Jurras Ltd v Companies Acts
| Jurisdiction | Ireland |
| Judge | Ms. Justice Stewart |
| Judgment Date | 31 March 2017 |
| Neutral Citation | [2017] IEHC 205 |
| Docket Number | [2015 No. 232 COS] |
| Court | High Court |
| Date | 31 March 2017 |
[2017] IEHC 205
THE HIGH COURT
Stewart J.
[2015 No. 232 COS]
AND
AND
Company – The Companies Act 1963-2014 – Practice & Procedures – O.25, r. 2 of the Rules of the Superior Courts – Trial of the preliminary issue – Locus standi of the employer of the company in bringing petition under s. 212 of the Companies Act 2014 – Right in shareholding – Unitary trial
Facts: The respondents sought leave to seek preliminary trial of the issue pertaining to the petitioner's locus standi to file the present petition under s. 212 of the Companies Act 2012. The respondents contended that the petitioner's employment in the respondents' company was terminated and he was the holder of ordinary shares in the company, which disentitled him the right to receive notice, attend or speak or vote in any general meeting of the company. The petitioner argued that the main dispute was the payment of monies that he was entitled as a shareholder and thus, he possessed the locus standi. The petitioner submitted that the Articles of Association of the company did not provide for alienation of shares on termination of the employment and the company should have called before converting his shares.
Ms. Justice Stewart refused the respondents' application for the trial of the preliminary issue pertaining to the locus standi of the petitioner. The Court directed that the present matter should proceed to a full unitary hearing. The Court observed that the petitioner had raised crucial questions in relation to his shareholding, payment made to him during the course of his employment, nature of the shareholding and thus, it would be unfair to allow the respondents to have the question of locus standi determined.
This is a decision on foot of the defendants' motion seeking leave pursuant to O. 25, r. 2 of the Rules of the Superior Courts directing trial of a preliminary issue, namely the issue of the petitioner's locus standi to bring his petition.
This matter commenced by way of a petition brought before the High Court on 10th June, 2015, together with the notice of motion seeking directions with regard to the proceedings to be taken on foot of the petition herein. Preliminary directions were made by consent of the parties on 12th October, 2015. Thereafter, points of claim were delivered on 2nd December, 2015, and points of defence were delivered on the 8th February, 2016.
The respondents pleaded as a preliminary issue in the points of defence that the petitioner does not have locus standi to bring the within petition, as he is not a member of the company. A notice seeking voluntary discovery dated 25th February, 2016, was furnished by the petitioner's solicitors and was followed up by a motion seeking voluntary discovery on 4th April, 2016. This resulted in an affidavit of discovery being sworn by Adrian Hegarty, a solicitor for the respondents, on 3rd May, 2016. The respondents' solicitors sent a request for voluntary discovery on 7th March, 2016, which resulted in an affidavit of discovery being sworn by the petitioner herein on 4th April, 2016.
On 14th June, 2016, the respondents issued a notice of motion seeking trial on the following preliminary issue:
‘1. An Order pursuant to Order 25 rule 2 directing the trial of a preliminary issue of law, namely, the preliminary issue raised in the points of defence of the said Respondents that the Petitioner does not have locus standi to bring his Petition.
2. An Order staying the operation of the amended consent order for directions made by the Honourable Court on 25th January, 2016 pending the determination of the within motion.’
The notice of motion seeking leave for a trial of a preliminary issue was grounded on the affidavit of Adrian Hegarty, solicitor for the respondent, which was sworn on the 13th June, 2016. There was a replying affidavit sworn by John P. Cahill, the solicitor for the petitioner, on 28th June, 2016. A further affidavit of discovery was sworn by Adrian Hegarty on 15th July, 2016. A supplemental replying affidavit of John P. Cahill was sworn on 13th July, 2016. A second affidavit of Adrian Hegarty was sworn on 18th July. 2016. A third affidavit of Adrian Hegarty was sworn on 18th July, 2016. A second supplemental affidavit of John P. Cahill was sworn on 14th September, 2016. A notice of motion, dated 13th October, 2016, was brought by the petitioner in respect of further & better discovery, which was grounded on the affidavit of John P. Cahill sworn on 10th October, 2016. Adrian Hegarty swore a relpying affidavit thereto on 12th December, 2016.
The petitioner was employed by the respondent, initially as a general operative and then later as a window salesman. It appears that, in or around 2004, he was allocated a shareholding in Jurras Limited, the respondent company. There seems to be a dispute as to whether the initial holding comprised of 80 ordinary shares or 53 E-Ordinary shares. The petitioner's employment with the respondents terminated on 25th September, 2014. This occurred following a mutual agreement between the petitioner and his employers which is confidential and has not been disclosed to this Court. The parties appear to agree that the confidential agreement was silent as to the question of the petitioner's extant shareholding in the company at the time his employment was terminated.
The respondents maintain that, at the time of his employment, the petitioner held 35 e-Ordinary shares in the company. The respondents rely on Clause 2A of the company's amended Articles of Association, which provide that an E-Ordinary shareholder does not have the right to receive notice, attend, speak or vote at any general meetings of the company. Further, the respondents rely on the provisions of Article 4, which provides as follows:
‘E Ordinary Shares may only be held by an individual who is in the employment of a company which is a subsidiary of Gairdini. Any E Ordinary Shareholder whose employment is terminated for whatever reason shall agree to have their shares converted into redeemable E Ordinary Shares and the provisions relating to the redemption as specified in Article 4A hereof shall apply or to transfer the shares to a person nominated by the directors of the company and shall complete whatever documentation necessary to give effect to the either the redemption or transfer as appropriate. The price to be paid on the E Ordinary Share(s) shall be determined as if the company was to be wound up…’
Article 4A of the Articles of Association provides that:
‘In accordance with Article 4 the shares of a departing E Ordinary Shareholder or a deceased E Ordinary Shareholder shall be classified as redeemable as long as the number of the shares redeemable shall not exceed 90% of the issued share capital.
(a) Redemption of the whole or any part of the redeemable E Ordinary Shares for the time being issued and outstanding shall be at the discretion of the Company; howsoever, that a decision of the Company regarding such redemption shall be by Ordinary Resolution passed at a duly convened General Meeting of the shareholders entitled to receive notice of, attend and vote at General Meetings, or Resolution of the shareholders entitled to vote on such resolutions.
(b) There shall be paid on each redeemable E Ordinary Share redeemed, the amount which would be paid if the company was to be wound up.
(c) When any redeemable E Ordinary Shares are being redeemed by the Company, the Company shall give 7 clear days notice of such redemption to the holder (s) of the relevant shares to be redeemed.’
The respondents maintain...
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