The billionaire Barclay brothers have won a bitter legal dispute against Irish property developer Patrick McKillen over the future of three of London’s most prestigious hotels.
Mr McKillen sued Sir Frederick and Sir David Barclay, owners of the Ritz hotel and the Telegraph newspaper group, as well as companies controlled by them, over their attempts to gain control of Coroin, the company that owns Claridge’s, the Connaught and the Berkeley hotels.
The Irish property developer had alleged during the High Court trial that the publicity-shy Barclay brothers had engaged in “dishonourable” and “unlawful” behaviour to gain control of the properties.
The five-month trial gave a rare glimpse into the world of the super rich and threw up colourful details of the work of Tony Blair Associates and meetings between former prime minister Tony Blair and the Qatari royal family.
It also detailed meetings with interested financiers including Walter Kwok, the Hong Kong billionaire and former chairman of Sun Hung Kai Properties.
Mr McKillen had also claimed in the trial that “significant payment was made from the Barclay brothers’ organisation to the wife of Derek Quinlan, an Irish financier who was also a shareholder and founder in Coroin.
During the trial, the High Court was told that Mr McKillen, who owns 36.2 per cent of Coroin, and other Irish investors including Mr Quinlan, set up the company to buy the trophy hotels in 2004, “riding a wave of cheap and easy Irish debt” provided by Irish banks.
By 2009, a number of the shareholders had withdrawn and “things were not looking so rosy” after the Irish banks that funded the deal had “gone bust or been nationalised”.
In January last year the Barclays gained a foothold by buying one of the shareholders, Misland, for £70m. Mr Quinlan’s debts were then taken into the National Asset Management Agency, Ireland’s “bad bank”.
The Barclays seized the opportunity to do a deal with Nama to buy Mr Quinlan’s debts, giving them effective control of his stake in Maybourne Group, which is a subsidiary of Coroin.
Mr McKillen’s High Court action alleged the Barclay brothers infringed his “pre-emption rights” to have first refusal on the stakes of any other investors in the hotels that came up for sale.
However, Mr Justice Richards ruled against Mr McKillen’s claims and said that no agreements had been made with Mr Quinlan which triggered or breached the pre-emption provisions.
He also found there were no breaches of duties of good faith in the shareholders’ agreement and said that Sir David and Sir Frederick Barclay and the Barclay companies acted lawfully in their dealings.
“The overall conclusion is that Mr McKillen’s petition and claim fail and will be dismissed,” the judge ruled.
In a statement Richard Faber, speaking on behalf of the Barclay companies, said: “After 30 days in court the judge has looked in detail at every aspect of Mr McKillen’s case, and has found it to be without any merit.
“It should never have been necessary for the Barclay interests to defend these baseless proceedings, which we always believed were an attempt by Mr McKillen to tarnish the Barclay interests’ reputation in the misconceived hope that they would then sell out to him.“
Mr McKillen said in a statement that he was “disappointed” with the ruling but he still continued to have the largest shareholding in Maybourne, a subsidiary of Coroin.
He said he was exploring “all legal avenues” and signalled he would consider appealing the ruling.