Dowling & Ors -v- Cook & Ors, [2013] IEHC 129 (2013)

Docket Number:2013 36 COS
Party Name:Dowling & Ors, Cook & Ors
Judge:Gilligan J.
 
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THE HIGH COURT[2013 No. 36 COS]

IN THE MATTER OF PERMANENT TSB GROUP HOLDINGS PUBLIC LIMITED COMPANY AND IN THE MATTER OF THE COMPANIES ACTS 1963-2012 AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT 1963

BETWEEN

GERARD DOWLING, PADRAIG MCMANUS, JOHN PAUL MCGANN, TIBOR NEUGEBAUER, PIOTR SKOCZYLAS, MURIEL SCORER AND GEORG HAUG PETITIONERSAND

ANDY COOK, JEREMY MASDING, EMER DALY, MARGARET HAYES, SANDY KINNEY, RAY MCSHARRY, PAT RYAN, KEVIN MURPHY, DAVID MCCARTHY, BERNARD COLLINS, ROY KEENAN AND THE MINISTER FOR FINANCE RESPONDENTS

JUDGMENT of Mr. Justice Gilligan delivered on the 27th day of March, 2013

Introduction

  1. This is an application for an interlocutory injunction before the hearing of an action pursuant to s. 205 of the Companies Act 1963 (hereinafter “the main proceedings”).

  2. The petitioners in this case were granted leave to issue a Notice of Motion returnable before this Court on 15th March, 2013 seeking an interlocutory injunction restraining the respondents, by themselves or by their agents or servants or plenipotentiaries, from undertaking any actions to terminate the directorship of Mr Piotr Skoczylas (the fifth named petitioner) at Permanent TSB Group Holdings plc until the adjudication of the main proceedings. The petitioners also seek a preliminary reference under Art 267 of the Treaty on the Functioning of the European Union (the TFEU) in relation to certain questions of interpretation of EU law.

  3. I have had the benefit of considering the papers, the written submissions on behalf of Mr Skoczylas, the written submissions on behalf of the first eleven named respondents and the oral submissions as given in Court by Mr Skoczylas, Mr Gallagher SC on behalf of the first eleven named respondents, Mr McCullough SC on behalf of the Minister for Finance, Ms Moynihan BL on behalf of the third and seventh named petitioners and the petitioners Mr McManus and Ms Scorer.

    Background Circumstances

  4. The petitioners are all members of Permanent TSB Group Holdings Public Limited Company (the Holding Company) which is a company limited by shares and incorporated under the Companies Act 1963 on 24th August, 2009. There are approximately 134,000 shareholders of the Holding Company. The Respondents are all directors of the Holding Company. Te Holding Company holds 100% of the shares of Irish Life and Permanent plc (the Bank). The Holding Company is not a credit institution but is listed on the Enterprise Securities Market of the Irish Stock Exchange. The Bank is a credit institution.

  5. A scheme of arrangement (the scheme) was sanctioned by the High Court on 11th January, 2010 whereby the Holding Company replaced the Bank as the listed holding company of the Irish Life and Permanent Group. The scheme provides that the Holding Company would be held by the shareholders in the same proportions and on the same basis as they held shares in the Bank. The Holding Company also, under the scheme, beneficially owns the issued share capital of the Bank. The scheme also provided that the Holding Company would have the same capital structure, board and management as the Bank and there would be no changes in corporate governance and the interests of the shareholders of the Holding Company in the assets and dividends of the Bank would not be effected by the scheme.

  6. As part of a series of recapitalisation programmes, the economic context of which need not be set out here, the Minister for Finance (the twelfth named respondent) acquired 99.2% of the shares of the Holding Company pursuant to a direction order made on 26th July, 2011 (the July direction order) by the High Court under the Credit Institutions (Stabilisation) Act 2010 (the 2010 Act).

  7. The Bank formerly held 100% of the shares in Irish Life Group Limited until 29th June, 2012, when the latter asset was sold to the Minister for Finance under a second direction order made on 28th March, 2012 (the March direction order) again pursuant to the 2010 Act. Irish Life Assurance is a wholly owned subsidiary of Irish Life Group Limited and the former is an undertaking authorised under the European Communities (Life Insurance) Regulations 1994 to carry on Life Insurance Business. The Holding Company does not conduct any business itself.

  8. The petitioners claim that under the terms of the scheme directors of the Holding Company must also be directors of the Bank and that a director of the Holding Company who is prevented from having access to information and involvement in the decision-making regarding the Bank is not in a position to discharge his duties as a director of the Holding Company. With the exception of Mr Skoczylas, the fifth named petitioner in these proceedings, all other members of the board of directors of the Holding Company (the first to seventh named respondents) are also members of the board of directors of the Bank. Mr Skoczylas claims that this is the result of him being “illicitly blocked from being on the [Bank] board.”

  9. Before examining the specific claims the subject of these proceedings it is necessary, for the sake of clarity, to set out the details of a number of other on-going proceedings which arise out of these factual circumstances. All of the petitioners except the sixth named petitioner, Ms Scorer, were applicants in the proceedings which challenged the Direction Order obtained by the Minister for Finance on 28th March, 2012 (Rec No. 2012/116). The first, second and fifth named petitioners are the applicants in proceedings in relation to the Direction Order of 26th July, 2011, which are ongoing (Rec. No 2011/239). There were also further proceedings brought by the first, second, third and fifth named petitioners seeking mandatory orders appointing Mr Skoczylas to the Board of Directors of the Bank. The reliefs sought on this application were refused by Murphy J on 27th February, 2012. This order has not yet been perfected though Mr Skoczylas stated in his oral submissions that it was intended to appeal this decision when that becomes possible. An attempt was also made by all of the petitioners to bring an application under s. 160(2) of the Companies Act 1990 against the first eleven named respondents seeking disqualification orders. The respondents and the Bank were granted an interlocutory injunction by Cooke J on 4th February, 2013 restraining the petitioners from bringing that application. This decision is under appeal by the petitioners.

    Specific Facts pertaining to the directorship of Mr Skoczylas

  10. On 20th July, 2011, prior to and in contemplation of the July Direction order, an Extraordinary General Meeting of the Holding Company took place, its purpose being to vote on seven resolutions, three proposed by the Board and four proposed by the shareholders. The fifth named petitioner was appointed, subject to prior regulatory approval, as a director of the Holding Company by 67.5% of the shareholder vote at that meeting. The three resolutions proposed by the Board of the Holding Company were rejected and the four resolutions proposed by the shareholders were passed. It is only “Resolution 7” in relation to the appointment of the fifth named petitioner as a director of the Holding Company which is of strict relevance to this application.

  11. In consequence of this the High Court made the July direction order on 26th July, 2011, pursuant to the 2010 Act, on the application of the Minister for Finance, the twelfth named respondent. This order was in similar terms to the three resolutions proposed by the directors of the board and rejected by the shareholder vote which related to the recapitalisation of the Bank, including an increase in the authorised share capital of the Holding Company. The four resolutions proposed and passed by the shareholders were revoked except Resolution 7 in relation to the appointment of Mr Skoczylas as a director of the Holding Company. These issues are termed the “first phase of recapitalisation” by the petitioner.

  12. The “Second phase of recapitalisation” occurred between December, 2011 and March, 2012. The twelfth named respondent, the Minister for Finance, made an offer to purchase Irish Life Group Limited to finalise the recapitalisation of the Bank. The directors of the Holding Company authorised the negotiations with the Minister in relation to this transaction. On 28th March, 2012 a further direction order was made by the High Court pursuant to s. 9 of the 2010 Act under which the Bank sold Irish Life Group Limited to the twelfth named respondent. It is in relation to these two direction orders and in relation to the role of Mr Skoczylas as a director of the Holding Company which the oppression forming the basis of the s. 205 Companies Act 1963 claim is said to have arisen by the petitioners.

    S205 in relation to the Petitioners as a whole

  13. A number of alleged breaches of EU law are claimed in relation to both of the direction orders.

  14. The petitioners claim that in relation to the EGM of the 20th July, 2011, the...

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