Investment and property development company Metrobrook has launched twin High Court legal actions after two joint ventures for shopping centre developments in Loughborough and Hanley went sour.
Metrobrook, founded and controlled by Michael Gruber, is suing its former partners in Roger Duckworth’s Highland Group and Derek Tughan’s Dundas Properties, which often finances Highland’s developments.
It is suing Highland (Loughborough) and Dundas in respect of the Loughborough development, claiming it has been denied a profit share it is entitled to.
Metrobrook is also suing Dundas and its subsidiary Realis Estates (SOT) (formerly known as Highland Hanley) in respect of the Hanley development, claiming its former partner has wrongfully frozen it out and seized the joint venture for itself.
Metrobrook claims that it was introduced to the site in Loughborough, Leicestershire, in 1999, and undertook the shopping centre development project in a joint venture with Highland (Loughborough), funded by Dundas.
Then, in 2001, Gruber was introduced to another site in Hanley, Staffordshire, comprising a rundown shopping centre and surrounding land.
Gruber says he was keen to work on this project with Duckworth, with whom he had enjoyed a good relationship during the Loughborough project.
Gruber claims that, at a working lunch in late September or early October 2003, they agreed to a joint venture, funded by Dundas, on the basis that Dundas took a 75% share of profits, with the remaining 25% to be split between Metrobrook and one of Duckworth’s companies, Highland Hanley.
However, in April 2004, Gruber says that, days after he assured the local council that Highland was trustworthy, he was told “out of the blue” by Duckworth that Metrobrook no longer had a role to play on the Hanley project, and that £75,000 it had recently been paid was all it would receive from the project.
At the same time, he claims that Duckworth told him that Highland Loughborough was also unhappy with Metrobrook’s work on the Loughborough project. Highland Loughborough exercised its option to effectively buy out Metrobrook, with the value to be determined by a valuation, under the terms of the agreements between the parties.
However, in January 2005, valuer Chesterton put a value of £33,415,000 on the development, a figure outstripped by the development costs, which meant that Metrobrook received no profit share.
Metrobrook claims that later in 2005, two offers were received for the site far in excess of that valuation, of up to £46m, and that it has written evidence of Duckworth declaring its true value as in the region of £50m.
It alleges that Highland and Dundas are seeking to maintain the validity of a valuation that is a nullity and should be set aside, and are allegedly doing so in order to deprive Metrobrook of the substantial profit share it is entitled to in respect of the Loughborough development.
It claims that Chesterton, which went into administration in 2005, was not independent or impartial, and reached a valuation that should be set aside on the basis of lack of independence, partiality, collusion or the taking into account of erroneous or false information.
It is asking judge Mr Justice Peter Smith to set aside the valuation and order a fresh one by a truly independent expert, so that it can receive the 40% profit share it is entitled to.
In respect of the Hanley development, it says that it brought the scheme to Highland, spent two years working on it, established a good relationship with the local Council and that Highland has taken an opportunity to wrongfully seize the whole of the join venture for itself.
It is seeking a court order for either specific performance of the contract or damages.
The Highland companies and Dundas are defending the case.
The trial is scheduled to last between two and four weeks, after which Mr Justice Peter Smith is expected to reserve his judgment in order to give it in writing later this year.
jess.harrold@estatesgazette.com
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