The owner of a Dublin home, which is the subject of a stayed repossession order issued this week, is a film producer who raised approximately £4 million in section 35 finance four years ago in a controversial film financing deal.
First Active was granted a repossession order on the home of Ms Mary Breen Farrelly earlier this week, but a six-month stay was put on the order to allow Ms Breen Farrelly time to pay the arrears, totalling £14,000. The court was told no repayments have been made on the mortgage since October 1997.
Ms Breen Farrelly's home, Marula, Fairbrook Lawn, Rathfarnham, Dublin, was the registered office for her film production company, Deadwood 2 Ltd, now dissolved.
Deadwood 2 Ltd raised £4.1 million from investors after receiving a section 35 certificate from the Department of the Arts, Culture and the Gaeltacht for the film Space Truckers, a science fiction comedy starring Mr Dennis Hopper. The film was released in July 1997.
Section 35 certificates provide for tax relief for investors for funds invested in film. In July 1995, when production of the film ran into financial difficulty and a second certificate was issued to a new producer, Ms Breen Farrelly was barred from the set. An examination of what had happened to the £4.1 million invested with Deadwood 2 Ltd found that only £1.5 million had been spent on Space Truckers.
Of the remaining £2.6 million, it was found that £850,000 had been invested in another Breen Farrelly production called Drift- wood, while a further £250,000 had been invested in yet another Breen Farrelly production, Sign of the Fish, which ultimately collapsed. The remaining £1 million plus could not be accounted for.
Ms Breen Farrelly returned from London to Dublin in 1992 and, with her partner, Mr John Avery, began working on projects here.
The broker who organised the section 35 investment in Space Truckers was Mr James Bowen, who was also on the board of Deadwood.
Around the time of the film's release, Mr Bowen said Space Truckers would have to be "an above-average success for any of the investors to see a return". In the event, the film was unsuccessful.
One investor, Mr John Hewitson, of Monkstown, Co Dublin, said he and his wife, both pensioners, had put £10,000 into the film following advice they received from a tax expert. Another investor, Mr Ronald Ellis, of Taney Rise, Dundrum, put in £25,000. Following negotiations with the Revenue, the investors were allowed tax relief on approximately 50 per cent of their investments, on the basis that only a percentage of their investment was used on the production. There was no actual return on the investment.
A spokesman for the Department of the Arts, Culture and the Gaeltacht said he would not discuss specific cases but that, in general, investors' money had to be spent on the film for which it was invested in order to qualify for tax relief. He also said that funds invested qualified for relief because there was an element of risk involved.
Neither Mr Bowen nor Ms Breen Farrelly were available to comment.
