Spanish property deal ends up in court

A man has brought High Court proceedings against a businessman and three companies involved in the sale of properties in Spain over the alleged retention of more than €540,000 paid by the man two years ago for investment in apartments there.

There was every good reason to believe "millions of euro" are at risk if the court does not grant an accounts freezing order against Karl Morris and the defendant companies, Peter Finlay SC said.

The court was told earlier that seven of 11 offices operated in Ireland and Wales by some of the defendant companies had closed down in recent months with losses to investors.

Mr Finlay was making submissions on behalf of Cyril McMorrow, Carrick Road, Boyle, Co Roscommon, who says he handed over about €540,000 (part of a compensation settlement paid to him after he sustained serious injuries in an industrial accident) for investment in Spanish property.

Mr McMorrow says the conduct of the defendants has meant he has been unable to complete the purchase of a block of 17 apartments as agreed, resulting in serious financial loss to him.

He is now seeking a "freezing" order restraining the defendants from reducing their assets below €838,000 to cover the monies invested and also sums for alleged loss of profits.

The action is against Karl Morris and three companies - Simple Palmera Properties Ltd (SPP), Simple Overseas Property Ltd (SOP) and Simple Property Group SL (SPG). Mr Morris was described as a director of all three Simple companies, with an address at Mill House, Schull, Co Cork.

Ms Justice Mary Laffoy said yesterday she will hear the injunction application on Wednesday next. She said the status of the SOP company has to be clarified and various matters put to her had to be put in an affidavit.

Earlier, Mr Finlay said that a man who acted as manager for the defendant companies in Spain was prepared to come to Ireland to testify that money would be moved if the freezing order was not granted. That former manager was "horrified" at what had happened and the facts he would disclose were "very serious".

Counsel also said the Companies Office had informed his side that the SOP company had been dissolved because of the manner in which accounts were furnished. Mr McMorrow alleges the cheques he had paid were to that company and that it has been dissolved, and the SPP company registered, in a bid to avoid legal and financial obligations to him.

Patrick Russell , for the defendants, said Mr Morris was in Montenegro and had been told by phone on Thursday about the freezing order application. Counsel said he could not give undertakings to the court. His clients believed any freezing order was unjustified.

Mr Russell said the former employee whom Mr Finlay had referred to was a former accountant of the defendant companies who had left in acrimonious circumstances and had included incorrect material in an e-mail presented to the court.

The proceedings arose after Mr McMorrow decided to invest in Spanish property in about 2004. He said he met Mr Morris, was taken to view several sites for apartment development and was told apartments being built at Almeira would face the sea. He felt confident to invest with Mr Morris and in October 2004 decided to buy 17 apartments in a block in Carboneras known as Mirador Del Puerto on the basis they would be front-line beach apartments.

On foot of an oral contract made with Mr Morris, he made several payments relating to the apartments via cheques payable to the SPP company. Those payments totalled €543,586 by February 2005.

In March 2005, Mr McMorrow said he saw on the internet the block of apartments at Mirador del Puerto for which he had paid the €543,586 deposit and was greatly concerned to see they were on average some 15sq m smaller than the sizes he had agreed with Mr Morris.

Mr Morris had later handed over some of Mr McMorrow's monies to a Spanish builder despite the size problem not being rectified, although Mr Morris had assured him it would be, he said. He later found out they were not front-line beach apartments.

Mr McMorrow said he learned in May 2006 that the block of 17 apartments had been sold to other parties. He had it valued in October 2006 at €2.84 million, excluding garages and storerooms valued at some €204,000.