The High Court today ruled that Dublin Waterworld Ltd (DWL) deliberately breached the terms of its lease to operate the National Aquatic Centre.
Mr Justice Gilligan told the High Court that although the financial position of Dublin Waterworld had now been regularised, the court was making an order for Campus and Stadium Ireland Development (CSID) Ltd to repossess the €62 million centre.
CSID, the State company which owns the centre, awarded the lease in 2003. It had alleged that, unknown to it, DWL had transferred beneficial ownership of the lease to Limerick businessman Pat Mulcair on April 30th, 2003.
The court was told that Mr Mulcair then entered into an arrangement for DWML (Dublin Waterworld Management Ltd), a wholly owned subsidiary of DWL, to manage the aquatic centre.
The court found this constituted "wilful" breaches of the lease as did the failure to pay more than €11 million due in rent and VAT.
Mr Justice Paul Gilligan declared the 30-year lease must be forfeited.
He noted that CSID had prepared contingency plans for the continued operation of the centre at Abbotstown, west Dublin in the event of a repossession order.
DWL secured the lease from CSID on April 30th 2003. The judge found that, in a deal done "behind the back" of CSID just hours earlier that same day, DWL breached the terms of the lease by assigning beneficial ownership to Mr Mulcair.
Mr John Moriarty, a director of DWL, told the court the funding arrangements with Mr Muclair were a "tax-driven deal". The judge noted the arrangements could be terminated if substantial capital allowances, worth some €2.8 million a year and capped at €34 million, were not secured by Mr Mulcair.
This would have left DWL, a company with no assets, without a venture capital provider for the centre. DWL orally assigned its right to the lease of the centre to Mr Muclair on April 30th 2003 but, instead of Mr Muclair taking the lease, an "elaborate set" of agreements were put together to protect Mr Muclair's claim for capital allowances, the judge found.
This breached DWL's obligation to operate the centre itself and not to otherwise assign its operation without the written consent of CSID.
He also said Rohcon, which built the aquatic centre, had made available €1.25 million to DWL to be put towards rent payments to CSID, the establishment of a sinking fund and other obligations under the lease.
However, DWL did not comply with the arrangements. DWL had received several demands for payment of annual rent of €100,000 as it fell due but made no response until legal action was taken.
The judge found DWL and Mr Moriarty had taken a "conscious decision" not to honour its financial obligations under the lease. The failure to pay rent and provide audited accounts on time was "wilful", he ruled.
Mr Mulcair, the judge said, was effectively in the same position as DWL as regards each breach of the lease as he had effectively taken on the terms, conditions and covenants set out in the lease.