Desmond, Smyth head for court

A dispute over fees between solicitor Mr Noel Smyth and businessman Mr Dermot Desmond is heading towards the High Court.

The case, should it come to court, is likely to be highly controversial as it arises from the Telecom affair of the 1990s, the scandal involving dealings in the former Johnson Mooney & O'Brien (JMOB) site in Ballsbridge, Dublin. Mr Smyth acted for Mr Desmond and some of the companies involved in dealings at the core of the affair.

The matter was mentioned yesterday in the Master's Court, where a motion was adjourned for four weeks. Among other roles, the Master's Court oversees the exchange of affidavits and other documents between parties while a case is making its way towards a full hearing.

It is believed the amount involved in the dispute between the two men is relatively small compared with the wealth of both parties and that relations between the two men are less than cordial. Any court clash is likely to be a robust one. No comment was available from either man yesterday.

In July 1993, an inspector appointed under the Companies Acts, Mr John Glackin, published a report on the dealings in the Ballsbridge site.

The liquidator to the JMOB group, Mr Tom Grace, was paid £4 million (€5.08 million) for the site in August 1989. It was bought by a company called Chestvale, pursuant to a contract entered into earlier between JMOB and United Property Holdings (UPH). UPH was a property investment company linked to Mr Desmond's NCB stockbrokers, which invited high-net-worth individuals to invest in it by taking out shares.

After the £4 million sale, the JMOB site was subject to a series of transactions involving Chestvale, Hoddle Ltd and Delion Investment Dealings Ltd, before being sold to Telecom in June 1990 for £9.4 million.

Mr Smyth acted as solicitor to Chestvale and Hoddle up to September 29th, 1991. He acted in a key deal which occurred between UPH entering into its agreement with JMOB, and that sale being concluded.

Mr Glackin found that when Mr Smyth made an offer of £6.3 million for UPH's interest in the deal on the JMOB site, in June 1989, he did so on the instructions of Mr Desmond. The offer was accepted without UPH knowing that Mr Desmond was Mr Smyth's client or that Mr Desmond knew Telecom was interested in the Ballsbridge site, according to Mr Glackin.

Dr Michael Smurfit, chairman of Telecom at the time of the JMOB deal, was an investor in UPH, although the inspector found in his report that there was no evidence to show that Dr Smurfit was aware of the affairs of UPH at the time Telecom was purchasing the Ballsbridge site.

Likewise, Dr Smurfit did not know of Mr Desmond's interest in the site when discussing Telecom's possible purchase of it with Mr Desmond.

The inspector found that Mr Desmond had a beneficial interest in the site, by way of a company called Freezone Investments Ltd, in the Isle of Man. Mr Desmond had contested this in his meetings with the inspector.

Mr Desmond has always strongly contested the findings in Mr Glackin's report.