Doyle v Bergin (No 1)

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 29 July 2011
• Neutral Citation: [2011] IEHC 517
• Date: 29 July 2011
• Court: High Court
• Docket Number: [2010 No. 162 COS]

Doyle v Bergin

IN THE MATTER OF THE COMPANIES ACTS 1963 -2009

AND

IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT 1963

IN THE MATTER OF SKYTOURS TRAVEL LIMITED

BETWEEN

MARK EDMOND DOYLE

PETITIONER

AND

JOHN BERGIN

RESPONDENT

[2011] IEHC 517

[No. 162 COS/2010]

THE HIGH COURT

Abstract:

Company law - Oppression - Practice and procedure - Costs - Purchase of shares - Cash value - Date of valuation - Discount - Orders - Calderbank letter - Companies Acts 1963-2009

Facts: The Court had delivered judgment granting a declaration, as sought by the petitioner, that the affairs of the Company in question were being conducted in a manner oppressive to and in disregard of his interests, along with an order directing the respondent to purchase his shares. The Court had to consider where liability for the costs of the proceedings should lie. The respondent contended that the petitioner had not succeeded on all issues, in particular on the arguments advanced as to the date of the valuation and the appropriate discount to apply. The respondent also contended that Calderbank letter had been issued.

Held by Laffoy J. that there would be an order that the respondent pay to the petitioner all of the costs of the proceedings other than the costs relating to the input of the two accountants. The petitioner had to pay to the respondent by way of offset of the valuation evidence costs, with all costs to be taxed in default of agreement.

Reporter: E.F.

COMPANIES ACT 1963 S205

SUCCESSION ACT 1965 S85

COMPANIES ACT 1990 S202(10)

COMPANIES ACT 1990 S242(1)

COMPANIES ACT 1963 S297(1)

COMPANIES ACT 1963 S297(2)

COMPANIES ACT 1990 S194

COMPANIES ACT 1990 S202

CRIMINAL JUSTICE (THEFT & FRAUD OFFENCES) ACT 2001 S59

COMPANIES ACT 1963 S205(1)

COMPANIES ACT 1963 S205(3)

GREENORE TRADING CO LTD, IN RE 1980 ILRM 94 1980/13/2367

COMPANIES ACT 1963 S60

COURTNEY THE LAW OF PRIVATE COMPANIES 2ED 2002

WESTWINDS HOLDING CO LTD, IN RE UNREP KENNY 21.5.1974

IRISH PRESS PLC v INGERSOLL IRISH PUBLICATIONS LTD 1995 2 IR 175 1995 2 ILRM 270 1998/22/8352

SCOTTISH CO-OPERATIVE WHOLESALE SOCIETY LTD v MEYER & ANOR 1959 AC 324 1958 3 WLR 404 1958 3 AER 66

EMERALD GROUP HOLDINGS LTD & BANFI LTD v MORAN & ORS UNREP FINLAY-GEOGHEGAN 8.10.2009 2009/19/4756 2009 IEHC 440

BIRD PRECISION BELLOWS LTD, IN RE 1984 CH 419 1984 2 WLR 869 1984 3 AER 444

COMPANIES ACT 1980 S75 (UK)

BIRD PRECISION BELLOWS LTD, IN RE 1986 CH 658 1986 2 WLR 158 1985 3 AER 523

COLGAN v COLGAN & COLGAN UNREP COSTELLO 22.7.1993 (EX TEMPORE)

STRAHAN v WILCOCK 2006 BCC 320 2006 2 BCLC 555 2006 AER (D) 106 (JAN) 2006 EWCA CIV 13

IRVINE & ANOR v IRVINE & ANOR 2006 4 AER 102 2007 1 BCLC 445 2006 EWHC 583 (CH)

FOWLER v GRUBER 2010 1 BCLC 563 2009 CSOH 36

LONDON SCHOOL OF ECONOMICS LTD, IN RE 1986 CH 211 1985 3 WLR 474 1985 BCLC 273

CLUBMAN SHIRTS, IN RE 1983 ILRM 323 1983/1/108

SUNRISE RADIO LTD, IN RE 2010 1 BCLC 367 2009 EWHC 2893 (CH)

PROFINANCE TRUST SA v GLADSTONE 2002 1 WLR 1024 2002 BCC 356 2002 1 BCLC 141

CUMANA LTD, IN RE 1986 BCLC 430

IRISH PRESS PLC v INGERSOLL IRISH PUBLICATIONS LTD UNREP BARRON 15.12.1993 1994/4/1061

1 Judgment of Miss Justice Laffoy delivered on 29th day of July, 2011.

1. Previous judgment

2 2 1.1 In a judgment delivered on 9 ^th July, 2010 on an interlocutory application in these proceedings, in which the petitioner claims relief under s. 205 of the Companies Act 1963 (the Act of 1963), I set out the reasons for dismissing a motion which had been brought by the respondent seeking the following orders:

3 (a) an order that these proceedings be heard in camera; and

4 (b) an order "pursuant to the inherent jurisdiction" of the Court precluding evidence being adduced in relation to a communication in respect of which the respondent contended that he was entitled to legal professional privilege.

5 The judgment and the order of the Court, which was perfected on 28 ^th July, 2010, were the subject of an appeal to the Supreme Court. By order of the Supreme Court made on 8 ^th October, 2010, which recited that the relief which the respondent was seeking was-

6 (i) an order that the matter be heard in camera, and

7 (ii) an order staying further prosecution of the High Court proceedings pending the determination of the appeal by the respondent,

8 the application for a stay was refused.

9 3 1.2 The substantive proceedings were heard in open Court. While issues were raised in relation to privilege during the course of the hearing and certain evidence was taken de bene esse, for the avoidance of doubt, I record that I consider that none of the evidence on which this judgment is based was evidence in respect of which legal professional privilege could be properly invoked.

2. The substantive proceedings and the factual background thereto

10 2 2.1 In the substantive proceedings, which were initiated by a petition which was presented on 18 ^th March, 2010, the reliefs claimed by the petitioner are:

11 (a) a declaration that, by reason of certain actions of the respondent adverted to in the petition, the affairs of Skytours Travel Ltd. (the company) are being conducted in a manner oppressive to the petitioner and/or that the affairs of the company are being conducted in disregard of his interests as a member of the company; and

12 (b) an order that the respondent and/or the company be compelled to purchase the petitioner's shares in the company at a value to be determined by the Court.

13 Unfortunately, a confused picture of how the interest of the petitioner in the company was acquired was presented in the pleadings.

14 3 2.2 The company was incorporated on 30 ^th October, 1987. From 1988 it was the corporate vehicle through which the respondent carried on his travel agency business, which over the time developed into a very successful business. The current issued share capital of the company comprises 30,000 shares, as I understand it, at €1.20 per share (although I would have expected the nominal value to be at the Euro equivalent of IR£1 per share), of which 28,420 are owned by the respondent and the balance of 1,580 shares are owned by the petitioner. In other words, the petitioner owns 5.266%, rounded to 5.3%, of the issued share capital of the company. Neither the pleadings in the case nor the evidence of the petitioner or the respondent properly reflected how the petitioner and the respondent built up their respective shareholdings until, on the third day of the hearing, an agreed position was put before the Court, albeit in what I found to be a rather confusing manner.

15 4 2.3 In the points of defence delivered on behalf of the respondent it was pleaded that at the time the petitioner acquired his shareholding he was, and still is, the principal of the solicitors' firm known as Action. It was pleaded that he had acted in family law proceedings on behalf of the respondent and that as part of the settlement of those proceedings in 1990 the respondent's wife relinquished her shareholding and directorship in the company. Therefore, it was necessary to have replacement director. The petitioner proposed himself as a replacement director and it was agreed between the petitioner and the respondent that the petitioner would acquire the respondent's wife's shareholding of 1,000 shares in the company at their nominal value. It was not disclosed how the petitioner acquired the remaining 580 shares. As was clear from the evidence, the petitioner's recollection was that in 1990 he purchased 1,580 shares which had been owned by the respondent's wife at the price of IR£1,580.

16 5 2.4 The true position, however, is difficult to extrapolate from the transcript of the evidence. Working back from the current position, I assume that in October 1990 the respondent was already the owner of 14,000 shares in the company. On 31 ^st October, 1990, 4,400 shares were issued for cash, of which the respondent acquired 3,400 shares and the petitioner acquired 1,000 shares. The annual returns for 1990, accordingly, show the respondent as the owner of 17,400 shares and the petitioner as the owner of 1,000 shares. On 23 ^rd March, 1995, a further 11,600 shares were issued on capitalisation of reserves, of which 11,020 were allotted to the respondent and 580 allotted to the petitioner. Therefore, as appears, apparently, in the annual returns for 1996, the respondent was then the owner of 28,420 shares and the petitioner was the owner of 1,580 shares, which remains the position. When the agreed true position was put before the Court, it remained the position of the petitioner that he had paid IR£1,000 for 1,000 shares. I accept his evidence on that point.

17 6 2.5 There was no shareholder agreement put in place to regulate the rights and obligations of the petitioner and the respondent inter se. Both on the pleadings and on the evidence there was a conflict as to the incidents attaching to the petitioner's position as director and shareholder.

18 7 2.6 It was pleaded in the points of defence that the understanding between the respondent and the petitioner was that, when the petitioner's directorship and shareholding would no longer be of mutual assistance to the company and the petitioner, in terms of the petitioner and Actons providing legal advice to the company, the petitioner would return the shares to the respondent at the price the petitioner paid for them. A letter dated 5 ^th March, 1990 from the petitioner to the respondent was relied on as corroboration of the alleged agreement. In the letter in question, the petitioner stated:

"In relation to the shares held by me, I confirm that in addition to the safe-guards given by the Company's articles of association, the shares in the event of my death are to be offered to you or to your nominee at the price which I paid for them plus the...