A COMPANY owned by property developer Bernard McNamara and communications consultant James Morrissey has initiated legal action against Dublin-based food group Aryzta for €48 million for an alleged breach of contract relating to the proposed development of 16 acres of land in Tallaght for a new town centre.

The lawsuit is being pursued by Varleigh Ltd, a company jointly owned by Mr McNamara and Mr Morrissey, against the Irish Agricultural Wholesale Society (IAWS) and a former director, Ronan McNamee, a founder of Cuisine de France.

They are being sued at the Commercial Court for some €48 million damages over alleged misrepresentation and “broken commitments” concerning an alleged agreement for the development of lands for a new town centre in Dublin.

Varleigh claim they were wrongfully induced by IAWS and Mr McNamee into entering a contract to purchase the Uniphar Pharma site at Tallaght for €52 million in October 2006.

This eight-acre site adjoins lands owned by IAWS, which is now part of Aryzta.

It is alleged that Aryzta pulled out of the development plan in mid 2007. IAWS subsequently granted Mr McNamee an option to acquire its eight acres in Tallaght for €48 million. This option cannot be exercised before July 31st, 2009.

On the basis of the alleged misrepresentations, Mr Morrissey claims he guaranteed Varleigh’s liabilities to Ulster Bank, which has a charge on the land.

The plaintiffs say the site is now valued at just €33.6 million and claim they would not have entered into the purchase were it not for the representations by the defendants.

They also claim the site would be worth substantially more – up to €117 million – had the defendants honoured an alleged agreement relating to joint planning submissions to South Dublin County Council for redevelopment of the Uniphar site and the two adjoining sites controlled by IAWS.

They further claim to have incurred fees and expenses of some €11.76 million relating to the acquisition of the site and the planning application.

The proceedings were admitted yesterday to the Commercial Court by Mr Justice Peter Kelly.

The defendants will be contending that the claims against them are “stale” and “unsustainable”, the judge heard.

While finding there was some delay in bringing the case, the judge said the most sensible course was to have it dealt with speedily in the Commercial Court.

He fixed June 23rd to hear the defendants’ application to strike out the claims and for security of costs.

In a statement issued to the stock market yesterday, Aryzta said: “The group considers the case to be without merit. A complete defence to the claim, based on the law and the facts, is being vigorously pursued.”

In documents in the case, Mr McNamee told Bernard McNamara in a letter of May 28th, 2007, that the council had failed to accept a single element of the submission concerning “our detailed masterplan” for the Tallaght lands and had instead adopted the original plan prepared by council officials.

Mr McNamee wrote that the interaction with council officials “appears to have been most unsatisfactory”.

In an affidavit to the court, Mr Morrissey said he had made efforts since July 2007, when it “became clear the defendants would not honour their commitments”, to resolve the situation and to mitigate both his own and the company’s position.