Ancorde Ltd & Barry Harte v Horgan and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 06 June 2013
• Neutral Citation: [2013] IEHC 265
• Court: High Court
• Date: 06 June 2013

[2013] IEHC 265

THE HIGH COURT

[No. 12487 P/2012]

Record No. 12606P/2012

Ancorde Ltd & Barry Harte v Horgan & Ors

BETWEEN

ANCORDE LIMITED AND BARRY HARTE

PLAINTIFFS

AND

MIRINDA HORGAN, COLLETTE SWEETMAN AND ASHWOOD INVESTMENTS LIMITED

DEFENDANTS

In the matter of Ashwood Investments Limited T/A Horgan's Pharmacy Group

And

In the matter of the Companies Acts 1963 - 2012

Between

Ashwood Investments Limited, Miranda Horgan and Collette Sweetnam

Plaintiffs

And

Barry Harte, Damien Ryan and Ancorde Limited

Defendants

AMERICAN CYANAMID CO v ETHICON LTD (NO 1) 1975 1 AER 504 1975 AC 396 1975 2 WLR 316

COMPANIES ACT 1963 S122

CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 85

SERIES 5 SOFTWARE v CLARKE 1996 1 AER 853 1996 FSR 273

NATIONAL COMMERCIAL BANK JAMAICA LTD v OLINT CORP LTD 2009 1 WLR 1405 2009 UKPC 16

WESTMAN HOLDINGS LTD v MCCORMACK & ORS 1992 1 IR 151 1991 ILRM 833 1991/10/2491

ALLIED IRISH BANK PLC & ORS v DIAMOND & ORS UNREP CLARKE 14.10.2011 2011/3/547 2011 IEHC 505

SHELBOURNE HOTEL LTD v TORRIAM HOTEL OPERATING CO LTD 2010 2 IR 52 2008 IEHC 376

STATUTE OF FRAUDS (IRL) ACT 1695 S2

PARSONS LINGARDS BANK SECURITY DOCUMENTS 5ED 2011 PARA 11.1

WYLIE IRISH LAND LAW 4ED 2013 PARA 13.13

WYLIE IRISH LAND LAW 4ED 2013 PARA 13.63

DONNELLY THE LAW OF CREDIT & SECURITY 2011 PARA 17.69

COURTNEY THE LAW OF COMPANIES 3ED 2012 PARA 9.036

PALMER PALMERS COMPANY LAW

MANCINI v MANCINI 1999 17 ACLC 1570

CHEERINE GROUP (INTERNATIONAL) PTY LTD v YEUNG 2006 NSWSC 1047

LEE & CO (DUBLIN) LTD v EGAN WHOLESALE LTD UNREP KENNY 7.4.1978

WALLS v P J WALLS HOLDINGS LTD 2008 1 IR 732 2008 1 ILRM 1 2007/59/12668 2007 IESC 41

COMPANIES ACT 1963 S182(2)

COMPANIES ACT 1963 S142

MCGILLIGAN & BOWEN v O GRADY & ORS 1999 1 IR 346 1999 1 ILRM 303 1998/25/9783 1998 IESC 38

COURTNEY THE LAW OF COMPANIES 3ED 2012 PARA 13.082

COMPANIES ACT 1963 S205

FEIGHERY v FEIGHERY 1999 I IR 321 1998 IEHC 31

Company Law - Shareholdings - Interlocutory injunction - Directorship - Articles of Association - Bona fide issue - Balance of convenience - Transfer of shares - Status quo

Facts: These proceedings concerned two applications for interlocutory injunctive relief which were brought in two separate but related proceedings. These proceedings were the earlier of the two and referred to as ‘the Harte proceedings’ due to a Mr Barry Harte being the second named plaintiff. In the later proceedings, the parties were reversed therefore it was referred to as ‘the Horgan proceedings’ due to the fact a Ms Miranda Horgan was the first named plaintiff there. The only party who was not present in both sets of proceedings was a Mr Damien Ryan who appeared as the second named defendant in the Horgan proceedings only.

The third named defendant (‘the Company’) was a limited liability company incorporated in Ireland which owned and operated ten retail pharmacies. The Company was made up of seventy five shares, twenty five owned by the first named plaintiff, twenty five owned by the first named defendant. The dispute of both sets proceedings was identifying who was the owner of the remaining twenty five shares – the second named plaintiff or the second named defendant. Prior to November 2012, the only two directors of the company were the first named defendant and the second named plaintiff. The two directors then sought to add a third director, but whilst the first named defendant sought to put the second named defendant in the role, the second named plaintiff tried to put Mr Damien Ryan there (who was not participating in these proceedings). It was argued by the defendants that the second named defendant had acquired the twenty five shares in question from the second named plaintiff as a consequence of her taking action on a mortgage of shares which made the second named plaintiff the mortgagor of the twenty five shares and the second named defendant as mortgagee. It was claimed that the second named defendant was entitled to do so as the second named plaintiff had defaulted on the repayment of a loan that had been made to him under a loan agreement dated the 6 ^th April 2009.

The interlocutory relief sought by the plaintiffs was an injunction to prevent the second named plaintiff being removed as a director, an injunction preventing the defendants impeding him in exercising his duties as a director, and an injunction restraining the transfer of the twenty five shares in question being transferred to the second named defendant.

Held by Laffoy J that the granting of interlocutory relief was to alleviate injury to a party who complained that there was continuing harm being done prior to the full hearing and where compensation made may not be adequate at the conclusion of the proceedings to repair the damage suffered by the party. Granting the relief was not used to determine rights or issues whatsoever. The first consideration in deciding whether to grant the relief was whether a fair bona fide question had been raised by the person seeking the relief, which the court was satisfied was present here. The court also had to consider what relief could be granted to best maintain the status quo prior to the full hearing. This involved deciding whether an award of damages at the conclusion of proceedings would be an adequate remedy. Finally the court had to determine which party the balance of convenience favoured in deciding whether relief should be grant. In applying all these considerations, the court was not prepared to consider the relevant strength of each parties” cases.

Taking the circumstances of the present case, it was determined that if the second named plaintiff was to succeed in the action, he would be entitled to a permanent injunction protecting his shares and the resulting rights and privileges. As such, it was held that damages would not be adequate if these protections were not put in place on an interim basis. The Horgan parties had their own application for interim relief which they argued was necessary as damages would be an ineffective remedy if the plaintiffs were allowed to invoke Clauses 28(e) and 28(h) of the amended Articles of the Association of the Company which it was argued could be used to oust the first named defendant as a director. It was agreed that this was also the case. It was also recognised that the plaintiffs had jointly offered to give an undertaking as to damages if the relief was granted but they were ultimately unsuccessful in their action. The final consideration for the court was where the balance of convenience lay in deciding whether to grant the relief or not. It was determined that the principle favoured protection of the plaintiffs rights prior to the full hearing and the relief sought should be granted. It was further held that to do so would best maintain the status quo.

There were therefore interlocutory injunctions retraining the defendants from removing the second named plaintiff from his position as director, impeding him from carrying out his director duties, and transferring the shares in question from the second named plaintiff to the second named defendant. It was added that there would also be an injunction restraining the plaintiffs from invoking or relying upon Clauses 28(e) and 28(h) of the amended Articles of the Association of the Company against the defendants.

1 Judgment of Ms. Justice Laffoy delivered on 6th day of June, 2013.

Related proceedings

2 1. This judgment relates to two applications for interlocutory injunctive relief, the earlier in time having been brought in the above entitled proceedings and the later having been brought in proceedings entitled:

3 The earlier proceedings will be referred to as the Harte Proceedings and the later as the Horgan Proceedings. For clarity, the plaintiffs in the Harte Proceedings and the defendants in the Horgan Proceedings, other than Damien Ryan (Mr. Ryan) who took no part in the proceedings, will be referred to as the Harte Parties. The defendants in the Harte Proceedings and the plaintiffs in the Horgan Proceedings, other than Ashwood Investments Limited (the Company) in each case, will be referred to as the Horgan Parties. Insofar as it is necessary, the title to the proceedings will be amended by the substitution of "Collette Sweetnam" as the second defendant in the Harte Proceedings, to correct the spelling error in the title.

Factual backdrop

4 2. The Company is a limited liability company incorporated in this jurisdiction. It is a holding company which has a number of subsidiary companies through which it carries on business in the retail pharmacy sector. Currently, it owns and operates ten retail pharmacies, most of which trade as "Horgan's Pharmacy" and all of which are located within County Cork. According to its amended Articles of Association filed in the Companies Registration Office (CRO) in August, 2012, its authorised share capital is made up of ordinary shares and redeemable shares, the denomination of one of each such shares being €1.269738. At present, the issued share capital is seventy five ordinary shares, of which twenty five are owned by Mirinda Horgan (Ms. Horgan) and twenty five are owned by Ancorde Limited (Ancorde). The deponent on behalf of Ancorde in both proceedings has been Philomena Smith (Ms. Smith), who has averred that she is a director and a shareholder of Ancorde. Ms. Smith is the wife of Hilary Haydon (Mr. Haydon), who is a partner in Haydon Chartered Accountants, which firm acted as the auditors of the Company and its subsidiaries until it resigned by letter dated 30 ^th November, 2012. In her second affidavit sworn on 4 ^th January, 2013, Ms. Smith has averred that it is "simply untrue", as asserted by Ms. Horgan on affidavit, that Mr. Haydon is the beneficial owner of the shareholding in Ancorde of which she is the...