A receiver appointed to take possession of Michael Flatley’s Co Cork mansion has claimed in the Commercial Court that an insurance policy the entertainer has in place does not cover all risks such as storm, flooding or criminal damage.
Kieran Wallace, who was appointed receiver by Novellus Finance Ltd over Castlehyde in Fermoy, says the cover is not adequate given the mansion is unoccupied and in a rural location.
Mr Wallace asked the court on Wednesday to discharge an interim injunction granted earlier this month to Mr Flatley preventing the taking possession or sale of the property. Mr Flatley denies the claim and says he increased cover from €4 million to €8 million on Tuesday of this week.
Mr Wallace was appointed receiver over alleged default on a €5.6 million loan by Novellus to the Lord of the Dance star’s Blackbird Film Productions company. Mr Flatley was guarantor for the loan on the strength of the value of Castlehyde.
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Kelley Smith SC, for the receiver, told the court on Wednesday there was some urgency to the application to discharge an interim injunction preventing the receiver from taking possession of Castlehyde due to the adequacy of the insurance.
The Flatley side provided policies claiming adequate cover was in place. There was cover for fire, lightning, explosion and aircraft damage, but not all risks, in particular storm, flood and criminal damage, were included, counsel said. As a result, the receiver had put in place an all-risks policy but this expires on January 2nd, the court heard.
There was concern that this was an unoccupied property, subject to a commercial lease, on the national monuments list and in a rural setting, she said. As a result of media attention, it is well known that it is unoccupied, she added.
[ Michael Flatley denies default on €5.6m loan to his film companyOpens in new window ]
Ms Smith said the receiver had indicated he was prepared not to take steps to sell the property in the event the interim injunction was discharged and an undertaking to that effect would remain in place until the full case is heard.
Three policies were provided to the receiver by Mr Flatley, two of which were “red herrings” because they had expired and the third, providing €4 million cover, did not have the all risks covered. It was the kind of cover a builder would have in place but not like the kind a receiver or a lender would have to cover all risks, she said.
Ronnie Hudson, for Mr Flatley, said his client had increased cover on Tuesday from €4 million to €8 million and an insurance broker was willing to come to court to give evidence about it. Mr Hudson said he also wanted time to put the broker’s evidence on affidavit.
He said it was their case there was adequate cover in place pursuant to the loan agreement. There was also a gardener and another person living at the property, he said.
Mr Justice Mark Sanfey said he regarded it as very serious if a substantial property such as this did not have adequate insurance, even if it was not the case that there had been a fire there previously. It was in a rural setting and unoccupied and that would give any receiver pause in relation to ensuring there was adequate insurance, he said.
He would expect the receiver has to get in to inspect the property and that the parties would put their heads together to agree some form of minimal intrusion in doing so.
The court would have to be satisfied there was insurance in place until the full case is heard, he said.
The judge had a certain amount of sympathy for Mr Hudson in that the application to lift the injunction was “sprung” upon him, but this matter should be dealt with this week. He adjourned the matter to Thursday to allow Mr Hudson file an affidavit from the broker.
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