It was a bruising few years for Athlone Town FC marked by financial hardship, controversy, conflict and poor league performances. The senior men’s soccer team languished at the bottom of the SSE Airtricity First Division. Off the pitch, there were rotating managers, allegations of match fixing and a legal bust-up over who owned the club’s new purpose-built 5,000 capacity stadium. 

But by 2019, the club’s fortunes appeared somewhat rosier. The team crawled a couple of places up the bottom half of the league table with four wins, compared to just one the year before, and the row over the €4.5 million stadium development ended in a settlement on May 23 of last year.

The long-running ownership dispute, which began around 2013 and ended up in court in 2017, was finally over. Or so it seemed until it sprung back to life with “an unendingly elaborate series of points being initiated, one more meritless than the next”, to quote a recent, scathing judgment in the case from High Court Justice Richard Humphreys.

The judge, known for his lively writing style, criticises the approach taken by local businessman Declan Molloy and his company Athlone Town Stadium Ltd in trying to unravel the May settlement – an attempt, he says, which “involved a number of unhappy features” including unfounded and “rapidly withdrawn” fraud claims against two company directors and a “campaign of procedural obfuscation”.

First some background. The original High Court case was brought by David Dully, secretary of Athlone football club, against Athlone Town Stadium, a company set up for the development of the new pitch, and its directors – Molloy, Kieran Temple and Paddy McCaul. The Football Association of Ireland (FAI) was a notice party.

In the early stages of the row, the parties agreed former FAI chief John Delaney would act as a mediator .

Dully’s aim in the case was to remove the development company as a trustee of the property. He claimed that while Athlone Town Stadium Ltd was the legal and beneficial owner of the development, it was meant to hold title in favour of the club.

The court heard that the issue first surfaced in 2013 when Molloy, a 97 per cent stakeholder in the stadium company and contributor of around €665,445 of his own money to the project, allegedly claimed a right to be able to sell the development without any resort to the club. The parties agreed former FAI chief John Delaney would act as a mediator in the row, but no settlement was reached at that point.

Founded in 1887, Athlone is the oldest soccer club in Ireland. St Mel’s Park was its home from 1927, hosting many exciting games, including a visit from AC Milan in 1975; but the club had to move to new grounds and build a new arena to meet FAI licensing regulations imposed by UEFA in 2004. The new stadium was to be built on an 8.5-acre site at Lissywollen. 

Athlone Town Stadium Ltd was incorporated for the purposes of the development. Lottery funds of €2.5 million and other donations, including Molloy’s substantial input, went towards the new stadium, which was completed in 2007. Word got around that a “mystery donor” had cleared off the debts of the club with a substantial gift.

In 2012, problems arose with the new stadium. Chairman of the club John Hayden was concerned with the standard of maintenance of the grounds. It was alleged, and later accepted by the High Court, that the stadium had been allowed fall into a state of disrepair as a result of Athlone Town Stadium’s neglect. Not long after, the issue of ownership began to surface.

The row dragged on, threatening to scupper €200,000 being offered in sports capital funding for an astroturf surface. Works had to be completed by October 2017 to enable drawdown of the grant (the deadline was later extended), but the club was hampered because it was unable to register its interest in the grounds with the Property Registration Authority. Dully was concerned it could be 30 years before the club was again eligible for that sort of government money. Legal proceedings were initiated. 

There were also insurance issues, and according to Dully, Molloy showed up at the club one day and “told young kids to stop training and put a lock on the gate”, restricting access to the premises for club members. 

Attempts by the defendants to have the case struck out failed. The case went to hearing.

In an affidavit dated August 23, 2017, Molloy denied that the property had been held in trust for the club. But the court found he had signed a deed of trust in 2015, to that effect. 

At the hearing, Molloy admitted threatening to sell the grounds but said this had been a casual remark.

Later on affidavit, he denied ever having claimed a right to sell the property without resort. However, in a further cross-examination, he said he did make the threat but had been provoked.

Justice Humphreys noted: “In re-examination, he seemed to try to wriggle out of the contradiction which he previously acknowledged under cross-examination. Having seen and heard Mr Molloy, I find that he is an unreliable witness, that his evidence was unsatisfactory, confused and in certain respects evasive, was riddled with contradiction, complication and unexplained or implausible propositions.”

The judge also found Molloy was unable to explain clearly the status of the €665,445 he paid to the company. His evidence varied as to whether it was entirely in exchange for share capital or part loan or gift. 

Athlone Town Stadium Ltd was roundly defeated in the proceedings. Justice Humphreys ruled that the company be replaced as trustee of the club and that it hand over the keys to the property and all documents of title.

But the legal battle wasn’t over. The football club now wanted damages over what had happened.

An ostensible settlement

There were more court dates.

Then finally, there was an entente. Having wound its way through a series of High Court hearings and rulings, the two sides hammered out a deal last May in the corridors of the Four Courts, mid-trial. The negotiations took some time and there was a lot of toing and froing between the parties.

Under the terms of the settlement, any claims made personally against the directors of Athlone Town Stadium Ltd were withdrawn. The company agreed to discontinue a challenge pending before the Court of Appeal from the earlier High Court ruling and accepted €50,000 lodged by the defendants as security for legal costs would go to the plaintiff, along with a further €50,000.

It was also agreed that a new entity would be set up to hold Athlone Town Stadium on trust for the benefit of the club. This agreement was backed up by a court order.

So how did the settlement begin to unravel?

Around a month after the compromise was agreed, Athlone Town Stadium Ltd held an extraordinary general meeting (EGM) on June 27, 2019. Two of the directors, McCaul and Temple, voted in favour of the settlement agreement. Molloy, who had been opposed to the deal during negotiations (preferring to fight on), voted against it. Temple wrote to Colm MacGeehin, a solicitor acting for the directors, informing him that the majority view had prevailed.  

Some months later, when the row was stoked back up again, McCaul told the court he believed at the time of the deal that Molloy was permitting the agreement and would come on board.

McCaul said he borrowed €25,000 to pay his contribution to the settlement. The €50,000 that was lodged to court as security for costs was drawn down in favour of the club last September. McCaul also gave evidence that Temple wrote a cheque for €10,000 but later cancelled it, leaving the solicitors acting for Athlone Town short by €25,000.

He also told the court that he believed in the settlement. He felt the alternative, an appeal by the company against the earlier decision, was a “gamble”. 

The court heard the appeal strategy was considered a risk and legal counsel in the case had given the company a five per cent chance of winning.  (Justice Humpries had his own view, putting the chance of success on appeal of the trustee issue at nil.)

But not everybody felt the same way.

An “irresponsible and reckless” deal

Neil McNelis, solicitor for Athlone Town Stadium Ltd, would later say he had no hand, act or part in the settlement which he described as “ridiculous”. He claimed it was so irresponsible and so reckless that the directors could have exposed themselves to personal liability and legal costs.

In an affidavit sworn last September, he said he was not consulted about the terms agreed by the parties last May and first heard a settlement involving the company had been reached when he received a phone call from Colm MacGeehin, the solicitor acting for the firm’s directors.

McNelis said he had not been aware in advance of the negotiations that anything potentially binding on the company was in train.

There was a second company EGM on July 30, 2019. After this, Molloy emailed McNelis instructions to set aside the settlement and secure the company’s case in the Court of Appeal. The solicitor said he took this as superseding the earlier EGM decision.

Then last September, Athlone Town Stadium Ltd returned before Justice Humphreys in the High Court seeking various reliefs aimed at extracting the company from the court-approved settlement, allowing the company to pursue its appeal.

The matter went into oral evidence in a hearing lasting five days. McNelis was one of several witnesses called.

Despite his stated misgivings about the settlement, the court concluded McNelis had been advised in advance to turn up at the negotiations but had decided that the matter could be handled, without his attendance, by the company directors. McNelis said the stage that the litigation was at had led him to believe that none of the matters discussed would directly relate to the company. But contemporaneous correspondence led the judge to conclude otherwise. 

“He said he had no interest in the outcome of the case and it would be easy enough if the lawyers were cynical to sit in court for ten days and soak up money.”

Colm MacGeehin’s evidence

MacGeehin, the lawyer for the directors, said he had understood an email from McNelis to have given him “unconditional authority” to settle the proceedings (involving “blazing rows” and “huge legal bills”) on behalf of the company and its officers.

It was also pointed out to McNelis in court that letters he sent to MacGeehin in the immediate aftermath of the settlement failed to indicate any alarm or astonishment at the terms achieved. MacGeehin believed letters from McNelis on June 24 and July 3, 2019 to be “wholeheartedly” endorsing the deal and its implementation.

The judge concluded the McNelis’s recollections were “unconsciously significantly coloured in retrospect by later developments”.

Asked if the company did not benefit from the settlement, McNelis replied that it didn’t as it was rendering itself completely insolvent. This too was rejected by the judge who found the company was insolvent anyway.

MacGeehin gave evidence that he had brought the company directors down from a fairly disastrous situation to something far more manageable. The stadium would go into public ownership and be protected forever. There had been references to half a million euros in legal costs. Instead, they had an all-inclusive settlement for €100,000. McCaul and Temple were not prepared to risk it all. He said he had no interest in the outcome of the case and it would be easy enough if the lawyers were cynical to sit in court for ten days and soak up money.

By July 2019, McNelis was concerned that steps to satisfy the settlement by drawing down the €50,000 lodged with the Court of Appeal would jeopardise the company’s appeal, which had not been withdrawn. After the second EGM, Molloy emailed McNelis to say the vote instructed him to do whatever had to be done to secure the appeal.

McCaul told the court there had been no meeting of the board of directors. McNelis said he had no reason to disbelieve Molloy.

Ultimately Humphreys reserved his most stinging criticism for the manner the company ran the case, “utterly oblivious to the other demands of the court”.

A further EGM on September 8 passed a resolution calling on McNelis to apply for an extension of time to appeal the settlement order. 

Molloy also took the stand. He gave evidence that he had told his co-directors during the settlement negotiations “ye can outvote me if you want”, although he did not think that they would. It was put to him that he had taken it on himself to try and pull down the deal. His reply was that he only wanted everything to be legal and in his view, there was no legal settlement because there had been no advance meeting of the company and the shareholders were not involved.

These contentions were rejected by the court, which concluded the directors were aware of the settlement terms which clearly bound the company.

In his findings, the judge found it had not been the practice of Athlone Town Stadium to conduct legal proceedings via EGMs until such time as Molloy sought to unravel the settlement. From that point on, he concluded that McNelis was acting on the instructions of Molloy alone. Draft affidavits and motions filed on behalf of the company were not shown to the other directors.

Justice Humphries also concluded that MacGeehin had been given authority by McNelis in an email of May 15, 2019 to act for the directors and the company in settling the proceedings. McNelis had voluntarily absented himself. In his letter of June 24, 2019, he had warned the company directors that not complying with the order would have very serious consequences. 

While he tended to prefer the evidence of MacGeehin and McCaul, the judge did not cast doubt on the bona fides of McNelis and Molloy. He reiterated his earlier finding: “I consider that their recollections have unconsciously or inadvertently been coloured by the unravelling of the settlement and the general rancour that has emerged in this case.”

Ultimately, Humphreys reserved his most stinging criticism for the manner the company ran the case, “utterly oblivious to the other demands of the court”.  

“Once it eventually got going, it has run for a full week. Had I not afforded the parties the benefit of early starts, shortened lunch adjournments and late sittings, the matter would have comfortably drifted into a second week, and maybe the momentum thereby generated would have propelled it even further,” he complained.