A bank is suing estate agents Jones Lang LaSalle for some €17 million in damages over alleged "grossly" overvaluing St Patrick's Athletic Football Club lands at Inchicore, Dublin, in October 2007 at €33 million, or up to €45 million if the lands were zoned residential and commercial.
Investec Bank claims the correct value of the lands in October 2007 was between €5 million and €7 million but, based on the Jones Lang LaSalle valuation of €33 million, it made loans, secured on the lands, of some €18 million to a company of property developer Garrett Kelleher with a view to developing the site.
Three years later, in October 2010, Des Lennon of JLL put a rough estimated value on the same lands, whose zoning had not been altered in the interim, at less than €1 million, the bank claims.
'Material flaws'
The bank claims it was later advised that JLL had in October 2007 "grossly overvalued" the lands and there were "material flaws" in the methodology adopted by the firm in carrying out that valuation.
It would not have loaned the €18 million had JLL exercised due skill and care, the bank alleges. It claims JLL is liable to it for potentially more than €17 million in circumstances where neither Mr Kelleher, who had provided guarantees over the loan, nor his companies are able to repay the sums.
It is alleging professional negligence and breach of contract against Jones Lang LaSalle Ltd over the October 2007 valuation report concerning the club’s lands at Richmond Park, Inchicore, Dublin.
Mr Justice Peter Kelly this week refused to fast-track the case in the Commercial Court on grounds of the bank's delay in bringing it. Counsel for JLL, which denies the claims, opposed the case being transferred to the Commercial Court on delay grounds and it will now proceed via the ordinary High Court procedures.
In its action, Investec claims the business of the football club was operated by a firm owned by another company which was 100 per cent owned by Mr Kelleher. The club occupied a 4.2-acre site at Richmond Park under various leases.
Redevelopment plan
The bank said it understood Mr Kelleher acquired the club in 2006 with a view to redeveloping its land. His plan was to relocate the pitch within the site, providing an up-to-date stadium and leaving about 1.6 acres for mixed commercial and residential development. Mr Kelleher also apparently intended to acquire some neighbouring properties to facilitate the development, the bank said.
Mr Kelleher bought the site for about €11 million with finance from an Irish bank and later approached Investec to refinance the deal, it is claimed. He sought €18 million from Investec in October 2007, of which €11 million was for refinancing and the rest for equity release to fund another project involving construction of a tower in Chicago, Illinois.
JLL had, in a March 2007 valuation for the Irish financial institution, given a €33 million market value for the site, Investec claims. It claims it then asked JLL for an up-to-date valuation in autumn 2007 and JLL had valued it at €33 million.
