A High Court judge yesterday said there was no evidence before him to support a claim by a Derry building firm that the former Taoiseach, Mr Albert Reynolds, had personally received £400,000 sterling from the company and that this money was not repaid but had "disappeared".
Mr Justice McCracken dismissed an application to direct Mr Reynolds to lodge £500,000 in court in advance of legal proceedings against him and others in which O'Neill Brothers (Building Contractors) Ltd, of Penny burn Industrial Estate, Derry, allege Mr Reynolds personally received £400,000 sterling from the company in relation to dealings regarding possible construction projects.
The judge told Mr Des Murphy, for O'Neill Brothers, that Mr Patrick Kelly, solicitor for O'Neill Brothers in the firm of Brendan Kearney Kelly & Co, solicitors, Derry, had sworn an affidavit that Mr Reynolds had received £400,000 sterling in three payments on dates in 1997 and 1998 from O'Neills.
He said Mr Kelly said that the money was paid to Mr Reynolds in anticipation that he or his friends would provide finance or financial contacts for joint projects in Swords and Derry and, if the projects did not proceed, the money would be returned.
Mr Kelly had said that not only had the money not been returned but it had disappeared, and no explanation of its whereabouts had been forthcoming.
The judge said there was "not a whit of evidence" to support the claim that Mr Reynolds personally got the money and that it had disappeared. That was an allegation of embezzlement. "That is a very serious allegation and it is utterly and totally unjustified, and I am surprised that any solicitor would put that on record," he said.
Mr Murphy said he had edited the legal documents and had taken a particular view of the case. He had correspondence showing Mr Reynolds had acknowledged he had to and wanted to pay back the money. It was not a view he had "picked out of the air".
The judge said Mr Murphy was seeking "unheard of" conditions to be attached to the motion before the court in which counsel had sought that if Mr Reynolds was to be allowed additional time to file a defence, a condition of extending time should be that Mr Reynolds lodge £500,000 in court.
The judge said it was unjustified at this stage of the proceedings to make such allegations. He would allow Mr Reynolds three weeks to file a defence but refused the application that Mr Reynolds lodge £500,000 in court. He awarded costs of the motion against O'Neills on the basis that counsel's approach to the matter was unjustified.
Mr Martin Hayden, for Mr Reynolds, had opposed the application, saying Mr Murphy was effectively seeking a mareva order (an injunction freezing or restraining the disposal of assets) when there was no justification. His client had not received the money and there was no merit to the application.
O'Neill Brothers last year initiated legal proceedings against Mr Reynolds, a Co Meath businessman, Mr Patrick Russell, of Old Forge, Hill of Down, Enfield, and Universal Management Consultants Ltd (UMC), St Helier, Jersey.
Yesterday, after being told that neither Mr Russell nor UMC had entered an appearance in the action, Mr Justice McCracken granted O'Neills' application for judgment in default of defence against them. Last June the High Court granted an injunction restraining Mr Russell from reducing his assets below £875,000 pending the trial of the action.
O'Neill Brothers claims to have had extensive dealings from late 1997 with Mr Reynolds and Mr Russell regarding possible construction projects in Derry and Swords, Co Dublin.
It is claimed both projects had encountered difficulties and the defendants had defaulted on producing funds. O'Neills claims to have paid out £650,000 to the defendants and to have incurred another £70,000 losses. O'Neills claims it repeatedly demanded repayment of the money.
In his affidavit, Mr Patrick Kelly, solicitor for O'Neills, said Mr Reynolds received £400,000 sterling from his client through three payments, of £50,000 on or about December 19th, 1997, to the account of Universal Management Consultants Ltd at AIB, Baggot Street, Dublin; £150,000 on March 9th, 1998, and £200,000 on or about March 27th, 1998.
The money was paid to Mr Reynolds in anticipation that he or his friends would provide finance or financial contacts for projects in Derry and Swords.
He referred to a number of documents which, he said, supported the claims regarding Mr Reynolds. These included a letter of December 12th, 1997, to Mr Dessie O'Neill of O'Neill Brothers, signed by Mr Russell which said that Mr Russell believed, following a meeting, that they had agreed a new British-registered joint venture company would be formed, owned 50 per cent by O'Neill Brothers and 50 per cent by Universal Management Consultants, "the investment trust owned by Patrick Russell and Albert Reynolds".
The letter said O'Neills would contribute £250,000 in loan capital to the joint venture, and the balance would be provided from UMC. It also said that a formal joint venture agreement would be drawn up "and hopefully agreed before Christmas".
"In order to trigger this agreement, a deposit of £50,000 sterling will be paid by O'Neill Brothers to UMC. This deposit is fully repayable should for any reason the project not go ahead."
The letter said the deposit should be paid to the UMC account held at AIB, Upper Baggot Street, Dublin.
In another fax from Mr Russell to Mr O'Neill, dated March 4th, 1999, he said there was "an undisputed sum owed to O'Neill Bros from UMC" and later said the intention "has always been to remit the balance to you" from certain funds outlined in the letter, including property developments in England.
Mr Justice McCracken said there was no evidence that Mr Reynolds personally received any money. There was evidence that UMC had. There was no evidence Mr Reynolds had any interest in UMC or that he acted as its agent.
