Minister for Health Dr James Reilly and Fine Gael Cllr Anne Devitt are among five people being sued at the Commercial Court in connection with an alleged contract to buy a nursing home in Co Tipperary.
It is claimed, under an agreement of November 2000, Dr Reilly and four others were to buy the Greehills nursing home for €1.95m, plus VAT, and were also to secure the release of the plaintiffs - who include doctors and solicitors - from all liabilities to Bank of Ireland concerning the property.
It is claimed notices served in April and May last requiring that agreement to be performed have expired and the defendants are in default.
The proceedings were transferred to the Commercial Court list today by Mr Justice Peter Kelly but are to be subject to mediation on consent of all sides.
Charles Meenan SC, for Dr Reilly, said his client was not objecting to transfer of the case to the court but wanted the matter referred to mediation. Dr Reilly also wished the case to be consolidated with another set of proceedings are in being relating to rent arrears at the nursing home, counsel added.
The judge noted the two sets of proceedings could not be consolidated into one as not all the parties were all the same in both cases.
However, he urged the sides to try and resolve all the issues in both cases during the mediation process and to try and behave "sensibly and commercially".
The judge has adjourned the matter to allow mediation take place. If mediation does not succeed, it will come before the court again in October.
The case is against Dr Reilly, "Seafoam", South Shore Road, Rush, Co Dublin and four other people - Paul Kelly, Mountjoy Square, Dublin; Dilip Jondhale, Pococke Upper, Johnswell Road, Kilkenny; Ciaran Flanagan, Grattan Court, Inchicore Terrace South, Dublin 8, and Anne Devitt, Lispopple, Swords, Co Dublin.
The plaintiffs are seeking orders requiring the defendants to honour contracts allegedly created in April 2011 on foot of put and call option agreements of November 2000 to buy the plaintiffs interests in the Greenhills nursing home.
Alternatively, damages are sought, including damages for alleged breach of contract.
The plaintiffs also want a declaration the defendants are obliged to keep the plaintiffs indemnified against any claim by Bank of Ireland in connection with the property.
The plaintiffs are Michele Mellotte, Tullamore, Co Offaly, and Orla Higgins, Ashfield Road, Ranelagh, Dublin, both solicitors; John Caulfield, Belgrove Road, Clontarf, Dublin, John McGreevy, Mount Prospect Avenue, Clontarf, Dublin and John Whately, Ardee Road, Dundalk, Co Louth, all doctors; Garry Smyth, a civil engineer, Ailesbury Grove, Dundrum, Dublin; Tom Murphy, an IT consultant, Wynestown, Oldtown, Co Dublin and Michael Morris, Chelmsford, Celbridge, Co Kildare.
In an affidavit, Ms Higgins said Dr Jondhale and a medical colleague, Dr Vasudha Jondhale, had promoted the development of a residential care facility for elderly persons as a tax efficient investment in summer 2000.
She said all the parties were interested in becoming involved in a suitable tax efficient investment. By autumn 2000, the parties who were to take the lead role in the project had been substantially identified. The defendants, except Ms Devitt, were denominated the Recourse Co-Owners, she said.
She said Mr Kelly in November 2000 transferred to the plaintiffs and other defendants an interest in a portion of property at Greenhills, Co Tipperary, on which the 54-bed nursing home was to be built, for shares of €55,000.
She said Mr Kelly the same day transferred the balance of the property to the same parties in shares for a consideration of €220,000.
The parties later entered into a building agreement with Conclan Ltd for €1,598,350, plus a lease agreement, with Dr Jondhale and Vasudha Jondhale who were to operate the nursing home for all the parties, she said.
To fund the purchase of the property and the development of the nursing home, the parties entered into a credit agreement in November 2000 with Bank of Ireland to provide for borrowings of IR£1.5m (€1.95m), she said. That credit agreement was later amended by another agreement of May 15th 2008.
Because the borrowings were insufficient to discharge the whole sum required for the development, the plaintiffs made an investment into the project, Ms Higgins outlined. Mr Murphy had invested IR£30,000 while the other plaintiffs all invested IR£60,000 each.
The nursing home was built and leased as agreed and had been successfully operated since April 2001.
The parties also entered into a co-ownership agreement governing the investment which identified the defendants as the Recourse Co-owners, she sad. That meant the bank had greater recourse to them concerning the borrowings advanced on the first credit agreement and had full recourse to them concerning the second credit agreement borrowings.
The intention was the nursing home would not be sold until after the tenth anniversary of its first use as a nursing home when it was agreed a sale could be effected by the exercise of a put and call option by the non-recourse co-owners, she said.
Under that put and call option agreement of November 2000, the defendants were to buy the nursing home for €1.95m, plus VAT, and were to secure the release of the plaintiffs from all liabilities to the bank concerning the property, she said.
The nursing home was first used in April 2001 and the put and call option agreement has now become exercisable, she said. The nursing home was a commercial success and is a valuable business asset, she added.
Ms Higgins said the put and call option was served on Dr Reilly on Aril 4th last requiring him to purchase the respective interests of the plaintiffs in the nursing home. That was served on him at the offices of his solicitor and other addresses at South Shore Road, Rush and his country residence at Loughton, Moneygall, Co Offaly. It was again served on May 11th 2011, she added.
The put and call option was also served on the other defendants, she outlined. The period of two months for compliance with the option notices had expired and the defendants were in default of the contract for sale and purchase of the plaintiffs interests in the nursing home, Ms Higgins said.
