Permanent TSB Plc and Others v Muriel Scorer and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Cooke
• Judgment Date: 04 February 2013
• Neutral Citation: [2013] IEHC 42
• Court: High Court
• Docket Number: [No. 569 P/2013]
• Date: 04 February 2013

Permanent TSB PLC & Ors v Skoczylas & Ors

MR JUSTICE COOKE

APPROVED TEXT

BETWEEN:

PERMANENT TSB PLC, ALAN COOK, JEREMY MASDING, KEVIN MURPHY, DAVID MCCARTHY, BERNARD COLLINS, RAY MACSHARRY, MARGARET HAYES, EMER DALY, SANDY KIDNEY AND PAT RYAN

PLAINTIFFS,

AND

PIOTR SKOCZYLAS, SCOTCHSTONE CAPITAL FUND LIMITED, GERARD DOWLING, PADRAIG MCMANUS, GEORG HAUG, JOHN PAUL MCGANN, TIBOR NEUGEBAUER AND MURIEL SCORER

DEFENDANTS

[2013] IEHC 42

[No. 569 P/2013]

THE HIGH COURT

PRACTICE AND PROCEDURE

Interlocutory injunction

Application to restrain applications for orders disqualifying plaintiffs as company directors - Notice of application for disqualification order - Validity of notice - Abuse of process - Mandatory and indispensible precondition - Requirement that notice contain accurate identification of grounds - Requirement of genuine and fully formed intention to initiate statutory procedure - Appropriate test - Whether prima facie case - Whether damages adequate remedy - Whether balance of convenience in favour of plaintiffs - Director of Corporate Enforcement v Byrne [2009] IESC 57, [2010] 1 IR 222 and Truck and Machinery Sales Limited v Marubeni Komatsu Limited [1996] 1 IR 12 considered - Secretary of State for Trade v Langridge [1991] Ch 402 distinguished - Campus Oil Limited v Minister for Industry and Energy [1983] IR 88 followed - Companies Act 1990 (No 33), s 160 - Interlocutory injunction granted (2013/569P - Cooke J - 4/2/2013) [2013] IEHC 42

Permanent TSB Plc v Skoczylas

Facts The case arose out of the recapitalisation and restructuring of the first named plaintiff and its subsidiaries. The defendants were shareholders who had been aggrieved at the steps taken to recapitalise the Bank and to restructure the group pursuant to the Credit Institutions (Stabilisation) Act, 2010. As part of the on-going litigation the defendants sought to serve section 160 notices (under the Companies Act 1990) on the plaintiffs seeking to disqualify them from acting as company directors. The plaintiffs brought the present application seeking an injunction to prevent any steps being taken on foot of the section 160 notices. It was contended that the notices were not in accordance with the relevant section (s.160(7)) and it was also submitted that the application constituted an abuse of process as there was an ulterior motive to obstruct the restructuring of the group of companies.

Held by Cooke J in granting the injunction sought: The primary purpose of a disqualification order was not to punish individuals but to protect the public regarding the future running of companies. The court was satisfied that a notice under s.160(2) must contain an accurate identification of the grounds of the application. The plaintiffs had demonstrated a prima facie case that no valid notice had been given by the defendants. It was remarkable that the defendants had made it clear that the making of the application was by no means certain. If an injunction was to be granted the only effect upon the defendants would be a postponement of the application. Applying the Campus Oil principles it was clear that the balance of convenience lay in favour of granting the injunction sought. If an injunction was refused and the plaintiffs” claims were later upheld, there was a clear risk that commercial damage would be done which would be difficult to quantify and undo.

COMPANIES ACT 1990 S160(7)

COMPANIES ACT 1990 S160

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOM ART 6

DIRECTOR OF CORPORATE ENFORCEMENT v BYRNE 2010 1 IR 222

COMPANIES ACT 1990 S160(4)

COMPANIES ACT 1990 S160(5)

COMPANIES ACT 1990 S160(6)

COMPANIES ACT 1990 S160(6A)

COMPANIES ACT 1990 S160(4)(B)

COMPANIES ACT 1990 S160(2)

SECRETARY OF STATE FOR TRADE v LANGRIDGE 1991 CH 402

CAMPUS OIL v MIN FOR INDUSTRY (NO 2) 1983 IR 88

COMPANIES ACT 1990 S205

TRUCK & MACHINERY SALES LTD v MARUBENI KOMATSU LTD 1996 1 IR 12 1996/8/2532

COMPANIES ACT 1963 S213(E)

COMPANIES ACT 1963 S214(A)

COMPANIES ACT 1963 S213

Mr. Justice Cooke

1 It is important at the outset to emphasise that what is before the Court on this motion is an application for an interlocutory injunction. The submissions made and the evidence put before the Court have ranged widely over extensive background facts and the litigation already brought by the defendants relating in different ways to the conduct of the affairs and the recapitalisation and restructuring of the first named plaintiff and its subsidiaries, the former Irish Life and Permanent plc (referred to as "the Bank") and the Bank's subsidiary, Irish Life Limited (referred to as the "Life Company"). (The first named plaintiff will be referred to as "the Group Holding Co" and the three companies collectively as the "Group".)

2 The defendants are shareholders in the Group Holding Co. who have been aggrieved at the steps taken since 2010, to recapitalise the Bank and to restructure the group and particularly at the steps taken and direction orders obtained under the Credit Institutions (Stabilisation) Act 2010. These include direction orders made by the High Court on the 26^th July, 2011, (providing inter alia for the subscription by and the allotment to the Minister for Finance of new shares in the Group Holding Co, making him owner of 99.3% of the capital of that company,); and 28^th March, 2012, (requiring the Bank to sell its shareholding in the Life Co to the Minister,) in respect of which legal challenges brought by some or all of the defendants together with other claimants, are said to be still outstanding.

3 The first named defendant is a shareholder in the Group Holding Co. and is a non-executive member of its board, having been elected at an EGM of that company in July 2011. He is the managing director of the second named defendant. He is aggrieved that he has not been appointed a director of the Bank, given that all other members of the board of the Group Holding Co. have been so appointed and he with some of the defendants have brought a further set of proceedings seeking to compel his appointment to the board of the Bank. Furthermore, on the 25^th January, 2013, the defendants initiated proceedings by petition under s. 205 of the Companies Act 1963, seeking extensive reliefs based upon claims of oppression as minority shareholders in the Group Holding Co.

4 In these various proceedings potentially complex issues as to both national and European Union law are apparently to be raised and serious claims made as to the legality, propriety and probity of the manner in which the affairs of the group have been alledged mismanaged and misconducted by their boards. Challenges are made to the legality of the steps taken under the Act of 2010 by the Minister and the State and it is claimed that the abrogation of the pre-emption rights of shareholders in the allotment of capital to the Minister was unlawful as an infringement of constitutional rights and a breach of mandatory provisions of EU law including provisions of the Second Company Law Directive. In particular, a challenge is made to the way in which the Life Company as the most valuable subsidiary and asset of the group has been allegedly expropriated by the State to the detriment of the shareholders in the Group Company. Clearly, the defendants have taken on the task of pursuing serious claims and weighty litigation in their efforts to vindicate the grievances which they maintain.

5 On the 10^th January, 2013, the defendants caused to be issued and served on the plaintiffs a series of notices headed "Notice pursuant to s. 160(7) of the Companies Act 1990". The body of the notice then read as follows:-

"Section 160(7) of the Companies Act1990, states:-"

2 '(7) Where it is intended to make an application under subsection (2) in respect of any person, the applicant shall give not less than ten days' notice of his intention to that person.

Take notice that, as part of the intended proceedings in the High Court,inter alia, against you as a former director, the undersigned members of Permanent TSB Group Holdings plc (formerly Irish Life and Permanent and Group Holdings plc) intend, inter alia, to seek a relief against you pursuant to subsection 160(2) of the Companies Act 1990."

6 According to the general endorsement of claim on the plenary summons in the present action, the plaintiffs will seek substantive reliefs in the form of declarations and an injunction, the effective purpose of which will be to forestall and prevent any steps being taken on foot of those notices. The interlocutory injunction is accordingly sought to restrain, pending the hearing of this action, the initiation by the defendants of applications under s. 160 for orders disqualifying the personal plaintiffs named in the proceedings as company directors, including, of course, as directors of the first named plaintiff and of the Bank. (In fact the fourth, fifth and sixth named defendants had ceased to be directors in the group on various dates in 2011 and 2012.)

7 Subject to one argument as to the correct test to be applied to which the Court will return shortly, the Court is here only concerned to decide if a case for the grant of such a temporary restraint has been made out. Because the application is for interlocutory relief, the Court is not concerned to express any definitive view or make any particular finding on any of the substantive disputes involved or on any of the issues which have been raised and contested on either side.

8 As confirmed by the grounding affidavit of Ciaran Long on the present motion and in the written and oral submissions advanced on behalf of the plaintiffs, those declarations and a permanent injunction are to sought upon a two-fold basis. First, it is contended that no valid or adequate notices have been given as required by ss (7) of s. 160. Secondly, it is argued...