Feighery v Feighery

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 01 January 1999
• Neutral Citation: [1998] IEHC 31
• Docket Number: No. 199 COS/1999,[1997 No. 199 Cos.]
• Court: High Court
• Date: 01 January 1999

[1998] IEHC 31

THE HIGH COURT

No. 199 COS/1999

FEIGHERY v. FEIGHERY & ORS

IN THE MATTER OF THE COMPANIES ACTS, 1963– 1990

AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT, 1963

AND IN THE MATTER OF SIAC CONSTRUCTION LIMITED

BETWEEN

AIDAN FEIGHERY

PETITIONER

AND

CIARAN FEIGHERY, CONLETH FEIGHERY, TOM FEIGHERY, MARY FEIGHERY, MICHAEL FEIGHERY AND FINN LYDEN

RESPONDENTS

1 Ms. Justice Laffoy delivered on 25th February, 1998

THE APPLICATION

2 On 9th October, 1997 the Petitioner filed the Petition in this matter claiming declarations that certain alleged acts of the Respondents, which are particularised in the Petition, are oppressive to and in disregard of the interests of the Petitioner as a shareholder in Siac Construction Limited (the Company) and in breach of the Respondents' fiduciary duties to him and claiming certain other relief to which I will refer later. By Notice of Motion dated 15th October, 1997 in these proceedings the Petitioner sought directions and also interlocutory injunctions restraining the Company and the Respondents from:-

3 (a) convening or purporting to convene or from holding an extraordinary general meeting of the Company for the purposes of removing the Petitioner from his position as a director thereof, or from otherwise publishing or alleging that the Petitioner is to be removed from his position as a director as aforesaid;

4 (b) publishing in any manner whatsoever any statement to the effect that the Petitioner is no longer a director of the Company; and

5 (c) preventing or impeding the Petitioner's attendance at board meetings or shareholders' meetings of the Company, whether by means of the convening of secret meetings of the shareholders or directors of the Company without notice to the Petitioner to discuss the affairs of the Company or otherwise.

THE UNDISPUTED FACTS

6 The Company was incorporated under the Companies (Consolidation) Act, 1908 as a limited liability company on 13th June, 1913 and since 1983 it has been incorporated under the name Siac Construction Limited. Its business is building and construction. The authorised share capital of the Company is £2,751,100. The issued share capital is £2,501,000.

7 The grounding Affidavit of the Petitioner sworn on 15th October, 1997 discloses that the entire issued share capital is currently owned by the following parties in the shares following:-

8 (a) 10.45% by John Feighery, who is a brother of the Petitioner, but who has never played an active role in the business of the Company;

9 (b) 1.6% by Denis Feighery, who is also a brother of the Petitioner, and who in the past was a director of the Company but is not currently a director;

10 ( c) 14.26% by Paul Feighery, who is also a brother of the Petitioner, and who was the Managing Director of the Company between 1973 and 1993;

11 (d) 10.45% by the second named Respondent, who is also a brother of the Petitioner, but is not a director of the Company;

12 (e) 10.45% by the third named Respondent, who is also a brother of the Petitioner, but is not a director of the Company;

13 (f) 10.45% by the first named Respondent, who is also a brother of the Petitioner, and who is the Chairman of the Company and to whom I will hereafter refer as "the Chairman";

14 (h) 10.45% by the fourth named Respondent, who is a sister of the Petitioner, but is not a director of the Company;

15 (i) 10.87% by the Petitioner, who has been an employee of the Company since 1982 and a director of the Company for over 11 years and who has also been the Company Secretary since about 1983;

16 (j) 10.46% by the fifth named Respondent, who is also a brother of the Petitioner, who is employed by the Company as a risk manager but is not a director of the Company;

17 (k) 10.18% by Margaret Feighery, the mother of the Petitioner, who is not a director of the Company.

18 Formerly, the share capital of the Company was owned by the Petitioner's father who managed and operated the Company until 1965. The current ownership of the share capital, as outlined above, arose in consequence of appointments out of a discretionary trust in 1993. I should perhaps point out that there is an inconsistency between the Petition and the Affidavit of the Petitioner, in that the Petition suggests that the shareholding of Margaret Feighery has been distributed amongst the other shareholders other than Denis Feighery. Nothing, however, turns on this inconsistency.

19 For present purposes, what is significant is that only two of the shareholders, the Petitioner and the Chairman, are directors of the Company and of the shareholders only the Petitioner and the fifth named Respondent are employed by the Company.

20 Article 3 of the Articles of Association of the Company provides as follows:-

"Whenever any member of the Company who is employed by the Company in any capacity (not being a Director) is dismissed from or ceases to be in such employment the Directors may at any time within six months after such dismissal or cessation resolve that such member do retire, and that he be required to transfer his shares at their fair value to another member of the Company or to a person selected by the Directors as one whom it is desirable in the interest of the Company to admit to membership..."

21 Article 3 goes on to outline the procedure for the forced sale of the shares and the ascertainment of their fair value.

22 The sixth named Respondent, to whom I will hereafter refer as "the Managing Director", is the Managing Director of the Company, having being appointed to that position on 2nd June, 1994.

23 Currently, the majority of the directors of the Company are non family members of the Feighery family and two are well known businessmen who hold directorships in several other prominent Irish companies.

24 The Company is a trading company and it also operates through a number of subsidiaries. The estimated turnover of the group of companies of which it is the parent in 1997 was £60 million. In 1996, the Company enjoyed a profit of £1 million by contrast to a loss of £500,000 for the year 1993, the year before the Managing Director joined the Company.

25 I believe it is not an exaggeration to state that the foregoing facts are the only undisputed facts among a welter of fact and innuendo in the Affidavits filed in support of and in response to this application.

THE PLENARY ACTION

26 Before outlining what I consider to be the facts in controversy which are relevant to the issues which fall to be determined on this application, it is necessary to record that there was listed for hearing contemporaneously with this application an interlocutory application in a plenary action in which the Petitioner is plaintiff and the Company and the six Respondents in these proceedings are defendants (1997, Record No. 11839P), in which the Petitioner sought interlocutory injunctions against the Company and the Respondents restraining them from:-

27 1. dismissing or demoting, or taking any steps to dismiss or demote, the Petitioner from his employment with the Company;

28 2. suspending the Petitioner from his employment with the Company or otherwise interfering with the Petitioner's contract with the Company whether by means of demotion, imposition of new terms on the said contract, the purported removal of the Petitioner from his position as director of the Company or otherwise; and

29 3. activity of the type sought to be restrained on this application.

THE "FACTS" IN CONTROVERSY

30 The Petitioner, a qualified Accountant, has been employed by the Company since 1982 when, he asserts, he succumbed to family persuasion to abandon a career in an accountancy practice and take up employment within the Company. He asserts that it was always understood between himself, on the one hand, and the other family and board members, on the other hand, that he would continue for the remainder of his professional career to participate in the management of the Company's affairs, that he would not be wrongfully excluded therefrom, and that neither the Company nor its directors would seek to undermine his position within the Company, nor to hinder the discharge of his functions therein. Further, he asserts that at all times the Company was a quasi-partnership between himself and the other family members, operated on the basis of mutual trust and confidence between them. The Chairman, in an Affidavit sworn by him in response to this application, has averred that the Petitioner joined the Company of his own volition and not as a result of family persuasion, and that, had the Petitioner an expectation that he would continue to participate in the management of the Company's affairs for the rest of his life, it was an expectation which was wholly unfounded and not based on anything which any member of the family had said to him. Moreover, he denied that there is some quasi-partnership in existence which entitles family members to participate in the management of the Company. In the Company, as it has developed, he averred, there is a real distinction between ownership and management of the business.

31 The Petitioner asserts that since he assumed that position, the Managing Director, with the assistance and support of the other Respondents, has embarked upon a course of conduct designed and intended to undermine the Petitioner's position as employee, director and shareholder in a manner which is oppressive to him. The Managing Director denies this allegation and contends that he has been extremely patient and has sought to accommodate what he alleges has been incompetence on the part of the Petitioner. He had discussed the Petitioner's role in the Company with a number of shareholders and directors prior to taking up the office of Managing Director and their unanimous view was that, if the Petitioner was incapable of performing the role of Financial Director...