Barclay brothers claim 'total victory' in the hotels war

Russell Lynch,Paul Cheston
Thursday 04 July 2013 01:04

The billionaire Barclay brothers yesterday declared "complete and total" victory in their long-running £1.1bn legal battle over the ownership of three of London's most prestigious hotels.

The row over Claridge's, the Berkeley and the Connaught has raged for two years as Sir David and Sir Frederick Barclay, owners of the Telegraph newspapers and the Ritz, clashed with the Belfast-born developer and shareholder in the hotels, Paddy McKillen.

Mr McKillen had already lost a high court case against the brothers over the hotels last year, but yesterday three Court of Appeal judges threw out his attempt to overturn that decision. Mr McKillen must now pay most of the costs of the appeal on top of an estimated £20m legal bill. The judges also rejected Mr McKillen's application to appeal to the Supreme Court.

Richard Faber, a spokesman for the Barclay brothers, said: "This is a complete and total defeat for Mr McKillen. There is nothing for him to salvage from these rulings. After nearly two years of legal proceedings he is considerably worse off financially and no further forward."

Mr McKillen pledged: "I will continue to fight the Barclay brothers by any legal means to protect our staff, guests and our rights."

The complex tug-of-war over the hotels stretches back to 2004 and the heady days of the Irish lending boom. Mr McKillen was one of five shareholders in Coroin, a company that snapped up the Savoy Hotel Group, even outbidding Saudi Arabia's Prince al-Waleed bin Talal in the process. Coroin, whose frontman was the former Irish property poster boy Derek Quinlain, promptly sold the Savoy to Prince al-Waleed and then renamed the Berkeley, Claridge's and the Connaught under the Maybourne banner.

The original shareholders fell to three during the next six years, leaving Mr McKillen with 36.2 per cent, Mr Quinlain with 35.4 per cent and Misland, a Cyprus-based trust, holding the 25 per cent stake of the Manchester businessman Peter Green and stockbroker Kyran McLaughlin's 3.8 per cent.

In January 2011 the Barclays gained a foothold in Maybourne by buying Misland for £70m. Meanwhile, several of Mr Quinlain's property investments defaulted in the crash and his debts were taken into Ireland's bad bank, Nama. The Barclays did a deal with Nama to buy Mr Quinlain's debts, giving them effective control of his stake and majority control of Maybourne.

Mr McKillen claimed the brothers had ridden roughshod over his "pre-emptive rights" to have first refusal on the stakes of the other investors which came up for sale. When Mr Justice David Richards backed the brothers in the High Court last year, Mr McKillen appealed.

Yesterday Mr McKillen's appeal was rejected by Lady Justice Arden and Lord Justices Moore-Bick and Rimer.

Lady Justice Arden said that the Barclays' actions had not broken the pre-emption provisions in the shareholders' agreement and had not amounted to a breach of good faith.

Top prize: Luxury trio


Regular base of exiled European royalty following the Second World War. When a diplomat telephoned asking to speak to the King, the reply came back: "Which one?"

The Connaught

Patrons include Victoria and David Beckham. Its top suite will set you back £12,000 a night.

The Berkeley

Also ahead of its time, installing air conditioning and double glazing in the 1920s. In 1972, it moved to a new purpose-built hotel in Knightsbridge, boasting a unique rooftop pool.

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