Goudriaan v Jenda Corporate Holdings Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 16 August 2019 |
| Neutral Citation | [2019] IEHC 621 |
| Docket Number | 2017 NO. 2991 P |
| Court | High Court |
| Date | 16 August 2019 |
[2019] IEHC 621
THE HIGH COURT
COMMERCIAL
Quinn J.
2017 NO. 2991 P
AND
Specific performance – Stay – Payment postponement – Plaintiff seeking an order for specific performance – What date would the plaintiff be obliged to pay the price for the shares if they were being transferred to him pursuant to the order for specific performance
Facts: The High Court (Quinn J) delivered its judgment on 24 May, 2019 holding that the plaintiff, Mr Goudriaan, was entitled to an order for specific performance of the provisions of a Shareholders’ Agreement made on 22 January, 2010, which included a Share Option Plan (SOP) which conferred on the plaintiff the right to exercise options to acquire 155 shares (being 15% of the entire share capital) in the second defendant, Bosal Nederland BV. The defendants, Jenda Corporate Holdings Ltd, Bosal and United Trustees (NZ) Ltd, had pleaded that in the events which had occurred and on a proper construction of the relevant agreements, at the time when the plaintiff moved to exercise the share options, the period during which they were exercisable had expired and that he was estopped or otherwise precluded from exercising the options. The relevant event was that prior to the plaintiff giving notice of exercise of the options, the defendants had given to the plaintiff notice of a meeting convened for the purpose of considering his dismissal/removal from positions and offices held by him in the Bosal Group. Quinn J found that the relevant period for exercise of the options had not expired and that he had validly exercised the options when he did so on 28 October, 2016. Following delivery of the judgment, the matter was listed before Quinn J on 19 June, 2019 for the purpose of finalising the form of the order to be made and for any submissions concerning costs or other matters. By the time the parties appeared before Quinn J on 19 June, 2019, they had identified two substantive issues as between them which they informed Quinn J would require exchanges of affidavits and of legal submissions and a day of court time for further argument and submissions. Directions were made for the exchanges of affidavits and legal submissions and the matter was listed for hearing on 31 July, 2019. The two issues which arose were as follows: (i) the defendant indicated that it intended to appeal the Principal Judgment to the Court of Appeal, and wished to apply for a stay on any order for specific performance and other orders; (ii) a substantive issue arose as to the date on which the plaintiff would be obliged to pay the price for the shares if they were being transferred to him pursuant to the order for specific performance. This was referred to as the Payment Postponement issue.
Held by Quinn J that, having concluded that there are no provisions mandating the exclusion of the principle of construction that a party cannot benefit or take an advantage of its own breach of contract the postponement right cannot be extinguished by the defendant’s breach of contract and the only approach which may then be applied is to retain the original “construct” of the agreement – that the plaintiff may elect to postpone payment for the two years conferred by the second sentence of Article 5.3 of the SOP, which in the events which had occurred was a period of two years less fifteen days from the date of which the shares were delivered to him.
Quinn J held that he would grant a stay on the order for specific performance and stipulate the conditions on which the stay would be effective, being principally the minimum terms which such a contract must contain. As to the right to apply to the Enterprise Chamber at the Amsterdam Court of Appeal, Quinn J stipulated as a condition of the stay that the defendants immediately grant to the plaintiff a legally enforceable contractual right to petition the Enterprise Chamber in relation to the second defendant, subject to a time limit of two months. As for the right of information Quinn J stipulated a condition of the stay that the defendants immediately grant to the plaintiff a legally enforceable contractual right to obtain all information which would be available to a shareholder in Bosal under the laws of the Netherlands. Quinn J held that the expiry date for the agreement reflected the fact that the relevant rights were being conferred as a condition of a stay pending an appeal.
Order perfected.
This judgment relates to two matters of contention which arose after the court delivered its judgment in these proceedings on 24 May 2019, (‘the Principal Judgment’) but before perfection of the order to be made following the delivery of that judgment.
In the Principal Judgment, I held that the plaintiff was entitled to an order for specific performance of the provisions of a Shareholders” Agreement made on 22 January, 2010, which included a Share Option Plan (‘SOP’) which conferred on the plaintiff the right to exercise options to acquire 155 shares (being 15% of the entire share capital) in the second named defendant Bosal Nederland BV (‘Bosal’). The defendants had pleaded that in the events which had occurred and on a proper construction of the relevant agreements, at the time when the plaintiff moved to exercise the share options, the period during which they were exercisable had expired and that he was estopped or otherwise precluded from exercising the options. The relevant event was that prior to the plaintiff giving notice of exercise of the options, the defendants had given to the plaintiff notice of a meeting convened for the purpose of considering his dismissal/removal from positions and offices held by him in the Bosal Group. I found that the relevant period for exercise of the options had not expired and that he had validly exercised the options when he did so on 28 October, 2016.
The background to the matter and the reasons for my decision are set out in the Principal Judgment and it is not necessary to repeat them in this judgment. It is worth recalling that the SOP was originally stated to be governed by Dutch law and contained a submission to the jurisdiction of the Dutch courts. When amended in 2014 this was changed to Irish law and the Courts of Ireland.
Following delivery of the judgment, the matter was listed before me on 19 June, 2019 for the purpose of finalising the form of the order to be made and for any submissions concerning costs or other matters. By the time the parties appeared before me on 19 June, 2019, they had identified two substantive issues as between them which they informed me would require exchanges of affidavits and of legal submissions and a day of court time for further argument and submissions. Directions were made for the exchanges of affidavits and legal submissions and the matter was listed for hearing on 31 July, 2019.
The two issues which arose were as follows:-
(i) The defendant indicated that it intended to appeal the Principal Judgment to the Court of Appeal, and wished to apply for a stay on any order for specific performance and other orders.
(ii) A substantive issue arose as to the date on which the plaintiff would be obliged to pay the price for the shares if they were being transferred to him pursuant to the order for specific performance. This is referred to as the Payment Postponement issue, and I shall consider it first.
Article 5 of the SOP prescribed the procedure for exercise of the share options. It also provided for the payment of the exercise price on delivery of the option shares, subject to a right of the plaintiff to postpone that payment ‘ by a maximum of two years after the date of exercise of the options (without interest)’. (Emphasis added)
After delivery of the Principal Judgment, the plaintiff's solicitors McCann Fitzgerald submitted to the defendant's solicitors, Arthur Cox, a draft order which provided inter alia for a declaration that the plaintiff would be entitled to a transfer of the shares in accordance with the exercise notice dated 28th October, 2016, ‘ including the plaintiff's entitlement pursuant to Article 5 of the Share Option Plan to defer payment of the exercise price for two years from the date that shares are transferred to him.’ (Emphasis added)
The defendants submit that because the option was exercised on 28 October, 2016, the postponement period of two years has expired and therefore that if the judgment of this Court as to his entitlement to the option shares is upheld, he must pay the price for the shares on delivery of the shares.
At the trial of the action the entire focus of the evidence and submissions was on Article 4.3 of the SOP, and the question of whether the option had expired by reason of the service of a notice convening a meeting for the purpose of considering the dismissal and removal of the plaintiff from his positions, which the defendants had claimed was a ‘case of termination’ which had occurred before he purported to exercise the option. I decided that aspect of the case in favour of the plaintiff.
At no point in the evidence, submissions, or during the hearing was the question of the right of postponement of payment of the option price canvassed from any perspective. With hindsight it is difficult to understand how this issue would not have occurred to any of the parties or their representatives as an issue requiring determination. However, the parties are now agreed that this issue now requires to be determined.
The defendants made a preliminary point in their submissions on this issue that this question had not formed any part of the pleaded case. However, it was acknowledged at the hearing on 31 July, 2019, that the issue must be determined....
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