The Split Between Desmond And McCann

Dublin’s commercial court began hearing about the end of the business relationship between MCD chief Denis Desmond and Eamonn McCann Dec. 7, when the two began their legal fight over money.

McCann reckons the terms on which the two ended their business partnership mean he’s due about euro 3.8 million from Desmond, who says the figure should be closer to euro 104,680.

The matter has taken a year to arrive at a full court hearing. Proceedings began Nov 2, 2009, but the case scheduled for February of this year was put back because the judge said he could deal with the convoluted history between Desmond and McCann only in what he described as “more digestible portions.”

The lawyers have described the case as a “a row between two gentlemen,” but it’s still likely the gloves will be off because – as Mr. Justice Brian McGovern has observed – attempts at settling the matter through mediation have come to nothing.
Judge McGovern said he presumed the parties were aware that if the case plays out to conclusion they are unlikely ever to do business again.

Desmond and McCann worked together for several years and established MCD, the country’s main music promotions company. The partnership broke down a number of years ago, and Desmond took full control of the business. McCann went on to set up Wonderland Promotions.

Desmond allegedly agreed to buy out McCann for 4.66 times the average annual net profits for the years 2003, 2004 and 2005, but the two former partners are at odds over how the net profit should be reached.

The court will also be asked to determine a number of connected issues including the nature of the alleged partnership, how profits were calculated in relation to the buy-out agreement, and how it dealt with overheads and expenses.

McCann says that at no stage has Desmond put a “realistic value” on the amount due and that he also failed to keep the income of the alleged partnership in a separate account.

He also says Desmond didn’t keep the accounts and income of the alleged partnership – or joint venture, as Desmond is calling it – as a separate account, but instead permitted those funds to be used by his MCD Productions company.

McCann further claims that monies received as sponsorship had been retained by another company controlled by Desmond’s Gaiety Investments and that Desmond initially placed obstacles in his way when he tried to gain access to the accounts.

On the first day of a case that’s expected to last six, the court heard how – when the breakup of the partnership was being discussed – McCann intimated to Desmond that he had cancer and had been given five years to live.

Acting for McCann, Brian O’Moore SC said it was a “phantom illness” and admitted it was “a singularly stupid” and “particularly unforgivable act” and his client had only done it because he was very worried about the business and what sort of settlement could be reached.