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Barclay brothers score High Court victory over battle for Maybourne Hotel Group

10 August 2012 by

The Barclay brothers have successfully fought off allegations of dishonesty in a battle to gain ownership of the Maybourne Hotel Group, which operates three of London's most prestigious hotels - Claridge's, the Connaught and the Berkeley.

In a High Court judgement issued this morning, Mr Justice David Richards dismissed the claim made by Irish property developer Patrick McKillen that Sir David and Sir Frederick Barclay had tried to bypass his right to buy more shares to prevent him from gaining control of the company.

All three men hold shares in Coroin, the company which owns the Maybourne Group. McKillen, who has a 36% stake, decided to sue the Barclay brothers over their ownership of the 35% shareholding they acquired from the founder of Maybourne, Irish property entrepreneur Derek Quinlan, which took their holding in the company up to 65%.

The judge found that McKillen has no basis in law to challenge the Barclays' interests in Maybourne and that there was no conspiracy against McKillen by the brothers. He also acknowledged that the Barclays did not make payments to Quinlan to induce him to sell his shares.

After considering whether, had the allegations been true, McKillen had or could have raised the means to purchase the shares, the Judge rejected that he would have been in a position to raise sufficient funds.

The Barclay brothers believed that McKillen had brought the case to court as a misconceived attempt to tarnish their reputation in the hope that they would not continue to pursue their attempt to control the Maybourne Hotel Group.

During the course of the lengthy trial, McKillen made a series of far-fetched claims including that Sir Frederick operated from a secret office in the Ritz (which he and his brother own), and that the brothers had hacked his phone and had him followed by private detectives. The Judge described many aspects of McKillen's evidence as "fanciful".

The Barclay brothers said they welcomed today's judgement, which is their third legal success, following two earlier Court of Appeal decisions. In February the Court confirmed that the Barclays' acquisition of Misland - and thereby their initial indirect stake in Coroin - was entirely lawful and therefore not capable of any challenge, while in June, a ruling found their acquisition of the Maybourne debt of £660m from Ireland's National Asset management Agency was valid.

Richard Faber, a spokesman for the Barclays, said the judgment has completely vindicated the brothers' interests' position and brought to an end an unnecessary and distracting dispute.

"After 30 days in court the Judge has looked in detail at every aspect of Mr McKillen's case, and has found it to be without any merit," he explained. "It should never have been necessary for the Barclay interests to defend these baseless proceedings, which we always believed were an attempt by Mr McKillen to tarnish the Barclay interests' reputation in the misconceived hope that they would then sell out to him. The High Court has now confirmed what we always knew to be the case: that the Barclay family and its interests have always behaved entirely lawfully and properly in their business dealings."

It is believed that McKillen, who could face legal costs of around £20m, is considering an appeal against the judgement.

Barclay brothers increase stake in Maybourne Hotel Group >>

Barclay brothers move in on Maybourne Hotel Group deal >>

By Janet Harmer

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