Harte v Kelly

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 16 July 1997
• Neutral Citation: [1997] IEHC 124
• Docket Number: 1997/4745p/Ct.5
• Court: High Court
• Date: 16 July 1997

[1997] IEHC 124

THE HIGH COURT

1997/4745p/Ct.5

HARTE v. KELLY

BETWEEN

PETER HARTE

PLAINTIFF

AND

GERARD KELLY, JOHN ANDERSON AND HKC LIMITED

DEFENDANTS

Citations:

FENNELLY V ASSICURAZIONI GENERALI SPA 1985 3 ILTR 73

SHORTT V DATA PACKAGING LTD 1994 ELR 251

BOLAND V PHOENIX SHANNON PLC 1997 ELR 113

Synopsis:

Employment

Termination; injunction; directors; interlocutory injunction restraining dismissal; plaintiff contesting dismissal; fair issues to be tried; whether damages an adequate remedy; whether plaintiff should be restored to directorship pending trial; s.182, Companies Act, 1963 Held: Injunction granted restraining dismissal; order restoring plaintiff to directorship refused High Court: Laffoy J. 16/07/1997

Harte v. Kelly

1 Judgment of Miss Justice Laffoy delivered on the 16th day of July 1997

2 While the very considerable number of Affidavits filed on this interlocutory application contain a plethora of fact and innuendo, the essential facts are as follows. The third Defendant ("the Company") is a Company incorporated in the State which manufactures components for intruder alarm systems. It is a prosperous and profitable Company having an annual turnover of £1.6 million which yields a nett profit of £230,000. It has 10 employees.

3 The entire issued Share Capital of the Company is beneficially owned by the Plaintiff and the first Defendant, the Plaintiff owning 49% and the first Defendant owning 51% of it now. Immediately prior to the Board meetings of 18th March, 1997 which give rise to the dispute between the parties, there were three directors of the Company - the Plaintiff, the first Defendant and the second Defendant. The Plaintiff was also an employee of the Company. While there is a dispute as to his proper job description, it is not disputed that he was in receipt of a gross salary of £67,000.

4 On 12th March, 1997, the first Defendant gave notice of a meeting of the Board of Directors of the Company to be held at 2.30 p.m. on 18th March, 1997. The first item on the agenda for the meeting was to be "API Re Alarm Express meeting in England". The only other item to be on the agenda was "Other Business".

5 The reference to "API" was reference to what the Plaintiff contends was a private project of his which involved him in a proposal for a joint venture between an English company, NWT Limited, and API Limited, a company which he intended incorporating, for the design and manufacture of a component for an alarm system. NWT Limited had had an ongoing business relationship with the Company. The thrust of the complaint of the first Defendant, the majority shareholder in the Company, at the Board meeting on 18th March, 1997 was that the discussions between the Plaintiff and the personnel of NWT Limited were covert and that the Plaintiff's intention was to set up API Limited and do business with NWT Limited in direct competition with the Company and its business, which would be damaging to the interests of the Company.

6 The correspondence which emanated from the Plaintiff after 18th March, 1997 and the Affidavits he has sworn on this application do not give a coherent picture of what occurred on 18th March, 1997. However, in terms of the relief which the Plaintiff seeks on this application, it would appear that his contention is that at some time after the 18th March, 1997 he was wrongfully dismissed from his employment with the Company. The Defendants' version of what occurred is that at the meeting on 18th March, 1997, which was summoned by the notice of 12th March, 1997, the Plaintiff was summarily dismissed from his employment with the Company. The Defendants contend that at that meeting it was also resolved to convene an extraordinary general meeting of the Company within not less than 28 days to consider the Plaintiff's position as a Director of the Company. Later on the same day, 18th March, 1997, the Directors of the Company met once again for approximately five minutes. On that occasion, the Plaintiff signed a document headed "Board Minutes" which stated:-

7 "P.H. to resign for the good of the company".

8 Prior to 18th March, 1997, the cheque signatories for the Company's bank accounts per the mandate given by the Company to its bank, the Terenure Branch of the Bank of Ireland, were the Plaintiff and the first Defendant. Following the second meeting on 18th March, 1997, the bank was notified that the cheque signatories would thenceforth be the first Defendant and the second Defendant and Mary Stone.

9 The relief sought by the Plaintiff on this application is as follows:-

10 (a) an injunction restraining the first and second Defendants from interfering with, restraining or restricting the Plaintiff's entitlement to act and exercise his powers as a Director of the Company with the consequential entitlement as to service of all notices in relation thereto and participation in the management of the Company;

11 (b) an Order restraining the Defendants and each of them, their servants or agents from in many manner or fashion operating the bank mandates of the Company otherwise than in accordance with the mandate held by the Terenure Branch of the Bank of Ireland as of 17th March, 1997;

12 (c) an Order restraining the Defendants and each of them, their servants or agents from in any fashion whatsoever interfering with the Plaintiff in relation to his conduct and functions as an employee and executive of the Company; and

13 (d) an Order directing the Defendants and each of them to immediately and forthwith reinstate the Plaintiff in his employment and effect repayment of all outstanding salary and expenses together with an Order directing the Defendants to continue payment of the Plaintiff's salary and expenses pending the resolution of the matters at issue.

14 The reliefs referred to at (c) and (d) above were first claimed in a Notice of Motion which issued on 2nd July, 1997. In an Affidavit sworn on 8th July, 1997 to ground that motion, the Plaintiff averred that he was not dismissed from his employment with the Company at the first Board meeting on 18th March, 1997, that he did not resign as a Director at the second meeting but signed the document referred to above " only as an expression of future intent subject to conditions in relation to the buying out of your deponent's interest in and shares of" the Company.

15 The Affidavits filed on this application are replete with conflicts which can only be resolved at the hearing of the action. For present purposes, suffice it to say that Mr. Brady, on behalf of the Defendants, very properly concedes that there are fair issues to be tried between the parties as...