Horgan v Murray

• Jurisdiction: Ireland
• Judge: O'Flaherty J.,Mr Justice Francis D Murphy
• Judgment Date: 01 January 1998
• Neutral Citation: 1998 WJSC-SC 2130
• Court: Supreme Court
• Docket Number: [1996 No. 247 Cos: S.C. No. 54 of 1997]
• Date: 01 January 1998

1998 WJSC-SC 2130

THE SUPREME COURT

O'FLAHERTY J.

BARRINGTON J.

MURPHY J.

54/97

HORGAN v. MURRAY & MILTON

IN THE MATTER OF MURRAY CONSULTANTS LIMITED

(FORMERLY SAGE CONSULTANTS LIMITED)

AND NOCRUMB LIMITED (FORMERLY MURRAY CONSULTANTLIMITED)

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT1963

Between:

TERENCE P HORGAN

petitioner

AND

JOSEPH PATRICK JAMES MURRAY and JAMESMILTON

Respondents

Citations:

COMPANIES ACT 1963 S205

RSC O.75

BLACKSTONE COMMENTARIES BOOK III CH 27

JUDICATURE (IRL) ACT 1877

COURTS OF JUSTICE ACT 1924 S17

COURTS (SUPPLEMENTAL PROVISIONS) ACT 1961 S8

COMPANIES ACT 1948 S210 (UK)

COMPANIES ACT 1980 (UK)

COMPANIES ACT 1985 S459 (UK)

A COMPANY, IN RE 1986 BCLC 362

A COMPANY, IN RE 1983 1 WLR 927

A COMPANY, IN RE 1987 BCLC 563

VIRDI V ABBEY LEISURE & ORS 1990 BCLC 342

COMPANIES ACT 1986 S125(2) (UK)

A COMPANY (EX-PARTE), IN RE 1991 BCLC 597

A COMPANY, IN RE 1996 2 BCLC 192

MULGREW V O'BRIEN 1953 NI 10

A COMPANY, IN RE 1987 BCLC 94

A COMPANY, IN RE 1989 BCLC 365

Synopsis:

[1997] 3 IR 29 -[ 1998] 1 ILRM 110

1 Judgment of Mr Justice Francis D Murphydelivered the 9th day of July 1997 [BARRINGTONCONC]

2 As the title indicates the petition herein was presented under Section 205 of the Companies Act, 1963, by Terence P Horgan (the Petitioner). He alleges oppression of him in his capacity as a member of the above companies by the above named Joseph Patrick James Murray and James Milton (the Appellants).

3 The petition was presented on the 10th day of October 1996 and is ground on the affidavit of the Petitioner sworn on the 14th day of October 1996. By motion on notice to the Petitioner dated the 13th day of November 1996 the Appellants sought the orders following:-

4 1 An order striking out and/or staying within proceedings as an abuse of the process of the Court.

5 2 An order providing for the costs of this application and of the within proceedings to date.

6 3 Such further and other relief as to this honourable Court shall seemeet.

7 The motion was heard by Mr justice Barron on the 25th and 29th of November 1996 and by order dated the 31st January 1977 made in pursuance of the judgment delivered on that date Mr Justice Barron refused the relief sought by the Appellants and ordered the costs of the motion to be paid by them to the petitioner. It is that judgement and order which is now appealed to this Court.

8 The petition and grounding affidavit set out at length - perhaps excessive length - the history of the relationship between the Petitioner and the Appellants and the particulars of the wrongdoing which it is alleged the Appellants perpetrated. It appears that the Petitioner and the Appellants have together carried on the business of public relations consultants since 1974. For that purpose recourse was had to two companies the first originally known as Stage Consultants Limited but subsequently and now known as "Murray ConsultantsLimited" (MCL) and the other formerly known as Murray Consultants Limited and now known as "NocrumbLimited". In 1992 MCL took over the business formerly owned and operated by Nocrumb Limited. The issues share capital in each of the companies was held as to 40% by Joseph Patrick James Murray (Mr Murray) and 30% each by the Petitioner and the above named James Milton (Mr Milton). The Petitioner, Mr Murray and Mr Milton were at all times directors of both companies.

9 Clearly the business has been very successful but unfortunately differences emerged some time towards the end of 1994.

10 Whilst the Petitioner explained in his affidavit that he fulfilled the functions of the managing director of MCL and its predecessor with the knowledge, approval and gratitude of the Appellants he asserts unequivocally andemphatically that the business of the company, the public relations consultantcy business, was conducted on the basis of a partnership between the Petitioner and the Appellants and while the company has had and does have other directors that the agreement between the parties was and is that all decisions in relation to the business would be made by agreement and consensus between the parties at regular meetings known as "partners meetings".

11 The Petitioner defined the status of the parties in his affidavit (paragraph 29) in the following terms:-

"We always recognised, agreed and understood that we were together conducting a public relations business as partners though the medium of a limited liability company and that none of us would ever be (nor ever be placed) in a position where we were working for either of the other partners without our agreement and consent".

12 He then went on to describe the relationship of the partnership meetings to the meetings of directors (in paragraph 30) in the followingterms:-

"I say and believe that while we held frequent partners meetings, formal board meetings with other directors of MCL were held very infrequently indeed. Decisions which we took at our regular partners meetings were normally implemented without any form of recourse to the board of directors. On the very rare occasions when matters were formally brought to the attention of the board they were brought on the basis of decisions which had been previously made by us at our partners meetings as a fait accompli. I say and believe that on no occasion did the board ever reverse any decision taken by us at our partnersmeetings."

13 In paragraph 33 of the Petitioners affidavit he makes a further significant statement in the following terms:-

"I say and believe that until recently, no director (other than a director who is also a partner) ever received a copy of MCL's accounts. MCL's accounts were only considered by, and made available to, the partners. As a result I say and believe that the other directors were not aware for example of the salaries received by the Respondents and I, the up to date financial position of MCL or the up to date state of MCL's business."

14 Apparently the first rift in the harmonious relationship between the parties occurred in December 1994 when Mr Murray indicated that he believed that his personal status and wealth could be enhanced outside of the partnership and that he would remain in the partnership with the Petitioner only on the basis that he would remain in the partnership with the Petitioner only on the basis that he would be managing director of MCL at an enhanced salary and on the basis that he would devote less of his time and attention to servicing client needs. In addition apparently Mr Murray indicated that he would require to control MCL including its finances, administration and personnel.

15 In the following year some discussions took place between the parties about those proposals but the Petitioner fixes the 24th of November 1995 as the date on which he was informed by the Appellants, (who described the companies as "being run by a committee"), that they were determined to alter the existing management structure and to effect fundamental changes in management and administration involving the appointment of a managing director. The Appellants were in agreement that this position should be taken by Mr Murray. The Petitioner contends - as would appear to be the case - that such a structure would be a radical departure from the consensus partnership which he says was the agreed method of operating the business. Having regard to the clear difference between the parties as to the manner in which the company should be managed, negotiations took place with a view to the Appellants buying outthe Petitioner. An offer was made to purchase the Petitioner's shares for £1,000,000 but this was rejected by the Petitioner apparently on the grounds that it would have involved his retirement from the company. In February 1996 it appears that the Appellants devised a scheme for the revision of the management of the business of the company which was described as "the strategic businessplan". The Petitioner was aggrieved that he was not consulted about the formulation of that plan and even more concerned by the fact that it was proposed to bring this plan before the board of directors rather than the partners meeting. Whilst there are other areas of disagreement and concern it would seem that the vital issue is set out in paragraph 56 of the Petitioner's affidavit in the followingterms:-

"The second named Respondent (Mr Milton) informed me that all discussions between myself and the (Appellants) had ceased and that henceforth the five members of the Board, rather than the Respondents and I, would make all decisions concerning the business and future of MCL. I say and believe that the (Appellants) behaviour in this regard amounted to and amounts to, a unilateral and fundamental alteration by them of the partnership basis upon which MCL had at all material times been operated. I say and believe that the (Appellants) by their behaviour have repudiated the partnership between them and your opponent. I sayand believe that the (Appellants) attempts to procure that MCL is controlled by parties other than the Respondents and I, with (Mr Murray) in effective control as managing director was a deliberate and calculated decision taken by (Appellants) to further their stated ambitions in oppression of and against my interests and those ofMCL."

16 I would recognise that the foregoing is necessarily an inadequate summary of the detailed history and complaints set out in the hundred or so paragraphs of the petition and the additional eighty paragraphs of the grounding affidavit but I trust that it contains the essence of the Petitioner's complaint.

17 In his affidavit in reply Mr Murray indicated that the Appellants intended "to vigorously contest each and every allegation of oppression and disregard of the interests which have been made against them by the Petitioner" and asserted that the...