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Judge throws out oil tycoon’s bid to snatch back £210,000 paid out to developer in flats dispute

© PRESS AND JOURNALAberdeen Gareth Jones
Developers, Gareth Jones and Suzanne Jones at the Mile End school site, Aberdeen.

When retired oil tycoon Gareth Jones formed plans to transform an abandoned Aberdeen school into flats, he thought he was onto a surefire money-spinner.

But the £3.5 million Mile End School project launched in 2013 was blighted by “unforeseen problems” and took six months longer than planned to complete.

By the time the “substantially” over-budget revamp was finished, the downturn had caused the local property market to crumble.

The flats proved a burden to shift, and a financial flop.

Meanwhile, Mr Jones and his wife’s Mile End Developments fell out with project managers Crimond Estates Ltd, run by local businessmen Charlie Ferrari and David Suttie.

The deal inked three years earlier was torn up by Mr Jones in November 2016.

The matter reached the Court of Session earlier this year, where Mile End Developments was forced to fork out £213,101 to the property gurus.

But a defiant Mr Jones, who sold his oil business Dominion Technology Gases for £30 million in 2007, appealed the decision in a bid to avoid paying out.

Lord Pentland has now issued his judgment and backed the original verdict.

What was the dispute about?

The terms of the agreement stated Crimond Estates would provide management services to Mile End Developments, in exchange for some of the proceeds of the development.

Mr Jones cut ties on the grounds that the costs exceeded the originally agreed budget by more than the permitted 5% margin.

But it emerged in court that he had “approved the expenditure” that sent costs spiraling.

And despite the termination Mr Suttie and, to a lesser extent, Mr Ferrari, continued to carry out work in relation to snagging and sales.

This continued until an e-mail from Mr Jones in April 2017 ordered them to stop.

The oil and gas crash would further complicate the murky dispute.

The flats “failed to sell at the expected prices” as jobs were lost across the north-east when the sector was thrown into chaos.

This meant there were “insufficient profits” to entitle Crimond Estates to any share of them.

Court papers say the cash was “absorbed entirely” by Mile End Developments’ “entitlement to a priority sum”.

In March, Lord Tyre ruled that Mile End Developments “was not entitled to terminate the contract, and was in breach of contract in so doing”.

He ordered Mr and Mrs Jones to shell out the six-figure sum “by way of remuneration for its services up to the termination date”.

An appeal hearing recently took place at the Court of Session, with local firm Quantum Claims representing Mr Ferrari and Mr Suttie.

Lord Pentland agreed with the original decision.

Mile End School was opened in 1903 and generations of children attended over more than 100 years.

The plans for 37 flats were approved in 2012, after the school closed for the final time in 2010.

The original school building retained and extensions added to the north and south sides.

The full court judgment is available to read online here.

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