Kevin McCabe’s residential development company Fairbriar has won the first round in its £5.6m dispute with former chief executive Philip Van Reyk over the Collins Theatre development in Islington, London N1.
Evans-Lombe J has rejected Van Reyk’s argument that the dispute had already been compromised by a purported agreement in October 2004 that Fairbriar had no legal claims against him for any previous conduct.
Robert Bourne, the multi-millionaire developer who once tried to buy the Millennium Dome, is also embroiled in the dispute as a codefendant. However, he will be unaffected by this preliminary row and was neither present nor represented at the hearing.
The lawsuit centres on the £5.25m sale four years ago of the Collins Theatre site by Bourne’s pension trust to Fairbriar, at a time when Bourne and Van Reyk were members of the Fairbriar board.
Under the section 106 agreement for a £27m residential scheme on the site, Fairbriar had to include a theatre and an 11,000 sq ft restaurant and pub, of which Bourne will hold a long–term lease at a peppercorn rent.
However, Fairbriar, whose chairman, McCabe, is a major shareholder, alleges that the two men are guilty of misfeasance in that they renegotiated the sale to Fairbriar’s detriment.
Fairbriar claims that the two men wrongly released Bourne from his obligation to obtain vacant possession of the site and wrongly imposed an obligation on Fairbriar to pay damages to Bourne should the theatre and leisure facilities not be completed on time, regardless of the cause of the delay.
In addition, Fairbriar alleges that, owing to problems caused by Van Reyk and Bourne, who resigned from Fairbriar in April and July 2004 respectively, the project was a “debacle” and construction costs increased from £11.5m to more than £17m.
Van Reyk argued that under an October 2004 supplemental agreement, by which a previous management services and investment agreement between him and Fairbriar was terminated, Fairbriar had compromised any claim against him regarding the Islington project.
Rejecting that claim, Evans-Lombe J said: “I am unconvinced by the evidence of Mr V an Reyk, that at the time the supplemental agreement was entered into, he had any serious anxiety that claims of the kind of the misfeasance claim would be brought against him, or that the claimant was, at that time, contemplating making such a claim.”
Accordingly, applying settled legal principles, the judge found that the agreement had not compromised the misfeasance claim since that claim had not been contemplated by either party at the time the agreement was made.
Fairbriar plc v Van Reyk and another Chancery Division (Evans-Lombe J) 31 October 2007.
Richard
