A DISPUTE between two developers over the share of profits from a multimillion-euro residential development on part of the grounds of the K Club in Co Kildare has come before the Commercial Court.
Arthur French is claiming the "true profit" from the development is some €46.4 million and this figure should have been distributed equally between him and Séamus Ross of Menolly Homes.
However, he claims, the profits have been "significantly understated" as €28.9 million with the additional €17.4 million being "wrongfully paid" or permitted to be paid or diverted by Mr Ross to Menolly.
He alleges the understatement results from several factors, including overstatement of construction costs, misallocated fees, the charging of a Menolly "management" fee of some €3.6 million and other costs.
Mr Justice Peter Kelly yesterday admitted the proceedings by Mr French, Churchfields, Straffan, Co Kildare, against Mr Ross, Barberstown House, Clonsilla, Dublin; Menolly Homes and Brisa Developments Ltd, both of Main Street, Lucan, Co Dublin, to the list of the Commercial Court.
In the action, Mr French is seeking damages or an account of profits for alleged breach of contract and of fiduciary duty.
Mr French operates estate agency French Estates and claims he had secured an option to purchase lands at Ladycastle, part of the K Club grounds. He sought a partner for a residential development on the lands and claims he entered an agreement with Mr Ross, principal beneficial shareholder of Menolly Homes in that regard. Mr French claims the agreement provided that the net profits from the development would be divided equally between him and Mr Ross.
Brisa was incorporated as the legal vehicle to effect the development and the development lands were sold to Brisa for €21 million on foot of an agreement of June 30th, 2003, Mr French claims.
Menolly constructed the development and Mr French said it was anticipated, prior to construction, that the development would yield a profit of €49.7 million. It was completed in September 2006.
Because of concerns about expected profits, Mr French says he sought financial information about the development from January 2007. Draft financial statements for the year ended June 2007 disclosed a profit of €29.98 million. Mr French says that figure confirmed his concerns.
