Hamill v Vantage Resources Ltd & Martin
| Jurisdiction | Ireland |
| Judge | Mr. Justice Binchy |
| Judgment Date | 20 March 2015 |
| Neutral Citation | [2015] IEHC 195 |
| Court | High Court |
| Date | 20 March 2015 |
[2015] IEHC 195
THE HIGH COURT
BETWEEN
AND
Company Acts, 1963-2013 – Winding up – Act of oppression – S. 205 and 213 of the Companies Act, 1963, (as amended).
Facts: The petitioner sought an order pursuant to s. 213(f) and/or s. 213(g) of the Companies Act, 1963 for the winding up of the company. The petitioner contended a prima facie case of oppression of his interests in the company as minority shareholder. The petitioner further claimed that the breakup of the quasi partnership with the second named respondent which was based on mutual trust, good faith and confidence had occasioned winding up of the company in accordance with s. 213(f) of the Companies Act, 1963.
Mr. Justice Binchy held that the petition for an order for the winding up of the company would be dismissed. The Court held that conduct of the respondent claimed by the plaintiff to be oppressive would be misconceived. The Court held that the conduct of the respondent entirely would not constitute ‘oppressive’ in nature. The Court observed that the single act of disclosure of the transaction by the second named respondent to the petitioner would not constitute an act of oppression. The Court stated that the order of winding up of the company in the circumstances of the case would not be just and equitable.
JUDGMENT of Mr. Justice Binchy delivered on the 20th day of March, 2015
1. In these proceedings the petitioner seeks the following reliefs:
1. An order pursuant to section 213(f) and/or section 213(g) of the Companies Act, 1963, (as amended) for the winding up of the first named respondent, Vantage Resources Limited (the "company").
2. In the alternative, such order or orders pursuant to section 205 of the Companies Act, 1963 including one or more of the following:
(i) An order dividing the assets and liabilities of the company among the petitioner and the second named respondent in such proportion as the court may seem fit;
(ii) In the alternative an order directing the second named respondent to sell his shares in the company to the petitioner, at such price as the court shall deem fit.
(iii) In the further alternative, an order directing the respondents to purchase the petitioner's shareholding in the company for such a price as to which the court shall deem fit.
(iv) An injunction restraining the second named respondent from continuing to involve the petitioner in the day to day operations, running and decision making of the company.
(v) Further, or in the alternative, an order for the winding up of the company.
2. The proceedings came on for hearing before the court on 5 th February, 2015 and concluded on 13 th February, 2015. At the conclusion of the petitioner's case, counsel for the respondents, Bill Shipsey SC, moved an application for a direction from the court to dismiss the proceedings, indicating that Mr. Martin would go into evidence if this application was unsuccessful. In the event, the application was not successful on the basis that I considered that the applicant had established a prima facie case of oppression of his interests in the company as minority shareholder.
3. The company was incorporated on 25 th April, 2000. Its initial shareholders were Mr. Martin who held 80% of the shares and Mr. Jeff Ruddell who held the remaining 20% of the shares. At that time Mr. Martin had already had some success with another company called Vantage Software which he had established in 1995 and in 2000 he identified a new opportunity in supplying IT staff to existing customers of Vantage Software, and for this purpose he, together with a Mr. Jeff Ruddell formed the company. Mr. Martin held 80% of the shares and Mr. Ruddell held 20% of the shares.
4. Approximately a year later, Mr. Ruddell informed Mr. Martin that he wished to retire from the company. Mr. Ruddell invited Mr. Martin to purchase Mr. Ruddell's shareholding, but Mr. Martin said that he did not want to invest further money in shares in the company and nor did he want to own 100% of the company, so he agreed to assist Mr. Ruddell in identifying another party who might be interested in acquiring Mr. Ruddell's shareholding. An acquaintance of Mr. Martin's suggested that the petitioner, who Mr. Martin already knew from a time when they both worked with Bank of Ireland, might be interested in acquiring Mr. Ruddell's shareholding. In the event, the petitioner agreed to acquire Mr. Ruddell's shareholding (which he acquired in two tranches, the first of 15% and the second of 5%) on condition that he could subsequently acquire an extra 10% in the company from Mr. Martin. Mr. Martin agreed to this on the basis that certain targets would be met in the following years. While these targets were not fully reached, Mr. Martin nonetheless honoured the commitment and Mr. Hamill acquired a further 10% of the issued share capital in the company from Mr. Martin in or about 2004/2005. At the time that the petitioner originally acquired a shareholding in the company, the petitioner and Mr. Martin entered into a management agreement dated 30 th May, 2002. This agreement provided, inter alia, for the increase in the petitioner's shareholding described above. The parties i.e. the petitioner and the respondent subsequently entered into a shareholder's agreement dated 17 th February, 2005. This agreement contains many of the provisions which one would expect to see in an agreement of this kind and, most relevant to these proceedings:
(a) Clause 4 of the Agreement is a "best endeavours" clause requiring the parties to act with the utmost integrity and good faith in relation to the company and their dealings with and on behalf of the company.
(b) Clause 7 provides that "the Directors shall be paid such fees as they shall from time to time agree. In the event of a dispute, the view of Simon Martin, as majority shareholder shall prevail."
(c) Clause 14 contains comprehensive provisions in relation to the transfer of shares in the company. This clause permits any shareholder to transfer his shares in the company in accordance with the procedures set out therein. These procedures require a shareholder wishing to dispose of his shares to offer them by notice in writing to the holders of other shares in the company who are then given 28 days within which to respond. If the other shareholders are interested in acquiring the shares, there is a mechanism set out for determing the price of the same, in the absence of agreement. If either party does not wish to proceed on the basis of the share price as so determined, then he is not bound to do so and in that event the shareholder who wishes to transfer his shares may offer the shares to a third party or parties who are not members of the company.
(d) Clause 25 of the shareholders agreement states that it embodies the entire agreement between the parties and supersedes all prior agreements.
(e) Clause 27 of the agreement states that it shall not be deemed to create any partnership between the parties in relation to the company.
5. The company traded successfully from the outset and continued to do so from the time the petitioner became a shareholder. It was agreed from the outset of the petitioner's involvement in the company that he would work for the company on a part-time consultancy basis, providing his services to the company through another company of which the petitioner was the sole shareholder namely Aspect Consulting Limited. Through this company, the petitioner also provided services to the Gowan Motor Group and it was always understood that he could continue to do so, dividing his time between providing services to the Gowan Group and the company. In addition to receiving their remuneration as an employee, in the case of Mr. Martin, and as a consultant, in the case of the petitioner (in his case via Aspect Consultancy Limited) it was agreed that the petitioner and Mr. Martin would be paid Directors fees to be divided in accordance with their shareholding in the company i.e. 70% of all fees to be paid to Mr. Martin and 30% to be paid to the petitioner. For reasons of legitimate tax planning, this method of payment was preferred to declaration of dividends. By arrangement between them, the manner in which the petitioner and Mr. Martin received these payments was different in each case. In the case of the petitioner, it was arranged that the company would open a separate bank account with Rabo Bank (in the name of the company) into which payments would be made on behalf of the petitioner to be drawn down by him in accordance with his directions. In the case of Mr. Martin, and with the agreement of the petitioner, a separate company, Ecoview Ltd. was formed as a subsidiary of the company. Since this was to be Mr. Martin's vehicle for receiving directors fees, only he and his wife were directors of this company. Mr. Martin's directors fees were to be paid into Ecoview Ltd for his use and benefit, although that company was a fully owned subsidiary of the company. This had the legitimate effect of avoiding any liability to taxation on these payments (in the hands of Mr. Martin at least) until such time as Mr. Martin drew down any funds form Ecoview Ltd for his personal use.
6. At all relevant times, Mr. Martin was the managing director of the company and the petitioner was the operations director. According to the grounding affidavit of the petitioner dated 11 th September, 2014, the managing director...
To continue reading
Request your trial
-
Leech Papers Ltd v Companies Act 2014
...is settled that it is possible for a single act of oppression to justify relief under s. 212: see for example Re Vantage Resources Ltd [2015] IEHC 195 at para. 26 . However, before considering whether the single act of oppression is sufficient to grant relief in this particular case, I thin......