Paddy McKillen seeks to have hotels case heard in Ireland

Property developer Paddy McKillen has asked a UK court to let the Irish courts decide if he should sell his shares in three London luxury hotels to the Barclay brothers and financier Derek Quinlan.

The hearing before a Master of the High Court in London yesterday followed a £20 million legal battle in London courts over the last two years. Mr McKillen has argued that British courts have jurisdiction in the matter and should have ordered that Mr Quinlan's shares in the hotels be sold to him.

He was unsuccessful in his actions and the Barclays and Mr Quinlan are now taking their own case, claiming the IRBC's security on Mr McKillen's shares in Coroin – the holding company which owns Claridge's, the Connaught and the Berkeley – has now become enforceable following the liquidation of the bank.

Under the Coroin shareholders’ agreement, his shares should now be offered to them, they claim, giving them control of the hotels.

Majority control
Mr McKillen now wants this action heard in Dublin. He is also seeking to bring an new action in Dublin to force Mr Quinlan to sell his shares to him. Last month, it was learned that Mr Quinlan had lodged a High Court bid in London to stop Mr McKillen from taking legal action in Dublin to force him to sell his shares. A proportional division of Mr Quinlan's shares, if that happened, would give the Belfast-born developer majority control of the company.

Yesterday, the three sides returned to the High Court in London to appear before Master Bowles to argue over where the Barclay's challenge should be held. Mr McKillen's counsel, Mr Alan Johnson argued that the Barclays/Quinlan challenge should be heard in the High Court in Dublin.

Mr McKillen is domiciled in Ireland, Mr Johnson declared, adding that there is plenty of case law that makes it clear that "a defendant is entitled to be sued in the courts in the place of their domicile".

'Proper forum'
"It isn't that Mr McKillen has started proceedings in another jurisdiction. The question is that he started proceedings in the proper forum, which we say is Ireland," Mr Johnson told Master Bowles, who will decide on the jurisdiction question.

Rejecting arguments that parallel legal actions in Ireland and Britain threatens chaos, Mr Johnson said Coroin itself has “stayed neutral” in the long-running battle.

There is no risk of “irreconcilable judgments”, he insisted, since the eventual judgment of the High Court in any case involving Coroin would be honoured by the company and it is “fanciful” to argue otherwise.

Rejecting the arguments, Mr Kenneth MacLean, counsel for the Barclays and Mr Quinlan, said: “In the past Mr McKillen has been content to invoke the jurisdiction of the English court in his dispute with the claimants.”

Shareholders' agreement
The crux of the case lies in a clause in the shareholders' agreement drawn up when the hotels, along with the Savoy in London, were bought in 2004 by a consortium put together by Mr Quinlan.

This lays down that the stake held by any shareholder should be sold within the month if the shareholder is declared bankrupt anywhere in the world, or if any securities offered by the shareholder become enforceable.

Master Bowles, argued Mr MacLean, should order that the Barclays/Quinlan case be heard in London if there is a risk that “irreconcilable claims” could exist if cases were dealt with separately in two jurisdictions.

“The only answer that can be given in the hypothetical sense in which it can be asked is yes, objectively, there is a risk,” he said, adding that the master is being asked “to speculate” that Coroin would honour a judgment made in an Irish court.

Mr MacLean went on to argue that it is “completely unprecedented” for someone to argue that a shareholder in an English-registered company should be barred from going before an English court because of an action being taken, or planned by someone in another jurisdiction.