Donegal Investment Group Plc v Danbywiske, Wilson

• Jurisdiction: Ireland
• Judge: Denham C.J.,Charleton J.,O'Malley J.
• Judgment Date: 18 October 2016
• Neutral Citation: [2016] IESCDET 124
• Court: Supreme Court
• Date: 18 October 2016

[2016] IESCDET 124

THE SUPREME COURT

DETERMINATION

Denham C.J.

Charleton J.

O'Malley J.

IN THE MATTER OF ELST AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT, 1963 AND IN THE MATTER OF SECTION 213 (F) OF THE COMPANIES ACT, 1963 AND IN THE MATTER OF THE COMPANIES ACT, 1963-2012

BETWEEN

DONEGAL INVESTMENT GROUP PLC

PETITIONER

AND

DANBYWISKE, RONALD WILSON, THE GENERAL PARTNERS OF THE WILSON LIMITED PARTNERSHIP 1, MONAGHAN MUSHROOMS IRELAND

AND

ELST

RESPONDENTS

APPLICATION FOR TO APPEAL TO WHICH ARTICLE 34.5.3° OF THE CONSTITUTION APPLIES I.E., AN APPLICATION FOR LEAVE TO APPEAL TO THE SUPREME COURT FROM THE COURT OF APPEAL.

RESULT: The Court grants leave to the First Second and Third named Respondents and to the Petitioner to appeal to this Court from the Court of Appeal

REASONS GIVEN:

1 There are two applications for leave to appeal. Both are concerned with what is commonly called a suit under s. 205 of the Companies Act 1963, related to a company called ELST. Relief was also sought under s. 213(f) of the Act. The parties are in each case shareholders in that company. This is a composite ruling. The 1st matter is an application in which Danbywiske and other parties seek to appeal from the decision of the Court of Appeal of 8th June 2016, Finlay Geoghegan, Hogan and Cregan JJ, [2016] IESC 193. This was an appeal from an order of the High Court, McGovern J, of 16th January 2015, and judgment of 5th December 2014 [2014] IEHC 615. That High Court judgment fixed the price at which Danbywiske should buy the shares of the petitioner, Donegal Investment Group Plc, should that be the appropriate remedy on this section matter. That valuation hearing lasted 16 days and was heard by special order prior to the issue as to whether there were grounds to require a share buy out. There was also another hearing by McGovern J whereby on 5th June 2015, pursuant to judgment of 21st May 2015, he ordered that Danbywiske purchase the Donegal Investment shares in Elst. The judge regarded this as the appropriate remedy and there is no appeal on this. That hearing lasted 2 days. McGovern J had fixed the share price, in particular the relevant multiplier to be applied, in relation to transaction comparables exclusively. The decision on appeal of the Court of Appeal was that the High Court orders of 16th of January 2015 and 5th of June 2015 should be vacated and that Danbywiske should purchase Donegal Investment's 30% shareholding and ruled as to the calculation of the price at which that should occur. The Court of Appeal gave certain directions which were that the price should be the full current market value of the shares and that the appropriate multiplier should be determined after consideration of both relevant transaction and trading comparables. The trial judge had fixed the multiplier of 6:1 on the basis of transaction comparables only. That, the Court of Appeal held, was a finding based on no evidence. Danbywiske seeks to uphold the trial judge's finding by appealing the Court of Appeal judgment and essentially claim that there was evidence upon which McGovern J could have based his judgment. It seems that one possibility of returning to the High Court, pursuant to the Court of Appeal judgment, is an increase in the multiplier, and hence a higher price for the Donegal Investment shares.

2 The 2nd application is brought by Donegal Investment and relates to the costs order arrived at by the same panel of the Court of Appeal, judgment of Cregan J of 27th of July 2016 [2016] IECA 226. The order of the court dated 4th of August 2016 states that Danbywiske had appealed the order of McGovern J made on the 5 June 2015. The order of the High Court appealed against was that Donegal Investment should recover as against Danbywiske the cost of the petition, that is the valuation module including both the costs of the remedy module and reserved costs, such to be taxed in default of agreement. That order was overturned by the Court of Appeal, vacating the costs order of McGovern J and making no order on the costs of the appeal. Donegal Investment seeks to appeal that Court of Appeal judgment.

3 It is unnecessary on this application for leave to appeal to detail the background whereby Donegal Investments, as shareholders in Elst became unhappy with the various decisions that were made in the context of company management. That is detailed in the amended petition presented in December 2013. It is sufficient to quote from the judgment of Finlay Geoghegan J, referencing an attempt to seek agreement from the shareholders on a global review, at para 9 of the Court of Appeal judgment of 8th June 2016:

By this stage, however, there had been significant disagreements between the shareholders, so one of the options considered in the course of the Investec process was possible exit strategy for Donegal. The Chairman suggested a buyout of Donegal's shareholding be considered. The respondents offered a sum of €25,000,000, upon the basis of a 30% shareholding. That was refused. Donegal, by letter from its solicitors, sought the price of €34,000,000 for a claimed 35% shareholding in the company in default of which it was stated a petition would issue.

4 Is important to note that by prior judgment, which was not appealed, McGovern J, in plenary proceedings in the High Court, had decided in January 2015 that Donegal Investments held 30% of the relevant shares in ELST.

5 Article 34 of the Constitution provides for the public administration of justice; describes the courts established by the Constitution and those which may be established by law; provides for the full and original jurisdiction of the High Court; and under Article 34.2 establishes the Court of Appeal and under Article 34.5.3° sets out its appellate jurisdiction. This reads:

4 1° The Court of Appeal shall—

i save as otherwise provided by this Article, and

ii with such exceptions and subject to such regulations as may be prescribed by law,

have appellate jurisdiction from all decisions of the High Court, and shall also have appellate jurisdiction from such decisions of other courts as may be prescribed by law.

6 Article 34.4 of the Constitution also provides for the finality of decisions of the Court of Appeal, save for appeals that may be taken to the Supreme Court from decisions of the Court of Appeal. This is set out in Article 34.5.3° and 4° of the Constitution. The former relates to appeals where there has been a determination by the Court of Appeal and the latter where a litigant seeks to come directly from the High Court to the Supreme Court. The article relevant to this appeal, that where the Court of Appeal has...