Firm sues over alleged substandard fit-out of mortgage-to-rent properties

High Court reporter

A property company is suing a building contractor in the Commercial Court over its alleged failure to deliver refurbishment and fit-out works for 14 mortgage-to-rent properties to a proper standard.

GDL Management Group plc, through its subsidiaries which include FSH Acquisitions One Ltd and Fresh Start Homes Ltd, engaged Dublin-registered Bert's Properties Ltd to carry out the works on 14 properties including in Galway, Dublin, Laois, Longford, Cork and Louth.

GDL also claims that as a result of an attempt by Bert's to advertise a petition for GDL's winding up over a disputed debt of around €405,000, its planned initial public offering on the Euronext Dublin Main Market, worth €136 million, was delayed.

To mitigate what GDL director Kahlil De Burca described as "an existential threat" which advertisement of a winding up petition meant, GDL ultimately paid the disputed sum. It is now suing for its recovery of the money.

It is also suing over what it says were the systematic, defective, substandard and unfit for purpose works carried out by Bert's to the mortgage-to-rent properties.

De Burca, in an affidavit seeking entry of the case to the fast track Commercial Court, said the works systematically failed local authority inspections and have rendered the properties unlettable.

They are estimated to cost €165,595 to remediate.

When the disputed debt arose, Bert's failed to invoke or comply with a Dispute Resolution Clause in the contract and instead threatened to advertise the winding up petition, he said.

After GDL brought injunction proceedings against the winding up, the matter was temporarily resolved by the payment of the disputed debt.

However, GDL says it is now also seeking the cost of remediation works and losses of rent accruing from having to withdraw the properties for rent.

The rent that accrues annually from each withdrawn property is €1.35 million under the 25-year term of the leases, De Burca said.

He said the principal claim in the proceedings was damages for abuse of process and intentional interference with economic interests by the wrongful presentation and threatened advertisement of the winding up petition.

The damages sought for this will be subject to expert evidence in due course, without limitation, and reflecting the damage to GDL's public offering timetable, the depression of achievable valuation and price on admission, he said.

On Monday, Judge Eileen Roberts admitted the case to the fast track commercial list on the application of Martin Hayden, for GDL, and with the consent of Michael Howard, for the defendant.

The judge approved directions agreed between the parties for the progress of the case through the court.