Walls family case opens in High Court

A multimillion euro dispute between members of the family who own the PJ Walls property companies opened yesterday before the High Court.

Dr Patrick Joseph Walls has taken the proceedings over a move to compulsorily acquire his shares in Walls Properties Limited and a linked company at a price which he claims substantially undervalues the companies by nearly €13 million.

Dr Walls has taken the action against PJ Walls Holdings Ltd (Holdings), whose directors are Dr Walls's brothers, Liam and Michael Paul (Paul), and Mr Patrick Veale.

He claims the share offer made regarding his shares in Walls Properties Limited (Properties) and a linked company, Thornhill Properties Limited, put a valuation on both companies of €20.5 million when the true valuation was more than €33 million.

He alleged that although Holdings had received a valuation of €26.4 million for the main asset of Properties from Hamilton Osborne King in November 2003 - lands at the Northern Cross road in Dublin - no valuation was made generally available to the shareholders.

He also claims that when the share offer was made in October 2003, the shareholders, including himself, were not given sufficient information, advice or time to properly assess the offer.

While there was a purported acceptance of the offer by more than 80 per cent of shareholders, the vast majority of those who had accepted were very closely linked to his brothers Liam and Paul, Dr Walls said.

The defence denies the claims. In an affidavit, Mr Michael Paul Walls said the share offer represented "a very favourable outcome" for the shareholders, was made in a procedurally fair manner and was "entirely beneficial" to the interests of the Walls group of companies as a whole.

A straightforward price comparison overlooked the fundamental point that there was a difference between asset sales, where provision must be made for taxation and other liabilities, and company shares sales, especially in terms of distribution to shareholders, he said.

The land in the dispute was formerly zoned as agricultural land but was rezoned in the 1999 Dublin City Development Plan.

In an affidavit, Dr Walls said he was advised that the Northern Fringe Action Plan recommended residential development on the land and Hilton Hotels was developing a 165-bedroom hotel on the site. He had commissioned a valuation report, which put its market value, not including the office building, at €33 million.

That figure did not reflect the increase in value which, he was advised, could result if permission was given for higher-density residential schemes.

The share offer also valued Thornhill, a property holding company set up by himself and other members of the family to develop a 1.17 acre site, at just €100, he said.

Outlining the background, Dr Walls said Properties, Holdings and Thornhill are all private companies controlled and owned by members of the Walls family. The PJ Walls company was established and built up by his late father and the core business was of construction.

Dr Walls said that in about 1978 his brother Liam had persuaded him that the majority of the controlling shares should be passed to him (Liam) in order to manage the business effectively.

After receiving assurances that the wealth created would be shared out by way of dividends, Dr Walls said he transferred his shares to Liam without any consideration. His brother Edward did the same.

However, despite Holdings regularly having distributable profits, no dividend - apart from "one small dividend" in 2002 when the company had profits of €2,7 million - was declared during the 20 years that Liam and Paul controlled the board of directors, Dr Walls said.

In his affidavit, Michael Paul Walls said the acquisition of Properties by Holdings more closely resembled a corporate restructuring to enable the Northern Cross project to proceed.

He denied that Dr Walls and his other brother Edward were persuaded to "give away" their shareholdings in the family companies to Liam.

While Dr Walls had correctly stated that Holdings had not traditionally paid out dividends, the asset value of Holdings had risen from some €5 million in 1992 to €24 million in 2002 as a result of the reinvestment in the company of distributable profits.