To step inside the Ashling Hotel in Dublin is to enter the reassuringly familiar world of the modern city four-star hotel. While the Luas passes out front and the Guinness brewery offers an arresting vista across the Liffey, the hotel itself presents the kind of streamlined facade and muted interiors you might find in any city, at least in Ireland or the UK.

But in its own modest way, the Ashling Hotel is a bit of a Dublin institution, one that dates back to 1870. A plaque by the door informs visitors that one of the twentieth century’s great thinkers, the Viennese philosopher Ludwig Wittgenstein, boarded there between November 1948 and June 1949 when it was known as Ross’s Hotel. There is more to the Ashling than meets the eye.

A stone’s throw from Heuston Station and the Phoenix Park, in the past the hotel had the appearance of a somewhat faded three-star establishment; nestled beside run down B&Bs from another era in a part of the city that appeared destined for inexorable decline. 

But in 1996, the hotel was taken over by Foxfield Inns, the company behind the Flannery family of hoteliers who owned and operated the Imperial Hotel on Eyre Square in Galway city.

Two years later, Foxfield called in O’Dwyer & Associates Architects to demolish the existing four-storey building and redevelop the Ashling Hotel as a modern eight-storey build with 134 bedrooms, a multi-storey car park, meeting and function rooms, a bar and a restaurant. 

The revamp cost €16.4 million. In a way it pre-empted, or part assisted, the regeneration of the neighbourhood which has sprung back to life in the past decade and has been identified, along with parts of the docklands, as a Strategic Development Regeneration Area where buildings over 50 metres in height may be built. Last year, developer Joe O’Reilly’s Chartered Land submitted plans for a 29 storey residential tower on Parkgate Street as part of a mixed commercial and retail space.

For the Flannery’s, the hotel investment appears to have paid off handsomely. Foxfield Inns enjoyed profits of €4.7 million in 2018, down from €5.3 million in 2017. Dividends totaling €2.75 million were paid out last year. The aggregate dividend sum for the past five years was €5.65 million.

Of course, aside from the Ashling, the company has several strings to its bow including a significant number of residential and commercial investment properties in Dublin and Galway, all of which are rented out.

Foxfield Inns also has a wholly-owned subsidiary, the successful Maplestar, which owns and runs the Eglinton Hotel in Salthill as a direct provision centre. According to the latest accounts filed with the Companies Registration Office (CRO) last July, Maplestar recorded net profits of €402,037 in 2019.

However behind the scenes all is not well in the lucrative family run business and it is not the fault of Covid-19. One of Foxfield’s directors and shareholders Mary Flannery claims she is being sidelined from the running of the company by her siblings. 

She has brought oppression proceedings under section 212 of the Companies Act 2014 against family members, the company itself and its auditor, Dublin accountant James Norton, who she claims exerts sufficient influence over the other directors so as to make him a shadow director of the firm.

Tens of millions of euros are at stake. The case was fast-tracked into the big business Commercial division of the High Court in late November. 

Mary Flannery is asking the court to take drastic steps to bring an end to the bitterly divisive dispute. She wants an order obliging her siblings to buy her out at a fair price or she wants the whole company wound down with a receiver realising the assets for distribution among the four shareholders. 

The proceedings are still at a very early stage. To get the case admitted to the Commercial Court Mary Flannery had to set out her case in an affidavit. The picture that emerges is of a spectacular family rupture. However, that picture is far from complete as to date the court has only heard her side of the story. The defendants have been given an opportunity to file replies to her claims in the proceedings. The case is due to return to court next week.

What follows here is the businesswoman’s account of why she believes it may be time to draw the curtains on this particular family success story. It is a potent mix of claims involving the alleged misuse of company funds, a 5th Avenue apartment in New York, boardroom rancour, and personal problems that have allegedly led to an irrevocable breakdown in relations. It is likely that many of the allegations could well be disputed when replying affidavits are opened.

Beginnings: splitting responsibilities

In terms of its ownership, Foxfield Inns is one hundred per cent a family affair. On reaching adulthood the five Flannery siblings, three male and two female, were each given a 20 per cent shareholding in the business founded by their parents in 1987.

In 2018, one of the five siblings Colin Flannery died intestate. His estate remains unresolved but his holding in the company is due to be divided equally among his remaining brothers and sisters bringing their respective interests in Foxfield Inns up to 25 per cent each. 

Mary Flannery was appointed a director of the company in 2002. She claims she has been involved in the running of the company’s interests since the 1990s when she, her father, and the former general manager of the Ashling Hotel Alan Moody oversaw its redevelopment. She also claims that with the exception of the banking arrangements for the Imperial Hotel, she is primarily responsible for the company’s finances. The other directors working full time in the business are Kevin, the eldest in the family, and his wife Sheelagh Flannery. 

The court was told that traditionally duties were split so that Mary Flannery has charge of the Ashling Hotel while Kevin and Sheelagh Flannery looked after the Imperial Hotel and the various investment properties in Galway. The couple also oversees the direct provision centre. A professional agent manages the Dublin property investments.

It is Mary’s case that up until the annual general meeting of the company in May 2019, Frank, who lives in Spain and works full time as a commercial pilot, and Andrena, a full-time teacher, did not engage in the day to day management of the business. That apparently changed when Mary Flannery began probing large-scale financial transactions allegedly involving company money and her older brother Kevin.

The court has heard it is Mary’s belief that Kevin is an alcoholic and that his condition is having an adverse impact on his ability to operate the Imperial Hotel. Kevin will have a chance to respond to these allegations as the case progresses.

She gave an account to the court of his wife Sheelagh confiding in her after unexpectedly arriving at her front door on a morning in March 2019. Having let her in, Mary Flannery claims Sheelagh told her that Kevin’s drinking had gotten completely out of hand and that it was having a detrimental effect on the running of the Imperial Hotel. Sheelagh Flannery had apparently just returned from a holiday in Spain where she had met with one of the other siblings Frank Flannery. Allegedly she told Frank there were monies missing from a US Dollar account Kevin controlled and Frank had advised her to “tell Mary”. Sheelagh allegedly said she wanted to have her husband barred from any further involvement in the hotel business.  

Sheelagh also allegedly expressed concern at the state of the payroll apparently claiming that until March 2019, Kevin was paying staff in cash and not maintaining proper records of employment. It is alleged that staff who had not worked at the hotel for years still appeared on the register. Management of the payroll was subsequently taken over by Norton & Norton,  the accountancy firm run by Foxfield’s accountant James Norton with offices in Blackrock, Co Dublin.

From 5th Avenue to Galway

One of Mary Flannery claims is that as Kevin’s alcoholism deteriorates he has begun to rely more and more heavily on Norton. The accountant has allegedly been paid €10,000 for corporate governance activities every month since April 2014, totaling €780,000 plus Vat. Mary Flannery claims she has never seen any documentation setting out what corporate governance activities he is actually conducting on behalf of the company. Mary says the money is being paid on top of his normal accounting and auditing fees. “I am forced to conclude that they are improper and amount to a misapplication of Company monies,” she claims in an affidavit before the court. Again, the accountant will have the opeprtunity to dispute any allegations.

The accountant for Foxfield is said to have involved himself in the business in other respects. By way of example, Mary Flannery claims that up until 2019 Patrick McGovern, the manager of the Eglinton Hotel direct provision centre, was responsible for negotiating the DP contract with the Department of Justice and that this was done as part of his regular wage packet. Last year, she claims Norton took over the job and was paid €31,980.

Additionally, she alleges that an entity owned by Norton – who is also a qualified barrister – Carysfort Avenue Law Services, received a sum of €65,010. 

Apart from her alleged exchange with Sheelagh Flannery, Mary says she has her own concerns about her brother and not just in relation to the Imperial Hotel. There were two other transactions allegedly conducted by Kevin using company monies that bothered her. The first concerned the buying and selling of a New York apartment and the second related to the acquisition of commercial units at Liosbaun Industrial Estate, just outside Galway city.  

She claims that around €1.14 million in company funds were spent on the 5th Avenue apartment in New York in 2005. While the apartment appeared as an asset on the books of Foxfield she says it is unclear as to whether the apartment was ever registered in the company’s name. It was meant to be rented out but Mary Flannery claims she has not been given the full details of any rental income received.

The accountant “made personally insulting remarks to me about my ‘inferior education’ and stated that I had been single-handedly responsible for having his friend and colleague, a solicitor, disbarred”

Mary Flannery, company director of Foxfield Inns

The apartment was sold in August 2015. Mary Flannery alleges that the proceeds of the sale were paid into an account in Kevin’s name rather than into a company account without any satisfactory explanation.  

In July 2018, a company called AutoExec Ltd, controlled by Kevin and Sheelagh Flannery, bought commercial units at Liosbaun. Mary says she became aware of the acquisition in April last year when the rent received was mentioned in the company’s accounts. “It was to say the least, a mystery as to why the Company was receiving rent in respect of these properties, particularly in circumstances where the directors of the Company had never resolved to buy the properties,” she states in her affidavit. 

It is Mary’s case that relations turned hostile with her siblings when she began to enquire of company accountant James Norton what was going on with the New York sale and Liosbaun rents – “regrettably” leading to the commencement of legal proceedings.

Finding the transactions “inherently troubling”, in an email dated April 8, 2019, and again nine days later, Mary Flannery wrote to Norton seeking information on the New York apartment, the Liosbaun units, and the draft 2018 accounts for the company. She said she did not receive any answers ahead of the annual general meeting on  May 8. When the AGM rolled around, she says the company accounts were approved by all of her siblings despite her objections.

Relations sour at the agm

The meeting, she says, did not go well. Norton chaired the meeting – again despite her objections. When it came to his reappointment as company auditor, Mary says she tried to open up a discussion about his role generally in the business. She claims this provoked an extremely irate response from Norton. The accountant “made personally insulting remarks to me about my ‘inferior education’ and stated that I had been single-handedly responsible for having his friend and colleague, a solicitor, disbarred,” she alleged. Mary Flannery says she has no idea what solicitor he was referring to. “I have never had anyone disbarred as a solicitor. Be that as it may, the tone and content of Mr. Norton’s remarks to me set the tone for the remainder of the meeting,” she said.

Mary Flannery claims Norton also proposed that Frank and Andrena be appointed as executive directors of Foxfield. She claims she queried the appropriateness of the move given Frank lived in Spain and both siblings were engaged in full time employment elsewhere. She said she also wanted to know how their appointments would affect the company on a practical level given that the day to day running of the business fell to her and Kevin and Sheelagh. Mary claims no explanation was forthcoming but their appointments were voted through all the same. 

Another contentious issue was the repayment of a €25 million loan to AIB which had been drawn down in 2008 towards the refurbishment of the Ashling Hotel along with the acquisition of other commercial properties. According to Mary Flannery there was €4.1 million left on the ten year facility when in May 2019, she directed that the loan be discharged in its entirety. She said this was done in the best interests of the company, which had no cash flow issues, as it meant an end to annual interest payments. However, she claims she was subject to a barrage of abuse about the payment at the 2019 AGM. Norton allegedly became so upset that he knocked over his chair and stormed out of the meeting. She said he returned shortly afterwards and advised the directors he was calling AIB immediately to reverse the transactions.

Claiming she was shouted down at every turn, Mary Flannery says she felt she had no alternative but to leave the meeting. “Sadly, the way in which the meeting ended set the tone for how my siblings and Mr. Norton dealt with me thereafter. The cost to the Company in terms of negative interest has been substantial since the date of the reversal,” she says in her affidavit in respect of the AIB loan.

However, Mary alleges her sister Andrena has dramatically altered her position in recent months and she also now wishes to bring her business/shareholding relationship with her brothers to an end. Mary’s lawyers have clarified that the oppression lawsuit is not directed against Andrena although she is a party to it.

An alleged vendetta

The saga in respect of the New York apartment and the Liosbaun units did not end with the May 2019 agm. Mary Flannery hired Grant Thornton to advise her on these issues and the company accounts more generally. She says the accountancy firm has tried unsuccessfully to make contact with Norton requesting relevant information.

Having received no response, she says a director of Grant Thornton, Patrick D’Arcy, called to Norton’s offices on June 24, 2019. The court heard he was told by the receptionist that Norton was upstairs. Allegedly when Norton came down and saw D’Arcy, he immediately ran back upstairs. A few minutes later, D’Arcy was allegedly told – despite having seen him – that Mr. Norton was not in the office.

According to Mary Flannery, her accountants were simply being stonewalled in their pursuit of financial information she says she was legitimately entitled to as a director and shareholder of Foxfield.

She claims after the 2019 AGM, she became aware of several unusual lodgements and withdrawals to and from the company’s accounts. Between March 25 and June 13, 2009, she states that over €1.1 million was lodged in four dollar transactions. Between January and June 2019, Mary Flannery alleges there were seven withdrawals totaling €615,307 for which she has yet to receive any explanation as to their purpose.

Allegedly denied the information, Mary Flannery issued legal proceedings to gain access to the company’s books and records under the Companies Act 2014 “with some regret”. Those proceedings have been adjourned on several occasions to facilitate mediation but remain live. 

On March 25, 2020, Grant Thornton received a letter from the company’s solicitors Arthur Cox. Mary Flannery claims the correspondence suggests that part of the proceeds from the sale of the New York apartment were used to buy the Liosbaun units which were in the process of being transferred to the company. 

The Foxfield director believes this does not get to the bottom of the matter. She claims no explanation has been forthcoming as to why, if company was used to purchase the units in Galway, they were held in the name of AutoExec, Kevin and Sheelagh Flannery’s company, or why they were included as an asset of Foxfield by the company accountant and auditor James Norton. 

“I say the lack of any cogent or rational explanation for the way in which these transactions took place regrettably leads me to conclude that Kevin and Sheelagh were attempting to misappropriate Company monies, namely part of the proceeds of the sale of the New York apartment and that the subsequent suggestion that the Liosbaun units were being transferred into the name of the Company was little more than a weak attempt to remedy their wrongdoing, having been caught out by me,” Mary Flannery claims in her affidavit. In her words the transactions are “patently irregular”.

Mary Flannery claims she is sidelined

There are other complaints made by the 58 year old director as part of her oppression claim. She alleges Frank excluded her from negotiations of a lease with a service station EK Fuels in Galway with negative results. She says she was excluded from a meeting of the board of directors on August 7, 2019 at Buswell’s Hotel in Dublin which was attended by Kevin, Frank, Sheelagh, Andrena and Norton. Allegedly she discovered afterwards that she had been removed from her position as company secretary and replaced by Andrena. 

The court heard there was also an attempt to reign in her control over the accounts. Having been sole signatory with unlimited spending for years, the board allegedly voted to cap any individual cheque issued to the sum of €200,000. It is also alleged that the other directors sought a meeting with AIB in order to introduce themselves and put a new mandate in place. This was apparently rejected by the bank.

Mary Flannery claims that in a further bid to isolate her, some of her management duties in respect of the company’s property portfolio were transferred to Frank. She also alleges that her younger brother rang Alan Moody, the then manager of the Ashling Hotel in June 2019 to stop him hiring Mary’s daughter who had previously worked in the Shelbourne Hotel and Accenture. It is alleged that Moody told Frank Flannery that as manager he would be making the decision in terms of hiring and firing. 

However, that allegedly changed in November 2019 when a decision was made that all new senior hotel appointments had to first go through the board.

The final straw, allegedly, for Alan Moody who managed the Ashling Hotel for 25 years came in January 2020. The court heard he received a letter from Norton & Norton Accountants, signed by James Norton allegedly questioning his integrity and seeking to re-audit the accounts for the Ashling Hotel for a period of 12 years during which Norton was both the accountant and auditor. According to Mary Flannery, Moody felt this was an attack on his personal integrity and subsequently tendered his resignation. She said it was a mark of his character that rather than pursue a case against the company he wrote a very pleasant letter thanking the directors for the years he had spent at the Ashling. 

Since his resignation, a management company, the Prem Group, has been put in control of the Ashling which Mary Flannery believes, based on her experience in the hospitality industry, is the wrong avenue for the hotel. 

In respect of the direct provision centre at the Eglinton Hotel, Mary Flannery claims a motion was put forward in her absence last August to proceed with renovation works in the region of €750,000 in order to put the property up for sale. She says she opposes the works on the basis that a potential buyer might not want to operate the building as a direct provision centre meaning all the money would have been spent for nothing.

When the case first came before the Commercial Court remotely on November 16 last, lawyers for the various parties introduced themselves to the court. There were questions as to whether the various parties had been served including Frank Flannery who lives between Spain and Ireland.

The case was adjourned for a week. When it came back before Justice David Barniville senior counsel Lyndon MacCann, acting for Mary Flannery, formally applied for the oppression proceedings to be entered into the commercial division of the High Court. MacCann said the value of the company Foxfield Inns ran to tens of millions of euros and the claim being made vastly exceeded the €1 million threshold set down for Commercial Court cases. The cae was fast-tracked without any objections from the defendants.

That is where the matter lies for now. The defendants were granted several weeks to furnish replies on what was described in court as “complex and intricate matters”. Court filings show Sheelagh Flannery, Kevin Flannery and James Norton have all lodged affidavits in recent weeks that have yet to be opened in court. The case will return to court on Monday.