severally, plus interest and costs, with a stay on execution of judgment until Apr 30. They have also consented to indemnify the plaintiffs concerning any liability to Bank of Ireland under a co-ownership agreement relating to the nursing home.

In their action, the plaintiffs alleged, under an agreement of Nov 2000, that Dr Reilly and four others were to buy the Greehills nursing home for €1.95m, plus VAT, and to secure the release of the plaintiffs from all liabilities to Bank of Ireland relating to the property.

It was claimed notices served in April and May 2011 requiring that agreement to be performed had expired and the defendants were in default. The nursing home was a commercial success and a valuable business asset, the plaintiffs said.

The proceedings transferred to the Commercial Court list in July but were adjourned for mediation.

In an affidavit, plaintiff Orla Higgins said defendant Dr Dilip Jondhale and a medical colleague, Dr Vasudha Jondhale, promoted the development of a residential care facility for elderly persons as a tax-efficient investment in summer 2000. By autumn 2000, the parties who were to take the lead role in the project were substantially identified and the defendants, except defendant Anne Devitt, were denominated the recourse co-owners.

To fund the development, the parties entered into a credit agreement in Nov 2000 with Bank of Ireland to provide borrowings of £1.5m (€1.95m). As those borrowings were insufficient to discharge the whole sum required for the development, the plaintiffs made an investment in the project, Ms Higgins said.

Tom Murphy invested £30,000 while the other plaintiffs each invested £60,000. The nursing home was built and leased as agreed and had successfully operated since Apr 2001.

The intention was the nursing home would not be sold until after the 10th anniversary of its first use as a nursing home. Under a put and call option agreement of Nov 2000, the defendants were to buy the home for €1.95m plus VAT, and to release the plaintiffs from all liabilities to the bank concerning the property.