Barclay Brothers Claridge’s Bid Was Improper, Developer Says

David and Frederick Barclay, the billionaire owners of the Daily Telegraph newspaper, acted improperly in an attempt to take over a luxury hotel company, including making a large payment to the wife of a shareholder, lawyers for an Irish developer said.

Patrick McKillen sued the Barclays and their companies over “an intense battle for control of Claridge’s and associated hotels,” McKillen’s lawyer Philip Marshall said in opening arguments of a trial in London today. The brothers behaved dishonorably and unlawfully in trying to acquire Maybourne Hotels, which also owns the Berkeley and Connaught hotels in the U.K. capital, he said.

The hotel company is worth more than 1 billion pounds ($1.6 billion), according to McKillen, who owns 36 percent of it. The Barclays bought 800 million euros ($1.06 billion) of the hotel company’s debt last year from Ireland’s National Asset Management Agency through a holding company called Maybourne Finance Ltd.

McKillen is seeking a court ruling that he has the right to buy the remaining shares in Maybourne. His lawyers argued the Barclays intend to divide up the company and sell the 200-year- old Claridge’s and the other hotels.

In court papers setting out their defense, the Barclays denied the allegations and said “they were not involved in the small details,” of transactions. “These serious allegations have been made for tactical reasons, to try to embarrass Sir Frederick and Sir David and to tarnish their reputations.”

Air ‘Grievances’

“The claims are designed to create a public platform for Mr. McKillen to air his grievances,” Kenneth MacLean, a lawyer for the Barclay brothers’ companies including Misland Cyprus Investments Ltd. and Maybourne Finance, told the court today.

The Barclays made a “very significant payment” to the wife of another shareholder of the hotel group, Derek Quinlan, who then represented their interests, Marshall said. Beginning in January 2011, Quinlan did nothing “contrary to the instruction or wishes of the Barclay brothers,” he said.

“The various tactics deployed by the Barclay brothers and their vehicles involve a series of infringements of Mr. McKillen’s rights,” the lawyer said.

Quinlan, a former Irish tax inspector, was one of Ireland’s biggest real estate investors during a property boom, which collapsed in 2007. Some of his assets were seized by NAMA in April 2011 when he failed to agree on a debt repayment plan.

Neither brother will appear at the trial, which David Barclay says he is too ill attend.

“We just don’t accept that David Barclay is not able to attend court,” Marshall said.

The case is: McKillen v. Barclay & Ors., case no. HC11C03437, High Court of Justice, Chancery Division (London).

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net