Trevor Osborne could face receivership for the second time in seven years following Pell Frischmann’s decision to seek a high court order appointing receivers to their joint venture, Hawk Developments.
The action is intended to end the current deadlock on the Hawk board which has been caused by a stand-off between the two rival factions.
Frischmann-owned Universal Project Management Services has also issued a writ for damages resulting from alleged breaches of contract and fiduciary duties by Osborne.
Hawk Developments was set up as a project and development management company in 1991, with Osborne and Frischmann as directors, when Universal bought the entire share capital of Speyhawk PLC . In 1994 Hawk diversified to pursue property development contracts in its own right and Osborne took a 50% equity stake in the company.
Since then the 50/50 joint venture has secured a number of high profile development contracts – some of which were through special vehicles rather than Hawk – including the redevelopment of Richmond Station and PFI projects to develop offices for Customs & Excise in Southampton and the Harrow Jewish Day School Trust.
The High Court writ claims that Trevor Osborne Property Group (The Osborne Group) has breached its shareholding agreement by allegedly failing to give Universal equal ownership and control of the projects, including those operated through special vehicles.
In an official statement issued to EGi , the Osborne Group said: “Pell Frischmann claim to be entitled to share, as development partners, in a number of projects. [We] Agree that its PFI project in Southampton and the proposed development at Richmond Station are projects in which Dr Wilem Frischmann is expected to be an equity partner meeting half the costs of these projects.”
The damages suit is expected to take up to two years to resolve in court so Universal is seeking an injunction aimed at ending the current board stalemate. The project manager wants the court to appoint a receiver in the interim to oversee the assets and business of each of the projects with power to manage them as a going concern.
EGi understands the deadlock is not affecting the day to day running of individual projects which Osborne is managing. However, Universal’s solicitior David Stevens at Norton Rose said the dispute is causing problems at the strategic level: “The board is made up of nominees from both sides and they can’t do anything in the company unless they reach agreement. Because of the dispute neither side can agree. The injunction is aimed at ending this deadlock.”
Frischmann is also trying to rein in Osborne by seeking a restraining order preventing the Osborne Group from employing former Hawk staff. The writ claims that, as a result of the Osborne Group employing some of Hawk’s employees, the company “suffered loss and damage namely the loss of Employees, the loss of its ability properly or at all to conduct its business, and the loss of its ability to acquire new development projects.”
The project managers also claim that TOPG took key books and accounts relating to the Richmond project from Hawk offices and returned them with certain pages missing. As a result Universal is asking for a court order ensuring that all profits and benefits be accounted for.
In its offical statement, the Osborne Group said: “The Osborne Group has made it clear that they are agreeable either to the purchase of the Pell Frischmann interest, the sale of its own interest to Pell Frischmann, or the winding up of the company.”
EGi News 09/01/98
