BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Horgan v. Murray [1997] IEHC 21; [1997] 3 IR 23 (31st January, 1997)
URL: http://www.bailii.org/ie/cases/IEHC/1997/21.html
Cite as: [1997] IEHC 21, [1997] 3 IR 23

[New search] [Printable RTF version] [Help]

Horgan v. Murray [1997] IEHC 21; [1997] 3 IR 23 (31st January, 1997)

THE HIGH COURT
1996 No. 247 Cos
IN THE MATTER OF MURRAY CONSULTANTS LIMITED (FORMERLY SAGE CONSULTANTS LIMITED), AND NOCRUMB LIMITED (FORMERLY MURRAY CONSULTANTS LIMITED)
AND IN THE MATTER OF THE COMPANIES ACTS, 1963 TO 1990
IN THE MATTER OF SECTION 205 THEREOF
BETWEEN
TERENCE P HORGAN
PETITIONER
AND
JOSEPH PATRICK JAMES MURRAY AND JAMES MILTON
RESPONDENTS

Judgment of Mr. Justice Barron delivered on the 31st day of January, 1997.

1. This is an application to strike out or stay further proceedings on foot of the petition herein upon the ground that a continuation of such proceedings would be an abuse of the process of the Court.

2. The petition is one for relief against oppression. It is submitted by the Respondents that the primary relief being sought by the Petitioner is to be bought out. The Respondents submit that this can be done more beneficially for all by adopting a procedure for the valuation of shares contained in the articles.

3. The particular provisions to which the Respondents refer are contained in Article 6 of the Articles of Association of the Company. This article deals with transfer of shares. It is in a reasonably standard form for private companies where control of the registration and transfer of shares lies with the directors. The article concerned provides for the valuation of shares by a proposed transferor by the auditors of the company acting as experts.

4. The Respondents recognise that these articles relate to a valuation in the event of a shareholder wishing to sell. They are, however, prepared to allow the valuation to be carried out as of the date before the oppression is alleged to have commenced and presumably upon the basis of what would have been the likely course of the business between such date and the date of valuation. They also accept that there should be no discount by reason of the fact that the Petitioners holding is a minority holding.

5. The Petitioner is one of three shareholders. He submits that the affairs of the company were until the matters complained of run as a consensual partnership and that the necessary trust existing to run the company in such a manner has broken down as between him and his quasi partners. He denies that the petition is an abuse of the process of the Court and seeks to continue the proceedings.

6. Before the issue of proceedings can amount to an abuse of the process of the Court, it seems to me that there must be some element of impropriety. So if a plaintiff who has a valid claim which has been admitted seeks to continue proceedings for further relief to which such plaintiff could not in any circumstances be entitled that this would be an abuse of the process of the Court. It is upon this basis that the Respondents maintain that the Petitioner would be abusing the processes of the Court by refusing to accept the offer to value the shares being made by them.

7. In the context of the present case, if the articles provide a complete remedy then there can be no ground for Court proceedings.

In Re: A Company 1987 B.C.L.C. 562 the facts were very similar to those in the present case. The Articles of Association contained a specific provision as to what was to happen in such circumstances. It was held that to proceed with the petition and to refuse to allow the provisions of the articles to be implemented was an abuse of the process of the Court.

8. Counsel for the Respondents referred to several English authorities dealing with the circumstances in which the relief being sought by the Respondents in the present instance should or should not be allowed. While these cases in large measure must depend upon their own facts, two grounds upon which such relief might be refused emerge:-

(1) That the proceedings should not be struck out or stayed when there was impropriety on behalf of the Respondents of a substantial nature as affecting the value of the shares; and
(2) Where there was any risk to the Petitioner that a proper valuation would not be made of his shareholding.
In Re: A Company ex parte Kremer 1989 B.C.L.C. 365 at page 368 Hoffmann J. said:-

"..........there might be cases of impropriety on the part of the respondent which had so affected the value of the shares in the company as to make it inappropriate for the matter to be dealt with by a straight forward valuation".

9. In that case, however, it was held that the effect of the alleged improprieties on the valuation of the shares in the company was likely to be minimal. Accordingly, the petition was struck out.

In Re: A Company ex parte Holden 1991 B.C.L.C. 597 Harman J. said at page 603:-

"A petitioner is entitled to refuse to accept a risk - any risk - in an accountants valuation of his interest if such risk can be seen to be one that would depreciate in any way the valuation".

10. It is clear that the Respondents by making the offer to have the shares valued on the basis indicated are seeking to overcome the problems which they would otherwise have faced by virtue of the two passages to which I have referred. Nevertheless, I cannot accept their submission for a number of reasons:-

(1) The articles upon which the Respondent relies do not provide for a valuation in an involuntary rather than a voluntary sale;
(2) The articles form the contract between the shareholders and it is not open to a party to a contract to impose altered terms on another party to it without such parties consent however beneficial to such party such altered terms may be;
(3) No Court valuation will arise unless oppression has been established, something which has not been admitted by the Respondents.
(4) The Petitioner is seeking an equitable remedy. The level of the valuation to be determined by the Court will take into account the Courts view of the appropriate level of compensation having regard to its view of the circumstances giving rise to the proceedings.

11. The Respondents submit that this latter ground is invalid having regard to the decision in Irish Press Plc -v- Ingersoll Irish Publications Limited 1995 2IR 175. I do not accept that submission. That case has held that damages as a common law remedy are not available to a petitioner in proceedings under Section 205. However, it accepts that where a shareholder is bought out that the price can include an element of compensation, not as a main relief, but as incidental to the main relief. How this compensation is to be evaluated is a matter for the Court. In the course of his judgment which was the judgment of the Court, Blayney J. referred to in Re: Greenore Trading Company Limited 1980 I.L.R.M. 94 and quoted the following passage from the judgment of Keane J. in that case:-


"That, however, does not conclude the matter, since it is clear that in prescribing the basis on which the price is to be calculated, the Court can, in effect, provide compensation for whatever injury has been inflicted by the oppressors (see Scottish Co-operative Wholesale Society -v- Meyer 1959 A.C. 324)".

12. In my view what the Court may do in accordance with the terms of that passage as approved in Irish Press Plc -v- Ingersoll Publications Limited is not something which the auditors of the company could do acting as experts under the articles even if there was no other objection to their so acting.

13. In my view, the Respondents have failed to establish that this petition is an abuse of the process of the Court.

© 1997 Irish High Court

BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ie/cases/IEHC/1997/21.html