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Archive for November 7th, 2011

“Power and money is what I have and I will put you back on a bicycle” what Gina Farrell claimed Sean Dunne said to her

Well this is a pantomime that has something for everyone, an everyday tale of a court case between rich folks in a block of “luxury apartments” in Foxrock and the cleaner employed to, well, clean the common parts. You’ll be entertained by the apartment owner who wants their carpet hovered in a way which will give it the stripe effect you get on a pristinely-mown lawn; you’ll be enthralled by the evidence of the documents expert who spends a day evidencing how cleaner attendance records were altered, but most of all you’ll be mystified at how enormous legal and other costs were run up in the pursuit of a relatively small sum of money. And you’ll roll around laughing at the Keystone-cop abilities of accountants, solicitors and even the judge himself.

Today the Courts Service published the judgment in the recently-heard case between the management company of an apartment block on Brighton Road in Foxrock, Dublin and the cleaner Gina Farrell. The apartment block was built by Sean Dunne, now one of NAMA’s top developers and a developer against whom the agency took enforcement action over the summer. Sean, known as the “Baron of Ballsbridge” on foot of his plans and dealings in the upmarket Dublin district in the early 2000s saw receivers appointed by NAMA to several of his properties in July 2011. In respect of this case, Sean is associated with just nine apartments in the 48-apartment complex but according to the judge, Ms Justice Mary Laffoy, it is Sean himself who is the prime instigator in the case “I am satisfied on the evidence that Mr. Dunne, who did not testify, was the instigator of the initiation of these proceedings.” The defendant, Gina Farrell, was the owner of a management and cleaning company employed to provide cleaning services to the complex between 2003 and 2006.  The case centred on allegations of overcharging of the management company by the cleaner.

There is a handful of other cases ongoing between Sean and Gina, possibly the most interesting being the one alleging the hacking of Gina’s phone. Maybe that one will be disposed of in time for the 2012 pantomime season. There is plainly a fractious relationship between the two, the quotation at the top of this blogpost which Gina attributed to Sean during the hearing over the summer, appears to be typical.

To summarise this present case whose judgment was published online today, the management company engaged Gina to clean the common parts and other parts of the complex in 2003 but it did not renew the contract in 2006 and subsequently launched court action alleging overcharging and breach of contract. Sean is associated with nine of the 48 apartments and is said by the judge to have instigated this case by the management company against their former cleaner.

It’s an entertaining 19,000-word read; nobody comes out of the case looking distinguished with the impression that Sean is spending a disproportionate sum of money to pursue a relative pittance, and Gina contradicting her previous statements and ultimately admitting that she did alter cleaner attendance records.

In respect of Gina the judge says “finally, I found Ms. Farrell’s evidence in relation to the work to which the invoices referred to in column 4 related casual, contradictory and wholly unreliable.”

Sean is at the receiving end of a provocative conclusion by the judge at one juncture that “in any event, on the totality of the evidence before the Court, including Ms. Farrell’s letter dated February 2004, in my view, it is reasonable to infer that the objective of Mr. Dunne’s involvement of Ms. Farrell in relation to the cleaning of his home at the time to which the invoices in column 3 of the table relate was to ensure that Ms. Farrell, and not Mr. Dunne, would be retaining and would be seen to be retaining the individual who rendered the services, who did not have a work permit.”.

The supporting characters don’t come off very well either; you’d have to ask questions about the role of Sean’s solicitors given that the defendant in this case was originally a limited company which Gina controlled (All First Property Management) but which was struck off in 2008 and therefore couldn’t be sued, or pursued for costs incurred at the start of the case back in 2006. The judge said “I fail to understand why steps were not taken by the plaintiff to have All First restored to the Register of Companies, so that the proceedings could be continued against All First and issues in relation to reserved costs, for example, the costs of the interlocutory injunction, which must be substantial, could be resolved” It was also cringeworthy to see the judge dismiss part of the claim because it wasn’t the management company but one of Sean’s companies, not joined in this case, that was established to have suffered loss – in other words Sean won the point but the company which suffered the loss wasn’t part of this case!

Then there’s the accountant, a partner no less at BFCD Chartered Accountants, with the perfect stage-name Dara O’Gaora about whom the judge said “[he] produced a schedule, which, apart from being inaccurate in a number of respects, quantified the loss on the basis of subtracting the sum of €28,800 from the VAT inclusive sums actually paid to Ms. Farrell over two twelve month periods in relation to the “2004 Contract” and “2005 Contract””. There is also what seems like a bit of sarcasm on the judge’s part when he notes that Sean’s lawyers didn’t know that personal cleaning costs has been charged to Sean’s loan account with one of his companies “it would appear that Croskerrys [solicitors who have acted for one of Sean’s group companies, DCD] were not told what the court was told – that DCD recharged the relevant amounts to Mr. Dunne by charging his loan account at the end of the year, as Mr. Martin testified on the eleventh day of the hearing.”

And of course, the pantomime wouldn’t be complete without a judge who uses the following logic when deciding on the quantum of the award in favour of the management company in the case – “although there is no scientific basis for this approach, I think a fair method of assessment of the loss to the plaintiff as a result of the plaintiff’s breach of contract is on the basis that it is equivalent to one fifth of the aggregate of the monthly payments made to her inclusive of VAT over the 31 month period from August 2003 to February 2006 (€112,592). Accordingly, on the second element of the plaintiff’s claim, I assess damages for breach of contract at €22,518.40” Given that this was a case where the management company was claiming that only one cleaner turned up, instead of the two referred to in a draft contract, you might have expected a 50% award, but no, without any “scientific basis for this approach”, it’s 20%!

And as for NAMA’s supporting role, this is where the matter becomes more interesting to the general audience of this blog. Sean Dunne reportedly owed €350m in loans to Irish Nationwide Building Society and Bank of Ireland, and these loans have now transferred to NAMA. According to the judgment today Sean not only ensured that a €150,000 cheque written by Sean’s wife, Gayle was lodged with the High Court as a security for costs but Sean gave an indemnity to the management company against losses in the case (remember that Sean’s nine apartments comprise a minority of the 48 in the complex). The judgment says Gina’s “solicitors wrote to the National Asset Management Agency (NAMA) on 12th July, 2011 inquiring as to the attitude of NAMA to the funding by Mountbrook or Mavior [the current and former names of Sean’s main corporate vehicle] of this action and the position of that company with regard to honouring the indemnity provided to the plaintiff, should Ms. Farrell be successful in defending the proceedings. The basis on which the information was sought was that Ms. Farrell was considering bringing an application to Court for additional security for costs. Predictably and understandably, in its response dated 18th July, 2011, NAMA indicated that it was bound by duties of confidentiality to the borrowers whose loans it had acquired and declined to confirm whether Mountbrook/Mavior is a debtor within the meaning of the National Asset Management Agency Act 2009, or whether loans advanced to Mountbrook/Mavior had been acquired by NAMA.”

There is no record of NAMA intervening in the conduct of this case but you might wonder how a company with colossal loans which are in default can be allowed by a major creditor to continue to pursue a case which the judge indicates was not economic “On any objective assessment of the optimum result which would be likely to be gained by pursuing these proceedings against Ms. Farrell, if the plaintiff were to succeed in its claim, against the likely cost to the plaintiff, if the claim were to be unsuccessful or only partially successful to an extent which would not attract High Court costs, one has to conclude that it is highly unlikely that, if the plaintiff was relying on its own resources, namely, the service charges paid by the apartment owners, the action against Ms. Farrell would have been pursued as it was. Leaving aside the legal costs, these proceedings have generated a substantial amount of expert fees. At 3rd August, 2010, in replies to a notice for particulars, the plaintiff’s solicitors indicated that costs aggregating €70,867 had already accrued in respect of three experts who had investigated the claims against the defendants.”

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