The billionaire Barclays brothers’ hold over financier Derek Quinlan’s shares in a luxury London hotel group at the centre of a major legal battle with property developer Patrick McKillen will not be reversed, Mr Quinlan’s lawyer has said.
The declaration was made during the final day of a Court of Appeal hearing into Mr McKillen’s challenge to a High Court ruling last year which ruled that he had not been improperly barred from buying Mr Quinlan’s shares.
“McKillen’s appeal involves him ignoring many of the facts found against him, and seeks to mischaracterise much of what held in his judgment,” said Mr Quinlan’s barrister Stephen Auld.
Rejecting Mr McKillen’s arguments, Mr Auld said Mr McKillen seeks a court order to force Mr Quinlan to sell his Coroin shares, thus giving the Belfast businessman “a majority holding that he has not enjoyed previously”.
Coroin’s “very successful” hotels, the Berkeley, the Connaught and Claridges, have been “effectively” put on hold by Mr McKillen’s claims that he has been the victim of conspiracy and unfair prejudice
Mr McKillen’s conspiracy claims had been dismissed by the High Court as “hopeless”, while the unfair prejudice charge, which had included a “huge number of false allegations”, had been entirely dismissed, Mr Quinlan’s barrister added.
His client, he said, had not conspired with anyone or had acted unfairly towards Mr McKillen, and had observed the shareholders’ agreement that was set down in 2004 when the company was set up to buy the hotels, along with the quickly-sold Savoy.
In a skeletal argument, Mr Auld said Mr McKillen had made “an inappropriate and unpleasant application” against Mrs Quinlan’s wife, Siobhan, for disclosure of the family’s personal finances. “That was dismissed with indemnity costs will give the Court of Appeal an insight into Mr McKillen’s approach.”
Defaulted on debts
During exchanges the appeal judges queried Mr Auld’s assertions that clauses in the shareholders’ agreement would bring pre-emption clauses into life if a shareholder defaulted on debts.
Mr Auld said Mr Quinlan’s failure to meet an interest payment deadline with the Bank of Scotland – which had a charge over some of his Coroin stake until bought out by the Barclays – did not count because the bank had accepted payments 60 days later.
Lord Justice Rimer questioned whether a bank would prefer to “have someone onside who is reliable”, adding that Mr Auld’s argument amounted to a belief that Mr Quinlan “would get 60 days every month to pay interest”.
However, Mr McKillen’s barrister, Lord Peter Goldsmith, recited a list of judgments made against Mr Quinlan, including a number made in the Irish courts along with the “consensual” return of his yacht to a lender.
The defaults committed by Mr Quinlan were not “trivial” matters, argued Lord Goldsmith, particularly since it was now clear that the charges held on Mr Quinlan’s shares by the Barclays would never be enforced because they have everything they want.
Numerous events
“Mr Quinlan has committed numerous events of default. The only reason why the charges are not being enforced is that the people who have them do not want to trigger pre-emption rights,” the former Labour attorney-general told the court.
The company had been set up in 2004 with “good faith” rules at the heart of the shareholders’ agreement. If the Barclays “are right and we have done what we have done and you cannot do anything about it then it means that good faith provisions do not have real content”, he added.
