Gayle Killilea ‘needed’ €19m hotel sale to fund UK deal

The multimillionaire wife of bankrupt property developer Seán Dunne planned to use the money from the sale of a €19 million South Africa hotel to pay for a €7 million property in the UK, a Cape Town court was told.

In a judgment published by South Africa's High Court in January, Judge James Yekiso explained why the court granted an injunction in October 2014 that would have sequestered the sale proceeds of the Lagoon Beach Hotel in Cape Town, owned by Mr Dunne's wife, Gayle Killilea.

The hotel was part of €100 million in assets, about a fifth of Mr Dunne's fortune, that he transferred to her which are the subject of court actions in Ireland and the United States.

The developer’s Irish and American bankruptcy officials want to reverse the transfers to recover the assets for the repayment of his debts.

In March 2013 Mr Dunne filed for bankruptcy in Connecticut, where he and Ms Killilea moved in 2010, with debts of $942 million, about €700 million at the time, including about €250 million to the National Asset Management Agency.

He was declared bankrupt again, in Ireland, four months later in a court action taken by Ulster Bank.

Bankruptcy

Chris Lehane

, Mr Dunne’s official assignee in his Irish bankruptcy, applied to the South African court in September 2014 seeking an injunction that would seize the proceeds from the hotel sale if the transaction were to proceed.

According to the judgment, the hotel was to be sold for 260 million South African rand (€18.6 million) on September 30th and Ms Killilea would receive the sale proceeds as its owner. Its website states it is the only hotel in Cape Town with direct beach access.

Ms Killilea, a former gossip columnist, argued that if she didn’t get the sale proceeds she would breach an agreement to buy a property in the UK for £5 million (€7 million) and that she stood to forfeit a £1 million deposit on that property and a further £250,000 spent on renovations on it.

The judge discounted her argument, noting that she had concluded the UK property purchase in March 2014, four months before agreement was reached to sell the South African hotel. She did not state that she was unable to raise the balance of the purchase price from other sources, the judge said, and that it was “overwhelmingly probable” she had other sources of capital, noting that she could afford the £1 million deposit and £250,000 for renovations.

Judge Yekiso pointed out that Mr Dunne had gifted her €58 million in June 2005. This relates to Mr Dunne’s purchase of Walford on Shrewsbury Road, Ireland’s most expensive house, for his wife who now spends most of her time in the UK.

The judge ruled in favour of Mr Lehane, saying that efforts to trace the flow of proceeds from the hotel sale would be “nigh impossible given the ease with which funds can be transferred internationally, privacy of banking transactions and the fact that Mrs Dunne controls a network of companies registered in multiple jurisdictions around the world”.

Mr Dunne and Ms Killilea are embroiled in long-running litigation in the US. Legal actions have been taken in four US courts, including three in Connecticut, where the couple made their home in 2010.

The developer's US bankruptcy trustee, Richard Coan, has filed legal claims on properties in Connecticut and New York, making it difficult to borrow against them or for them to be sold. Mr Coan claims that they were purchased with money fraudulently transferred to Ms Killilea.

The couple deny his claims, saying that the money was transferred under agreements in 2005 and 2008 when Mr Dunne was very wealthy.