Property developer Paddy McKillen has lost his London appeal against the billionaire Barclay brothers over control of three of London's top luxury hotels.
In a judgment handed down this morning, three judges of the Court of Appeal rejected the Belfast-born developer's charges that the Barclays had breached pre-emption rules.
The two sides have been in a legal battle for over two years for control of Claridges, the Berkeley and the Connaught hotel in London, with Mr McKillen being the single largest shareholder.
However, the Barclays currently have a majority on the board of the hotels' holding company, Coroin because they now control the shares held in the name of financier Derek Quinlan.
Today, the Court of Appeal found that the arrangements entered into by the Barclays and Mr Quinlan “did not breach” rules in the shareholders’ agreement that would have given Mr McKillen a right to buy a share of them.
"The arrangements did not involve the transfer of a proprietary interest in Mr Quinlan's shares contrary to Clause 6.17 of the shareholders agreement," declared Lady Justice Arden, Lord Justice Moore-Bick and Lord Justice Rimer.
Mr McKillen, who holds 36.2 per cent stake in the company, says he should have been offered some of Mr Quinlan’s shares and that the failure to make that offer was a wrong to him as a minority shareholder.
He had appealed Mr Justice David Richards' September 2012 judgment in the High Court for "relief of unfairly prejudicial conduct" - an appeal that was opposed by the Barclay brothers, Mr Quinlan, two Barclay-controlled companies and some of their directors.
Today, Lady Justice Arden said Mr Justice Richard’s judgment had been “meticulous and clear”, noting that the factual findings made in it had not been challenged in the Court of Appeal case by Mr McKillen.
Rejecting Mr McKillen’s claims, Lady Justice Arden said: “(He) has failed to establish any act of Coroin which could constitute unfair prejudice by reason of the 2005 charge (on Mr Quinlan’s debts) becoming enforceable.”
Predictably, both sides drew different interpretations of today’s rulings, with the Barclays welcoming the Court of Appeal’s decision to “unanimously” reject Mr McKillen’s arguments.
"(It) confirms that the Barclay family interests have always acted entirely lawfully and and properly in relation to the Maybourne Hotel Group, " they said in a statement.
Circumstances which would have allowed Mr McKillen to buy out Mr Quinlan’s shares “have not arisen”, while the judges had found that he was wrong to assert that the board of Coroin should have called meetings, but did not do so.
A Barclays director, Mr Richard Faber: "This is a complete and total defeat for Mr McKillen. He has had numerous judgements against him in this case and has lost every major point on which he has appealed."
The Irishman, who already faces a near £20 million legal bill from the costs of the case, now faces the costs of the Court of Appeal hearing, minus one-fifth of the bill.
He has been refused permission to appeal to the Supreme Court. However, a spokesman for Mr McKillen this morning insisted that the Court of Appeal had found that Mr McKillen "had found that he can call for Quinlan's shareholding to be offered to other shareholders".
“The case has always been about whether the original shareholders should have first refusal if one of them wanted out, or became insolvent. That is what the shareholders’ agreement at the heart of this case is all about.
“The Court of Appeal has confirmed this right. I am pleased that the Court of Appeal decision allows me now to require the board of Coroin to offer me the right to acquire a majority stake in Coroin,” Mr McKillen declared.
He will now demand that a board meeting of the company is held. However, since he does not have majority control of the board he is not in a position to ensure that it decides that Mr Quinlan’s shares should be sold proportionally to himself and the Barclays.
Though refused permission to appeal to the Supreme Court, Mr McKillen vowed: “I will continue to fight the Barclays brothers by any legal means to protect our staff, guests and our rights.”
