North South Pig Company (NI) Limited and Michael McAuliffe, James McGraft, John Hanrahan, David Rowan, Truly Irish Country Foods Limited
| Jurisdiction | Northern Ireland |
| Judge | Huddleston J |
| Judgment Date | 19 February 2021 |
| Neutral Citation | [2021] NIQB 22 |
| Court | Queen's Bench Division (Northern Ireland) |
| Date | 19 February 2021 |
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Neutral Citation No: [2021] NIQB 22
Judgment: approved by the Court for handing down
(subject to editorial corrections)*
Ref: HUD11272
ICOS No: 2015/68050
Delivered: 19/02/2021
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
___________
QUEEN’S BENCH DIVISION
(COMMERCIAL HUB)
___________
Between:
NORTH SOUTH PIG COMPANY (NI) LIMITED
Plaintiff
and
MICHAEL McAULIFFE, JAMES McGRATH, JOHN HANRAHAN,
DAVID ROWAN, TRULY IRISH COUNTRY FOODS LIMITED
Defendants
___________
Mr G Simpson QC and Peter Girvan BL (instructed by Johnsons, Solicitors)
Mr M Humphreys QC and Stuart Spence BL (instructed by A&L Goodbody
___________
HUDDLESTON J
Introduction
[1] This dispute arises out of the breakdown in relations between two sets of
shareholders in a Northern Irish Company – North South Pig Company (NI) Limited
(“the Company” or “NSP”) – and the plaintiff to these proceedings. The plaintiff’s
claim is set out in its Further Amended Statement of Claim – giving some hint to the
protracted and convoluted nature of these proceedings. In summary (and allowing
for those sections of the claim that have already been removed) the amounts claimed
are as follows:
(a) €40,000 which is alleged to have been unlawfully paid to the first, second,
third and fourth defendants in breach of: (i) a Shareholders’ Agreement; and
(ii) the fiduciary duties owed by those defendants as the directors of the
Company;
…
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(d) €84,000 alleged to have been administrative payments paid to Truly Irish
Country Foods Limited (“Truly Irish”) (the fifth defendant) by those
defendants or on their direction in breach of the Shareholders’ Agreement
and the directors’ fiduciary duties as directors. This figure is not, however,
carried through into the plaintiff’s summary of its claim as set out in the
closing submissions;
(e) €397,210 in respect of “share payments” (as they are described) made to the
fifth defendant in breach of the Shareholders’ Agreement and again
constituting an alleged breach of the directors’ fiduciary duties. Again, this
sum is not contained in the plaintiff’s closing summary of its claim;
(f) €189,856 representing dividend payments made to shareholders which were
allegedly paid in breach of the Shareholders’ Agreement and in breach of the
directors’ fiduciary duties;
(g) Unquantified haulage costs paid to a third party owned and/or controlled by
the first defendant but again alleged to have been paid in breach of the
Shareholders’ Agreement, and/or constituting a breach of contract and a
breach of the fiduciary duties owed;
(h) €4,095,531 representing a loss of profit to NSP (comprised of €1,549,380 for the
period from 1 September 2013 to 30 April 2018 and €2,229,184 for the period
from 1 May 2018 to 30 April 2028 plus €316,967 interest);
(i) €2,359,180 representing loss of value in the plaintiff by the alleged actions of
defendants 1-4 again in breach of the Shareholders’ Agreement, and
constituting a breach of contract and/or a breach of the directors’ fiduciary
duties;
(j) Accounts, enquiries and equitable compensation/disgorgement of profits on
foot of the breaches of the Shareholders’ Agreement, contract and fiduciary
duties as pleaded above in the plaintiff’s closing submissions (at Paragraphs
69 and 77 this is described as damages for lost and future profits i.e. as profits
earned by the defendants in breach of their duties. The figure of €2,890,984 is
claimed (as valued by the plaintiff’s expert) as representing the “equity value”
of Truly Irish – in the absence (it says) of the fifth defendant having provided
a breakdown of revenue/profit streams; together with
(k) Interest claimed pursuant to section 33A of the Judicature (NI) Act 1978.
[2] The claim, however, focuses in the main on the alleged breach of contract (i.e.
the Shareholders’ Agreement that is alleged to have been in existence) and, in the
alternative, a breach of the fiduciary duties owed by the defendants 1-4 (“D1-4”) to
the Company as set out in ss. 172 and 177 of the Companies Act 2006 (“CA 2006”).
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[3] It is the pleaded case which defines the remit of this action and upon which
(lest there be any doubt) the court focuses its attention – per Order 18 Rule 6 and 15
of the Rules of the Court of Judicature (NI) 1980 and Rolled Steel v British Steel [1986]
Ch 246 and it is the pleaded case upon which this judgment focuses.
[4] As for the defendants, they deny the claim in all its material respects.
[5] The plaintiff was represented by Mr M Humphreys QC and Stuart Spence BL
and the defendants by Mr G Simpson QC and Peter Girvan BL. I am indebted to
counsel for their detailed arguments and submissions.
[6] The evidence that the court considered consisted of voluminous documentary
evidence spanning the period from incorporation of the plaintiff up to the final
stages leading up to the breakdown in relationships between the two groups of
shareholders in September 2013 and beyond. For the plaintiff I heard oral evidence
from the following principal witnesses: Paul Gilmore (former employee);
Michael Monagle (Director of the Plaintiff); Mr Seamus McCaffrey (Accountant);
Mr James Neill (Expert Witness Partner in HNH Partners Ltd); Mr Patrick Plunkett
(Director); and Mr Brendan Hanley (Director) and for the defendants I heard from:
Michael McAuliffe (first defendant); Brendan Thomas Dwyer (Expert Witness,
Partner in Harbinson Mulholland); and Mr Stephen Finn (Finn Meats). I have not
sought to rehearse all of this evidence but have used it when relevant to detail the
complex background to the dispute (as will be apparent below) and have detailed
that upon which I have relied in coming to my determination.
Background – The History and Nature of the Dispute
[7] The origins of this dispute date back to the late 1990s and early 2000s when, as
a result of, firstly, a reduction in pig processing capacity in Ireland and, secondly, a
perceived concentration of profit margin with pig processors (at the expense of pig
producers), a number of pig farmers decided to adopt a co-operative style approach
to pig processing to redress those perceived imbalances.
[8] A co-operative was formed in 1999 on an all-island basis with the objective of
improving pig prices for pig farmers but, ultimately, with an objective of
slaughtering and processing pigs and retailing the final product itself – essentially
cutting out the “middle man” processors (as they were seen). In part, this
co-operative was launched on the back of a report jointly commissioned on an
all-island basis – The Pig Industry in Ireland – a Strategic Study (2001) (“the 2001
Study”).
[9] In October 2002 the co-operative (then named North South Pig) identified its
longer term objectives broadly as:
- the securing of an outlet for pig sales;
- direct involvement in slaughtering and marketing; thus
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