Judge refuses bid by Duddy group to stop receiver’s sale of hotels

Dispute centres around disagreement over alleged failure to divide up assets

The High Court has refused to grant the Duddy Hospitality Group injunctions, including one restraining receivers from selling a Dublin-based hotel.

Mr Justice Rory Mulcahy said he was also not prepared to grant the Duddy group orders restraining the UK-based Propiteer Group from appointing or removing directors to firms involved in the running of the IBIS Red Cow Hotel in Clondalkin, Dublin.

The judge said that while he was satisfied that the Duddy Group had raised a serious issue to be tried, he was not granting the injunctions because damages would be an adequate remedy if the plaintiffs are successful in the full action.

The judge said the plaintiffs had not identified significant factors to show that the risk of injustice was such that they should be given the injunctions.

The dispute between the parties, he said, was self-evidently “a commercial dispute” and “the investment in the hotel was for no other purpose than to receive a commercial return.”

The judge added that it was in the best interests of the parties that the matter be resolved as speedily as possible and said that he would facilitate an early hearing.

Had the injunctions been granted, they would have remained in place pending the outcome of the case.

In his ruling the judge said that assets, including the hotel, are at the centre of a dispute between the Duddy and Propiteer Groups over an alleged breach of an agreement to divide up assets the parties had jointly owned.

Arising out of the dispute Duddy Hospitality Ireland Holdings Limited, Brendan Duddy and Lawrence Duddy, which are all part of the Duddy group, sued Propiteer Ireland Holdings Limited, DADAC Ltd and Propiteer Ltd.

The plaintiffs have also sued Colin Sandy and David Marshall, who are principals of the Propiteer group.

The defendants opposed the injunction applications on several grounds, including that the plaintiffs had delayed in seeking the orders and that there had been wrongdoing and an absence of “clean hands”.

The judge said that both sides in the dispute had made “allegations of misappropriation of funds, which were met with denials and explanations”.

While the questions “remain unanswered” the judge said that he was not making any conclusion at this stage of the proceedings that there had been any alleged absence of clean hands.

Similarly the court was not prepared to dismiss the injunctions on the grounds of delay.

The Duddy group has sought orders preventing receivers, insolvency practitioners Ken Fennell and Andrew O’Leary it claims were wrongfully appointed over the hotel by the defendants, from selling the business.

The Duddys claim that the sale of the hotel, originally due to take place late last year, would prejudice their position.

The Duddy Group also claims that the defendants have tried to remove directors from the boards of two companies associated with the hotel and had been seeking to replace them with their own nominees.

The defendant group, it is claimed, is not entitled to do this. All allegations of wrongdoing are denied.

The two groups had allegedly been partners in several joint ventures. After differences emerged between them in 2019 it was decided to divide up the shared assets and separate.

It is claimed that in 2020 the groups entered into settlement agreements regarding the various jointly held assets.

The Duddy group claims that as part of those arrangements it would get ownership and control of the IBIS Red Cow Hotel and related companies.

However, it claims that the Propiteer group breached the settlement agreements. It also claims that the defendant acquired the debt owed on the hotel, and has prevented the Duddy group from ultimately taking ownership of the hotel.

In its action the Duddy Group seeks orders including the specific performance of the agreements allegedly entered into by the parties in 2020, having been determined by the courts.

It also seeks orders removing the receivers appointed over certain assets, including the hotel.

The action is fully opposed. The Popiteer group rejects claims that it has breached the agreement, or that it attempted to obstruct the plaintiff’s efforts to obtain refinancing for the assets as alleged.

It also alleges that the settlement agreement has been superseded by a subsequent call-option agreement due to the plaintiff ’s alleged failure to satisfy certain conditions, including obtaining refinancing.

The receivers also deny any wrongdoing.

The matter will return before the court later this month.