COCA-COLA is suing a businessman over substantial losses allegedly suffered over his failure to honour a contract of May 2008 to buy 9.3 acres of lands near Tuam, Co Galway, for €6 million.
The lands are now valued at €1.4 million, Coca-Cola Bottling Company (Dublin) Ltd claims.
Mr Justice Peter Kelly found yesterday John McCann had advanced an arguable defence against the company’s claims which required the case go to a full plenary hearing and disentitled the company to summary judgment. Coca-Cola had argued there was no arguable defence.
Mr McCann, Loughross Road, Crossmaglen, Co Armagh, alleges he cannot perform the contract due to the company’s own conduct. He claims the company, for its own business reasons, breached an agreement with him to lease premises on the site for its drinks distribution business and had since ceased distribution from the site, where it had been based for 30 years. This, combined with the economic downturn and a fall in the value of the site, resulted in his bank refusing in December 2008 to finance the project further, he claims.
He claims the May 2008 contract was to involve the sale to him of the lands on which the company’s drinks distribution warehouse was situated and he was to build a new warehouse to be leased back to the company at a rent of €280,000 annually, with upward-only rent reviews every five years. It was intended the new premises would take up some 2.5 acres of the site and he would have the rest to let, sell or develop, he claims.
An agreement to that effect was to have been executed without delay but a draft agreement was not given to his solicitor until December 2008 and this was not detailed, he claims. In the interim, Coca-Cola Ireland had reviewed its business arrangements and he was informed in September 2008 the company’s new managing director had asked it to hold any progress on the Tuam depot until he had a full understanding of the plan for the business across Ireland.
Coca-Cola later discontinued its distribution business and he understood it now engages contractors to carry on that business.
The Irish economy also suffered a severe downturn from May 2008 and his bank, Bank of Scotland Ireland, had in December 2008 asked for an up-to-date valuation. When he obtained that, the bank refused to finance the project any further and it was in those circumstances he was unable to perform the contract. Mr McCann has also taken issue with the company’s claim of losses of €4.375 million on the basis of an alleged fall of more than 75 per cent in the site’s value.
Savills have estimated the value of the lands at €1.4 million, but Mr McCann claims the alleged losses do not take into account several factors including the proposed leaseback arrangement. Savills made statements “completely irrelevant” to the valuation of these lands, including that it took into account the limited demand for industrial premises, very significant falls in rental value and that it would take several years for the supply of property to be absorbed by the market, he claimed.
In a letter from Jones Lang Lasalle exhibited by Mr McCann, the company said they were not in a position to comment on the valuation reached by Savills. However, they stated no account was taken of rents to have been paid by the company to Mr McCann under the proposed lease agreements, the value of which they estimated at some €6.1 million.
