There are two uncontested facts. The first is that John Daly started working for Ardstone Capital in September 2015; the second is that his employment was terminated by the Irish property group on July 8, 2016.

Just what happened in between, however, is heavily disputed – from the nature of his employment to the terms of his package to the manner of his departure. Indeed, even the meeting in which he was let go is a bone of contention – the firm claims he told them he would “see them in court”, comments Daly has strenuously denied.   

However, the specifics of what happened during that three-year period are central to an escalating dispute between the low profile, yet extraordinarily successful fund manager, and Daly who was retained as a private investment manager.

In the world according to Daly, the company devised a “sham redundancy” in an effort to renege on paying out a handsome profit share on a €95 million property fund he claims he was heavily involved in. Ardstone, meanwhile, claim there was no such deal, that he was employed on a short-term basis and he unlawfully took information from the business – a claim he denies.

The dispute is now poised to boil over. Daly is suing the company for his share of the profits and damages for breach of contract, duty of care and misrepresentation. Ardstone, meanwhile, has countersued for over their claim he took confidential company data.

New court filings, pleading and judgements shed a light on the case, one that provides an inside take on the world of property deals and fund management – and into one of Ireland’s most successful property managers.

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From its ivy-covered Georgian headquarters on Dublin’s Fitzwilliam Square, Ardstone runs an international property business – sourcing and managing a portfolio of assets on behalf of select client and funds across Spain, Germany and the UK.

Established and owned by former Friends First property chiefs Donal Mulcahy, Ciaran Burns, and Donal O’Neil, it recently set up sister company Ardstone Homes, which has plans to build thousands of homes across Ireland.

Company filings show that Ardstone’s corporate structure spans multiple entities in multiple locations – from its Dublin parent to shares in subsidiaries in Madeira, Luxembourg Jersey, the UK, Spain and an ICAV in Dublin.

Ardstone Capital manages a number of major funds, including a £225 million fund focused on commercial property in Edinburgh, Manchester and Birmingham. The Ardstone Residential Partners Fund, a €200 million fund focussing on the Irish residential sector, recently had its first close, is continuing to fundraise and invest.

The fund at the centre of this dispute, however, is that Ardstone Value Partners Fund (AVP), a €170 million fund focussing on the recovering commercial real estate sector in Dublin. Established June 2013, a prospectus for Ardstone say that it is a “Programmatic Joint Venture Funds” managed on behalf of CBRE Global Investor Partners.

To date the Fund has acquired six prime assets in core Dublin locations with an aggregate value of €95 million, with the company boasting it “now provides a very attractive mix of secure income together with value-add opportunities”.

Properties in the portfolio – some of which have been sold although the firm continues to manage the asset – include 2 Harbourmaster Place in the IFSC, the Crampton Buildings in Temple Bar and Morrison Chambers, a high profile property on the corner of Dawson Street and Nassau Street in Dublin’s city centre.

John Daly claims he was entitled to a cut of the profits on this fund. Like most things in this case, that claim is disputed.

A “sham redundancy”

According to court documents, in the AVP involved seven large commercial properties in Dublin which were to be acquired, improved and sold on at a profit. John Daly says Ardstone would typically receive 20 per cent of any profits of the AVP generated over a 10 per cent internal rate of return threshold, the remaining 80 per cent being returned to investors in the AVP.

Daly began working with Ardstone in September 2013.  In his pleadings, he says that in the course of the interview process preceding his appointment he was offered a 5 per cent “entitlement” to the fund – essentially 5 per cent of profits. He says that this was to be earned at the determination of the AVP, that in turn occurring upon disposal of its last asset.

However, he claims that following a lunch meeting in July 2015, Ardstone agreed to increase the share of the AVP profit to which the plaintiff was entitled, to 10 per cent.

However, on 8 July 2016, Daly’s employment was terminated.  He says that this termination was unlawful and was effectively a ‘sham redundancy’, and that this was done with a view to denying him his entitlement to his 10% share of the profits.

Ardstone, however, denies that there was any agreement to give Daly a profit share as claimed by him. It says that in September 2013, he was offered a short term role with the company – at the time, it says the AVP did not exist at that time, and that no “representations or assurances of any kind were made to him” according to court documents.

It says that in July 2015, Daly expressed his dissatisfaction with an increase in salary then offered to him and that he sought 10% of the AVP profit – “not on the basis of any alleged prior representation but because he felt he deserved this” according to court documents. It claims that while an employee of the Ardstone, he unlawfully took information of and concerning the defendant’s business.

In addition to his High Court action, Daly also lodged a claim for unfair dismissal before the Workplace Relation Commission. In a decision of February 20, 2019 the WRC determined that the dismissal was unfair.

Some of the evidence from that case is now central to the current battle. Despite the High Court action being initiated in 2016, it is still at discovery stage, with Daly’s legal team making a recent application before the High Court in relation what it said were “inadequacies” in Ardstone’s discovery in January 2019.

The judgement by Mr Justice Murray has just been published, and sheds more light on the dispute – and the issues that are emerging.

The discovery battle

Back in in March 2018, the High Court directed that Ardstone make discovery. However, by January 2019, Daly was complaining of inadequacies in the firm’s response. In the course of the ensuing exchanges between the solicitors for the respective parties, Daly’s side delivered two supplemental affidavits of discovery on 27 February 2019 and 14 June 2019.  The plaintiff contends that the defendant’s discovery remains deficient and has brought this application seeking further and better discovery consequent upon that alleged default.

While rejecting a number of requests for documents, the court has now ruled that the company must make discovery in four separate areas.

1. The spreadsheet

During the Workplace Relations Commission hearing in May 2018, a spreadsheet was produced by Ardstone, and a copy of that spreadsheet was retained by Daly. It refers to Daly, having, on one sheet, a 5% share and on another a 10% share, of the profit on the fund, quantifying it as ‘275,000’and ‘550,000’respectively.  It also refers to another person ‘SC’ having a share in another fund, described as the ‘ARP’.

Daly claimed that the document is highly relevant to the proceedings, and within category. He says that he sent an email to Donal O’Neil of Ardstone after a meeting in a restaurant in August 2015 attaching this excel spreadsheet illustrating his Promote level as compared to that of another employee, SC. He says the document should have been handed over in discovery.

According to the recent court judgement:

“His solicitor explains in the course of the affidavit grounding this application that on the date the plaintiff’s employment was terminated, he was asked to leave the defendant’s premises and has had no access since to his email account and files.

“The defendant says that this document is outside this category.  The defendant’s position is that there was no ‘entitlement’ to a Promote and that no Promote was ever ‘promised’ and therefore by definition no documents exist within this category.”

The court ruled that this document should be handed over.

2. Investor presentations

In the initial discovery case, Daly had sought document relating to work he had carried out in the residential fund – this was later reduced to a request for two types of documents. The first was for copies of all residential investment presentations issued that included the plaintiff’s profile and the second, residential investor presentation slides, including draft s, sent by Ardstone between June 2015 and April 2016.

In their letter of February 22, Ardstone’s solicitors stated that the retail investment presentations did not show the work carried out by the plaintiff and were thus not discoverable.

According to legal documents:

“The plaintiff’s solicitors responded stating in their letter dated 30 April that the plaintiff worked on ARP presentations from April 2015 to May 2016 where his profile was included and issued to various investors.  They say that the plaintiff prepared a significant number of slides in these investor presentations, and that the presentations were used to attract investors to invest circa Euro 110 Million into a first round close by Q1 2016.  They say that Donal O’Neill subsequently asked the plaintiff  to work with him to update the investment power point slides to attract further investment as part of a second close after March 2016.”

3. The deleted emails

The third tranche of documents granted relate to what the court described as deleted emails. In 2018, Ardstone wrote to Daly stating the following:

‘We have reviewed the issues which you raised and our client will make further discovery in relation to a number of documents. Our client will be putting this on affidavit,  but in relation to some of the documents which our client will now discover and had not previously discovered, this was as a result of your client’s emails being deleted  when he ceased to be an employee  of our client. Our client has since been able to recover a large portion of these mails and accordingly will now discover same’.

Before the WRC, it was Ardstone’s case that at the meeting on July 8 2016 at which his employment had been terminated, Daly had said ‘see you in court’, although Daly denies ever making this statement.  

According to Mr Justice Murray:

“What is clear is that the plaintiff’s solicitors say in their letter dated 30 April 2018 that on 18 August 2016 they formally requested the defendant to retain all correspondence relating to their client’s employment with the defendant. It follows that at the very latest upon receipt of the letter dated 18 August 2016 and (depending on the facts) potentially on July 8, the defendants knew that there was a prospect of litigation arising from their relationship with the plaintiff. Once they knew this, documents relevant to that dispute should not have been destroyed.

“No reference of any kind was made to deleted emails in the affidavit of discovery delivered by the defendant on 27 July 2018.  This was not an insignificant default. The emails that had been deleted were the plaintiff’s emails. By definition they were likely to have comprised at least some discoverable documents.”

The court made an order require Ardstone to swear an affidavit addressing the five points:

(a) The exact date on which (a) the plaintiff’s email account was shut down and (b) the plaintiff’s emails were deleted;

(b) The date on which the defendant began a retrieval process in relation to the email;.

(c) The identity of the person or persons engaged to retrieve those mails, and how that task was undertaken.

(d) How many emails were successfully retrieved and how many were not.

(e) The nature of the emails which were not successfully retrieved including how they relate to the categories of discovery ordered by the Court on 25 May 2018.

4. The profit promise

The judge also made an order for Ardstone to make better and further discovery of any documents I relating to ant entitlement or promise of the kind alleged by Daly. This relates to email between the two parties over the alleged deal.

Since its establishment, Ardstone has been a quiet success story – pulling off a string of deals, paying tidy dividends and posting healthy profits. However, this case will bring its operations in the public arena. Already four years old, it remains at an early stage. But it is set to rumble on as the case continues its way through the system.