DUNNES STORES has been ordered by a High Court judge to pay about €20 million due to a company which built a shopping centre in which the supermarket chain agreed to be the anchor tenant.
Mr Justice Peter Kelly yesterday dismissed a bid by Dunnes to set aside an arbitrator’s award for €20.2 million arising out of an agreement between the supermarket owners and Holtglen Ltd to build the Ferrybank Shopping Centre in Kilkenny. The centre was completed in August 2009.
Dunnes had instituted arbitration proceedings claiming breaches of a development agreement by Holtglen which in turn counterclaimed. Holtglen claimed it was then entitled to stage payments due under the development agreement, plus other sums for which it had counterclaimed.
It said it had very large borrowings in connection with the Ferrybank development and it was “of the utmost importance” it was paid by Dunnes as soon as possible. Holtglen later became insolvent.
Last October, the arbitrator, while upholding some of Dunnes’s complaints of breaches of the development agreement, found Holtglen had remedied those matters and Dunnes was therefore not entitled to terminate the development agreement.
Dunnes applied to the Commercial Court to set aside the arbitrator’s findings. It argued that as Holtglen was now insolvent, it was precluded from claiming the money due.
The court was told that Holtglen’s Bank of Ireland loans had been transferred to a Nama company, National Asset Loan Management Ltd, as had all Holtglen’s related security rights, assets and interests.
In his judgment yesterday, Mr Justice Kelly said this transfer meant Nama had stepped into the shoes of Holtglen and its insolvency was now an irrelevance. It also meant any concerns Dunnes may have in relation to future obligations not being honoured had evaporated, he said.
The judge found the arbitrator had not erred in law in the approach taken by him to construction of the agreement between Dunnes and Holtglen.
Despite the fact the shopping centre was completed nearly 2½ years ago, Dunnes had only paid “a fraction” of the money due for the work. Judge Nolan granted Holtglen summary judgment for the €20.2 million after rejecting Dunnes’s application for an adjournment to allow it to consider his ruling. He also refused to grant a full stay on his decision pending the outcome of appeal to the Supreme Court which could mean another three years of Holtglen being deprived of its entitlement.
Dunnes had until Friday to appeal to the Supreme Court against his refusal of a stay, he added.