A legal bid to force property investor Paddy McKillen to sell his shares in three of London's most highly-rated hotels should be heard in London, the High Court there has ruled.
In March, a High Court master rejected Mr McKillen's application that the British courts had "no jurisdiction" to try the claims against him made by the billionaire Barclay brothers and Irish financier Derek Quinlan.
In that ruling, Master Bowles found that the British courts could hear the case against him because they had jurisdiction to hear a Barclays/Quinlan claim against the second defendant, Coroin, the hotels' holding company.
In the appeal before Mr Justice Behrens, McKillen's lawyers argued that Master Bowles had "erred" by ruling that Coroin was an appropriate "anchor defendant" because there was "no real issue" between it and the Barclays and Quinlan.
The “only real issue” at hand is the battle for control of the crucial swing shareholding in Coroin, which owns the Berkeley, the Connaught and Claridges, his lawyers argued then.
However, Mr Justice Behrens – in the latest legal chapter in the long-running and highly costly legal battle between the sides – found that Coroin “is not a nominal defendant and is a proper party to the proceedings”. He went on: “Coroin is a party with a real [rather than a nominal] interest in the litigation. The proceedings against Coroin can in no sense be described as abusive. The issue is one in which Coroin has a real interest in the outcome.
“I also agree that the issues are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”
Mr McKillen owns 36.2 per cent of Coroin, the Barclays own 28.36 per cent. The remaining shares are owned by Derek Quinlan, who is now “in severe financial difficulties” and whose shares are fully charged to secure debts to Barclay-controlled companies.
The Barclays and Quinlan contend McKillen’s shares in the company should be offered to them for sale because debts owed originally to Anglo-Irish Bank have not been repaid.
If the British courts eventually find in favour of the Barclays and Quinlan, they have said that would call a meeting of Coroin directors, inviting them to rule that McKillen’s shares had to be offered up for sale.
Mr Justice Behrens said he did not accept the argument of Mr McKillen’s barrister, Mr John Macdonald QC, that “the primary dispute” in this case is between the Barclays and Quinlan, and Mr McKillen.
“[They] are not parties to the Anglo charge and have no rights to enforce it, he said, adding that Coroin itself is “as interested” as the Barclays and Quinlan in knowing whether McKillen’s security has become enforceable.
He said it "is not in dispute that Mr McKillen is not domiciled in England. He is Irish", but added Master Bowles had ruled Coroin is domiciled in England and "therefore can be used as an 'anchor defendant"'.
Meanwhile, the judge said he did not accept "that there is no risk of irreconcilable judgments" if a court in Ireland was to take a different view to a British one on whether McKillen's shares should be put for sale.
“If, for example, in proceedings to which Coroin was not a party an Irish court were to decide that it had not become enforceable, there would be nothing to stop the directors of Coroin taking a different view.”
An English court could reach the “opposite conclusion”.
