Geaney v Elan Corporation Plc

JurisdictionIreland
JudgeMR. JUSTICE KELLY
Judgment Date13 April 2005
Neutral Citation[2005] IEHC 111
Docket Number1920SP/2004
CourtHigh Court
Date13 April 2005
GEANEY v ELAN CORPORATION PLC
MR. DONAL GEANEY
PLAINTIFF
ELAN CORPORATION PLC
DEFENDANTS

[2005] IEHC 111

1920SP/2004

THE HIGH COURT

COMMERCIAL

DUBLIN

PRACTICE AND PROCEDURE

discovery

Failure to comply with order for discovery - Cross-examination on affidavit of discovery - Application to strike out defence and counterclaim - Mercantile Credit Corporation of Ireland Limited v Heelan [1998] 1 I.R. 81 followed - Further and better discovery ordered

The plaintiff was a former chairman and chief executive of the defendant. The plaintiff instituted proceedings against the defendant. The plaintiff applied for discovery and the High Court ordered discovery. This was an application seeking to have the defendant’s defence and counterclaim struck out for failure to comply with the said order.

Held by Kelly J. in making an order for further and better discovery and giving directions that while he was dissatisfied with the way in which the discovery obligations of the defendant had been met that he would not be justified in making an order striking out the defendant’s defence at this juncture. The Court also indicated its displeasure at the way in which the defendant had met its obligations by way of a costs order.

Reporter: R.W.

UNFAIR DISMISSALS ACT 1977 - 2001

RSC O.31 r21

MERCANTILE CREDIT COMPANY CO (IRL) LTD v HEELAN 1998 1 IR 81

1

APPROVED JUDGEMENT DELIVERED BY MR. JUSTICE KELLY ON WEDNESDAY 13TH APRIL 2005

2

I hereby certify the following to be a true and accurate transcript of my shorthand notes of the evidence in the above-named action.

APPEARANCES

FOR THE PLAINTIFF:

MR. P. GARDINER SC

MR. DOWLING BL

Instructed By:

MR. E. CUNNEEN

L.K. SHIELDS

SOLICITORS

39-40 UPPER MOUNT STREET

DUBLIN

FOR THE DEFENDANTS:

MR. B. SHIPSEY SC

MR. M. HOWARD BL

Instructed By:

A&L GOODBODY

SOLICITORS

IFSC

NORTH WALL QUAY

DUBLIN 1

3

COPYRIGHT: Transcripts are the work of Gwen Malone Stenography Services and they must not be photocopied or reproduced in any manner or supplied or loaned by an appellant to a respondent or to any other party without written permission of Gwen Malone Stenography Services

MR. JUSTICE KELLY DELIVERED JUDGMENT AS FOLLOWS ON WEDNESDAY 13TH APRIL 2005.
4

MR. JUSTICE KELLY: The Plaintiff is a former Chairman and chief Executive of the Defendant. He was employed by the Defendant from the 1st October 1987 until the 31st July 2004.

5

On or about the 8th July 2002, the Defendant decided to remove the Plaintiff from the position of Chairman and chief Executive. He alleges that this decision was taken without cause and communicated to him without notice. He says he was immediately required to resign from all offices which he held with the Defendant. By an agreement of the following day, namely 9th July 2002, he was employed as a Senior Advisor to the Chairman of the Defendant until 31st July 2004.

6

As part of his remuneration, the Plaintiff was granted share options. options over 1, 150, 000 shares were granted on 8th November 1999. Options over a further 150, 000 shares were granted in February 2000. Employees whose service was terminated without fault had a period of 90 days during which to exercise their options post termination. That stipulation came from the terms of the plans under which the options were granted. This case concerns a dispute as to the length of time during which the Plaintiff can exercise his options. His case is that he is entitled to exercise his options for a period of 24 months since leaving the Defendant. That is to say he alleges that he is entitled to exercise his options until 30th July 2006. He contends that he has such an entitlement by contract or, alternatively, as a result of representations made to him by two named officers of the Defendant on the 8th July 2002. The statement of Claim, insofar as it is relevant, reads as follows. I now quote from paragraphs 5 through 12 of the statement of Claim.

7

2 "5. The rules of the said incentive plans provided for a variety of conditions associated with exercise periods in respect of share options. Between February and April 2002, the Senior Management Team and the Remuneration Committee of the Defendant were involved in a series of meetings. Arising out of the said meetings it was determined by the Defendant that, in respect of senior executives, the exercise period for share options under the Defendant's Share Option Plan would be extended to 24 months post termination.

8

6. At some time shortly prior to 8th July 2002 a decision was taken by the Board of the Defendant to remove the Plaintiff from the positions of Chief Executive Officer and Chairman of the Defendant. The said decision was taken without cause and was communicated to the Plaintiff on 8th July 2002 without notice and the Plaintiff was immediately required to resign from all offices that he then held with the Defendant.

9

7. On the evening of 8th July 2002, the Plaintiff attended at the Defendant's premises in Dublin. During the course of that evening, a telephone conversation took place between Mr. Dan Tully and Mr. Garo Armen of the Defendant, who were present in the Defendant's New York office, and the Plaintiff and his financial advisor, Mr. Jimmy skehan. During the course of the said conversation, it was confirmed to the Plaintiff by the Defendant that he would be treated in the same manner as other Senior Executives who had exited or would be exiting the Defendant, i.e. that the Plaintiff would have a period of 24 months from the date of the termination of his employment in which to exercise his share options as referred to in paragraph 5 above.

10

8. The Plaintiff was required to execute an agreement governing the terms upon which he would continue to be employed by the Defendant. By agreement in writing dated 9th July 2002, the Plaintiff agreed that he would work with the Defendant in the capacity of Senior Advisor to the chairman of the Board of the Defendant from 9th July 2002 until 31st July 2004 and that he would continue to be paid his remuneration as normal. It was further a term of the said agreement that awards that were previously made to the employee pursuant to the Defendant's equity compensation programmes would be governed in accordance with their existing terms.

11

9. In compliance with the said agreement, the Plaintiff worked in the said capacity full time until December 2003. Thereafter, by reason of the deterioration of his health, he performed his duties on a part-time basis.

12

10. Upon the expiration of the said agreement, the Defendant unlawfully terminated the Plaintiff's employment. The said termination is the subject of a claim under the unfair Dismissals Act 1977 to 2001.

13

11. Wrongfully, and in breach of the above terms, the Defendant has purported to assert that the Plaintiff is not entitled to exercise the options held by him under the 1996 and 1998 plans with effect from the 29th October 2004.

14

12. Further or in the alternative, the Plaintiff was induced by the following representations of Mr. Dan Tully and Mr. Garo Armen to execute the agreement dated 9th July 2004:

15

(a) that the Plaintiff would have a period of 24 months post the termination of his employment in which to exercise any share options held by him in the Defendant.

16

(b) that the Plaintiff would be treated on no less favourable terms than other senior executives whose employment with the Defendant was to be terminated."

17

That concludes the quotation from the relevant parts of the Statement of Claim insofar as this application is concerned.

18

A lengthy Defence and Counterclaim was delivered on 4th February 2005. It appears to me that the following paragraphs of that document are relevant. Paragraphs 2(b), (c) and (d) and paragraphs 5, 8 and 9 and they read as follows.

19

Paragraph 2(b):

"On the 8th July 2002, the Plaintiff was informed that the Defendant had lost confidence in him as Chairman and Chief Executive and proposed to dismiss him from both positions in accordance with his contract. The parties entered into negotiations in respect of a termination of the Plaintiff's employment with the Defendant. The Plaintiff's primary concern at that time was to be allowed as long a period as possible to allow the share price an opportunity to recover so that the share or stock options would have some value. To that end, it was agreed that the Plaintiff be granted a new employment contract of two years duration, with its being terminated and the relationship being severed at the expiry of that term. At no stage did any negotiations take place in respect of extending the option exercise period post termination. The aforesaid negotiations resulted in the Plaintiff entering into a written agreement on 9th July 2004.

(c) The written settlement agreement comprised two documents, the agreement and the release agreement, which inter alia provided for the Plaintiff to remain as an employee on the same remuneration up to 31st July 2004 but in a different role.

(d) Any claim, cause or action or benefit in respect of the termination of the Plaintiff's employment effective on 31st July 2004 was compromised by virtue of the terms of the agreement, together with the associated release agreement. By the terms of the aforesaid agreements, the Plaintiff undertook not to sue inter alia the Defendant, its direct or indirect parents, its subsidiaries, affiliates and related companies in respect of the employment and its termination."

20

Paragraph 5:

"It is denied that between February and April 2002 or at any time, the Senior Management Team and the Remuneration Committee agreed and/or determined that in respect of senior executives the exercise period for share options under the Defendant's share options schemes, or plan, would be extended 24 months post...

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