SIMON AND CHRISTIAN Stokes were not wanted as directors or shareholders or required to do banking business in their former club Residence when the new owners took it over, the Employment Appeals Tribunal has been told.

The tribunal heard new owners Olivia Gaynor Long and Derek Phillips had arranged to buy the assets of the business through their company, Molana Ltd, from the receiver of the Stokes brothers’ company, Missford Ltd, which had built up debts of some €4 million.

The tribunal was told Ms Gaynor Long and Mr Phillips were prepared to take responsibility for some 40 staff as part of an “asset transfer” from the receiver of the business. But they did not want the deal to be completed until the Stokes brothers had resigned from the business.

The tribunal was told the new owners were concerned about the the failure of three businesses previously run by the twins and “adverse commentary” made about them in the Commercial Court.

Mr Phillips told the tribunal “legacy issues” that the new owners had to deal with included a demand from some suppliers for cash on delivery because, he said, they “had got burnt” by the Stokes’s operation.

He also said credit and debit card companies wanted a substantial deposit of €350,000 or a bank guarantee in order to supply credit processing facilities to the new company. This was a serious problem, he said, because some 40 per cent of the Residence’s income was through such cards.

He had also received a call from the Revenue Commissioners in Limerick querying the status of the Stokes brothers in the new business. The brothers business dealings activated a “red light” for the Revenue, he said.

As the new owners felt they could not have the Stokes brothers as shareholders or directors, a consultancy contract had been offered and accepted, Mr Phillips said.

He said the brothers were popular and skilled in dealing with club members and their continuance as “front of house” people was “integral” to the business.

But he said they could not get their heads around the idea they no longer owned the business, referring to Ms Gaynor Long as a “an investor”.

Ms Gaynor ended the relationship with the brothers in September 2010. The brothers subsequently took an action for unfair dismissal against Molana.

Summing up on their behalf, barrister Imogen McGrath quoted case law in which individuals described as self-employed consultants had been found to be company employees, largely because they were effectively the agents and/or servants of those who paid them.

Accordingly they were entitled to the benefits of employment legislation such as notice and redundancy payments.