Henry Gwyn-Jones describes it as “love at first sight”. The British property developer and businessman had been hunting for an Irish home for some time, but, as he made way through the gates at Ballynatray House, a Georgian mansion on the banks of the Blackwater River in Youghal, Co Cork, he knew his search had ended. So, in 2014, he bought the house, along with its 400 acres, for €12 million.

This is not just a holiday outpost. Gwyn-Jones spends 60 to 70 per cent of his time in Ballynatray and he has invested heavily in the estate. There has been ongoing conservation, historic fixtures and fitting have been reinstated, cottages have been converted, while the overall estate has swelled in size to 800 acres.

In addition to being his home, it is also a business. It can be rented for weddings and functions, while it also offers clay pigeon shooting, driven game shooting and other outdoor activities.

If Ballynatray has been a shrewd and pleasurable play for Gwyn-Jones, an investment in an incomplete shopping mall in the Bulgarian capital of Sofia in 2007 has been anything but.

At last count, Gwyn-Jones estimates that he has lost more than €26 million on the project, while he also a further potential exposure on foot of a personal guarantee he provided in relation to it.

And it does not end there. A bitter corporate battle has been escalating with his former business partner in the project, a New Zealand-born, Brazil-based real estate developer called Richard William McDonald.

Gwyn-Jones has alleged in various courtrooms that he was the victim of “fraud” and was effectively lured and induced into the project under a false premise.

The battle spans multiple jurisdictions – from courtrooms in Sofia and the Isle of Man to offshore corporate entities in Malta and the Channel Island of Guernsey. There have been international freezing orders, various debt enforcements and even international arbitration.

Now, however, a new front has opened in the battle between Gwyn-Jones and McDonald: Ireland. And Ballynatray House, located on the Blackwater River, plays a starring role.

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Henry Gwyn-Jones describes himself as a “self-taught, highly motivated, independent businessman with a near 20-year career in property investment and an impressive track record in generating return on investment”.

He launched his Gort group of companies in 1997, and for, the first eight years, it focused on the UK market. According to Gwyn-Jones, it eventually accumulated a portfolio of 34 UK office properties which were sold in 2005 for a 36 per cent profit on his £84 million investment.

Since 2009, Gort’s focus has once again being on the UK where the company has acquired a diverse portfolio of commercial property. In between, however, it expanded into eastern Europe. Through a partnership with Altima Partners LLP, it acquired a portfolio of commercial properties in Bulgaria, Romania, Croatia and Turkey.

In addition, Gort invested independently in Bulgaria and Romania, primarily in hotels, shopping malls and development land.

It was in this period, after he had sold out of his UK assets and before he returned to familiar ground, that Gwyn-Jones entered into a deal with Richard William McDonald.

The New Zealand developer and the Bulgarian mall

Richard McDonald is a New Zealand real estate figure living in Brazil where he has been involved in the construction of Trump Towers in Rio de Janeiro, an office block licensed by the Trump Organization.

McDonald approached Gwyn-Jones in 2007 to invest in a shopping mall in Bulgaria known as Burgas Plaza. At the time of the deal, the plaza was incomplete. According to filings by Gwyn-Jones in various courtrooms, he agreed to advance €15 million for the acquisition, a figure that would then be supplemented by further, albeit smaller, amounts of money.

Gwyn-Jones claims that McDonald agreed to invest €5 million in the project, and it was this that convinced the Irish resident to invest. Under the terms of the agreement, Gwyn-Jones would get 60 per cent of the equity, with McDonald retaining the remaining 40 per cent.

The structure of the deal was complex, and it is this complexity that has added additional lawyers to the voluminous litigation that has occurred in recent years.

First, they established a special purpose vehicle in Malta called Burgas Holdings Limited to manage the project.

Gwyn-Jones held his stake in this company through a Guernsey company called Gort (Holdings) Limited. McDonald, meanwhile, housed his interest in an Isle of Man company called Bridgewater (IOM) Ltd. This was later substituted with a new company Balkan Holdings and this latter vehicle was subsequently renamed MRP Brazil Limited.

However, despite the early enthusiasm, things quickly soured. Gwyn-Jones claims that McDonald did not live up to his side of the bargain and advance the €5 million, something the New Zealand businessman rejects. Instead, he has claimed that never committed to investing €5 million of his own funds in the project.

He says that he actually took a loan from the company that ultimately held the interest in Burgas Plaza and that the loan was then applied as part consideration against the sum payable.

This is disputed by Gwyn-Jones who has argued in multiple jurisdictions and in multiple actions that these loans were a “sham” designed to allow McDonald acquire an equity interest in Burgas Plaza which far exceeded his minimal contribution. He says that had McDonald been clear on the loan structure from the start, he would never have recommended to the board of directors of Gort that it become involved in the project and “nor would he have given a personal guarantee to the tune of €20 million”, legal filings state.

Gwyn-Jones claims he became aware of this “deceit” (as he alleges it to be) in September 2014. And since then, the two sides have engaged in legal warfare across multiple jurisdictions.

Freezing orders and arbitration

The High Court in the Isle of Man is located on Bucks Road on the island’s capital of Douglas. It is an understated functional building that lacks the old-world grandeur of the Four Courts in Dublin. And in November 2014, Gwyn-Jones dispatched lawyers to the Douglas courtroom on behalf of Gort seeking a worldwide freezing order against the assets of Balkan, the Isle of Man registered company that housed McDonald’s holding in the Bulgarian scheme.

The freezing order was granted on foot of an intended arbitration hearing before the International Chamber of Commerce (ICC), a dispute resolution institution headquartered in Paris. The first round of arbitration commenced in December 2014 and the terms of it were set out in an order of the Manx High Court the following October.

The settlement followed the appointment of a receiver over the assets of Balkan when it failed to discharge 60 per cent of the interim costs awarded against it in the Manx proceedings. According to documents lodged before the Irish courts, Gwyn-Jones has not recovered anything from Balkan. He says, accordingly, that he remains at a loss in respect of the funds of which – he claims – he was defrauded.

McDonald sought to have to order rescinded, but the court refused the application of Balkan in February 2015. Instead, it ruled that it was satisfied that the Gwyn-Jones company, Gort Holdings, had an arguable case that it had been the victim of “deceit and that the misrepresentations had continued through the project”, including various agreements to inject further loan capital to keep the venture afloat and the ultimate assignment of Balkan Holding’s interest to another company, Omega.

On January 28, 2020, Gwyn-Jones and Gort commenced a second ICC arbitration against McDonald and ten related corporate entities. In August 2020 the ICC decided that it would permit the claimants to proceed but only against McDonald and one of those entities. That order was appealed and the appeal is presently pending before a Paris court.

According to evidence given before the Irish courts, the arbitration tribunal has not yet been convened and when it does, McDonald proposes to challenge its jurisdiction to hear and determine the claim.

Judgements and counter offensives

As Gwyn-Jones litigated in the Isle of Man and in Paris, McDonald went before courts in the Bulgarian capital of Sofia. 

First, he sought to recover monies due on foot of loan contracts entered into between the two sides in early 2011 in relation to advertising space at the Burgas Plaza shopping centre

Gwyn-Jones unsuccessfully argued that that the “loan contracts had to be seen as part of the various contractual arrangements entered into in relation to the Burgas Plaza project and that the obligation under the loan contracts was performed by other agreed means and/or should be the subject of some form of deduction or set off,” according to a summary of the case outlined by the Irish courts.

However, he lost and on October 31, 2017, McDonald obtained a €425,926 judgment in the first Bulgarian proceedings in the Sofia City Court. This was confirmed on December 6, 2018, by the Court of Appeal and later by the Bulgarian Supreme Court of Cassation.

As the case over the advertising loans progressed, McDonald instituted a second action against Gwyn-Jones in Sofia over a third alleged loan agreement, dating from April 2011, under which he claims he lent Gwyn-Jones €110,700. A judgement against the Irish-based businessman was obtained in November 2016 for this amount, although Gwyn-Jones claims that he never knew about the litigation, and that had he known, he would have defended it in Bulgaria.

Gwyn-Jones was not prepared to pay the judgements, maintaining again that he was the victim of a fraud by McDonald (claims that have yet to be proven) and that he had a worldwide freezing order in relation to the dispute.

And so, in an effort to enforce the judgements against his former business partner, McDonald dispatched correspondence to Ballynatray House and lodged documents with the High Court in Dublin seeking to enforce the Bulgarian judgements here.

All roads lead to Ireland

If McDonald thought applying pressure in Ireland would force his former business partner to retreat, he quickly learned otherwise. Instead, Gwyn-Jones went on the offensive and tried to block the enforcement, alleging, among other things, that such an order would breach public policy by assisting a fraud to be perpetrated against him.

He has now taken two separate cases trying to stymie the judgements. In the first, in relation to the advertising contracts, Gwyn-Jones’s legal team contested McDonald’s case that the advertising loans were standalone contracts, claiming this was unlikely as the New Zealand businessman “had been in the weaker financial position” and “had never put any of the monies he had promised into the venture”, allegedly a fact he concealed.

Specifically, he says McDonald arranged for a contract between a firm set up by him to purchase all advertising spaces in the Burgas shopping centre for resale to advertisers at a profit. Then, he alleges McDonald fraudulently induced him to consent to this contract by indicating that he would provide a series of loans which would then be repaid through a share of the advertising profits generated by the company that had taken this space.

He also claims McDonald agreed to advance the value of his share of these anticipated profits via the loans, and their repayment in this manner. In a sworn affidavit Gwyn-Jones’s French lawyer stated that “but for the fraudulent conduct of Mr McDonald to induce Henry Gwyn-Jones from entering into a series of contracts and actions to acquire the shares of Burgas Plaza AD such subsequent contracts including the advertising contract and these related loan contracts would not have been entered into by Henry Gwyn Jones”.

He argued that the contract was only entered into because of the fraudulent misrepresentation, and as a result, the Irish courts should refuse enforcement or recognition of the foreign judgment on public policy grounds, Irish public policy leaning strongly against ‘fraud’.

However, late last year, Justice Barr decided not to block or even to stall enforcement of the Bulgarian loan judgment pending the outcome of the arbitration proceedings. He found the Bulgarian courts clearly had jurisdiction to deal with the dispute and he had no authority to review the correctness of the outcome.

Gwyn-Jones has since appealed that ruling to the Court of Appeal. The case is ongoing.

Meanwhile, Gwyn-Jones continues his fight against the second judgement. Having lost his case before the High Court, he took matter to the Court of Appeal, which has now handed down a further judgement.

While he was represented in court in the first action in Bulgaria, he was not there for the second case. This was central to the first of his arguments – that he had not been served properly in relation to the action.

His evidence is that on November 19, 2015, the documents initiating these proceedings were sent by courier to Ballynatray House and were signed for by a ‘N. O’Riordan’. In his first affidavit grounding, Gwyn-Jones describes this property as his ‘home address’, but contends that he was not present at his residence at this time, that he was not aware that legal documents were delivered, that he did not authorise ‘N. O’Riordan’ to accept the documents and that he personally never received them.

In a recent judgement, the Court of Appeal added further context:

“He says little about ‘N. O’Riordan’, stating neither whether a person of that name was at the property at the relevant time nor, if he was (the appellant describes the person as ‘Mr. O’Riordan’), whether he has sought or obtained any explanation from him as to the circumstances in which he signed for such correspondence and failed to advise the appellant of it. In his application to set aside the judgment before the Bulgarian Courts his lawyers assert that ‘N. O’Riordan’ is not a member of the appellant’s family, and is not a worker, employee or employer.”

The court adds:

“On 26 June 2017, a notification of that judgment was sent to the appellant via the Courts Service. It too was sent by registered post and was signed for. The appellant says that he was not in Ireland on that date (again exhibiting various documents corroborating his claim that he was outside the jurisdiction at that time). He tenders no evidence to explain how it came about that a registered letter was signed for at his home, but he was not advised of it. The appellant had two weeks from receipt of notice of this judgment to appeal it to the Sofia Court of Appeals. He never availed nor sought to avail of any such appeal when he says he did become aware of the judgment. No evidence has been adduced before this Court as to whether an application could have been made to extend the time for such an appeal. That judgment was thereafter declared enforceable on 10 July 2017.”

Based on the facts, the court did not accept this as a reasonable ground for overturning the judgement.

In his appeal, Gwyn-Jones also argued once again that enforcement of the judgment would be contrary to public policy because.

The Court of Appeal sums up his claim:

“While he asserts that the fraud and deceit carried out by the respondent in inducing him to enter into certain commercial transactions ‘shows that the judgment herein were [sic.] obtained by an underlying fraud’, he points to no evidence tendered by the respondent which was false – in fact he appears to admit the fact of the loan agreement and the making of an advance thereunder, and suggests no basis on which the formal legal conditions for the recovery of that debt as provided for under the law of Bulgaria were not met.

“Instead, his point is that the loan should not have been enforced because it was connected with a fraud, that (in a sense which is not particularly clear from the papers) the loan contract was itself procured by fraudulent misrepresentation and that the evidence of this connection (comprising the material before, and conclusions of, the Manx High Court) is sufficiently strong to justify the court in refusing to recognise or to enforce a judgment in circumstances in which but for the defendant’s allegedly fraudulent scheme, the opportunity for the contract now sought to be enforced would not have arisen.”

The court was not moved by his argument and rejected his claim on the grounds that there was insufficient evidence to overturn the verdict of a foreign court.

Gwyn-Jones also asserted that the claims giving rise to the Bulgarian proceedings are the subject of an arbitration before the ICC Court of Arbitration and that this affords a separate basis in law for not recognising or enforcing the judgment. Again, the court rejected the argument.

Delivering its verdict, the court also awarded costs against the Cork-based businessman.

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According to his profile on LinkedIn, when Gwyn-Jones is not managing his international portfolio of property investments, he enjoys relaxing at home in Ireland with his four dogs or spending time sailing on his boat and skiing.

However, he has also spent a large amount of time litigating. The Irish actions continue, while arbitration in Paris will begin shortly. Some fourteen years after backing the Bulgarian property play, the fallout continues.

Further reading:

Eastern promise: The complex web behind a soured Bulgarian property deal