High Court grants specific performance of share options and extends shareholder information rights pending appeal.

[2019] IEHC 621

THE HIGH COURT

COMMERCIAL

2017 NO. 2991 P

BETWEEN

ADRIANUS GOUDRIAAN

PLAINTIFF

AND

JENDA CORPORATE HOLDINGS LIMITED, BOSAL NEDERLAND BV AND UNITED TRUSTEES (NZ) LIMITED

DEFENDANTS

JUDGMENT of Mr. Justice Quinn delivered on the 16th day of August 2019,

1. This judgment relates to two matters of contention which arose after the court delivered its judgment in these proceedings on 24

May 2019, (“the Principal Judgment”) but before perfection of the order to be made following the delivery of that judgment.

2. In the Principal Judgment, I held that the plaintiff was entitled to an order for specific performance of the provisions of a

Shareholders’ Agreement made on 22 January, 2010, which included a Share Option Plan (“SOP”) which conferred on the plaintiff the

right to exercise options to acquire 155 shares (being 15% of the entire share capital) in the second named defendant Bosal

Nederland BV (“Bosal”). The defendants had pleaded that in the events which had occurred and on a proper construction of the

relevant agreements, at the time when the plaintiff moved to exercise the share options, the period during which they were

exercisable had expired and that he was estopped or otherwise precluded from exercising the options. The relevant event was that

prior to the plaintiff giving notice of exercise of the options, the defendants had given to the plaintiff notice of a meeting convened

for the purpose of considering his dismissal/removal from positions and offices held by him in the Bosal Group. I found that the

relevant period for exercise of the options had not expired and that he had validly exercised the options when he did so on 28

October, 2016.

3. The background to the matter and the reasons for my decision are set out in the Principal Judgment and it is not necessary to

repeat them in this judgment. It is worth recalling that the SOP was originally stated to be governed by Dutch law and contained a

submission to the jurisdiction of the Dutch courts. When amended in 2014 this was changed to Irish law and the Courts of Ireland.

4. Following delivery of the judgment, the matter was listed before me on 19 June, 2019 for the purpose of finalising the form of the

order to be made and for any submissions concerning costs or other matters. By the time the parties appeared before me on 19 June,

2019, they had identified two substantive issues as between them which they informed me would require exchanges of affidavits and

of legal submissions and a day of court time for further argument and submissions. Directions were made for the exchanges of

affidavits and legal submissions and the matter was listed for hearing on 31 July, 2019.

5. The two issues which arose were as follows:-

(i) The defendant indicated that it intended to appeal the Principal Judgment to the Court of Appeal, and wished to apply

for a stay on any order for specific performance and other orders.

(ii) A substantive issue arose as to the date on which the plaintiff would be obliged to pay the price for the shares if they

were being transferred to him pursuant to the order for specific performance. This is referred to as the Payment

Postponement issue, and I shall consider it first.

Payment Postponement issue

6. Article 5 of the SOP prescribed the procedure for exercise of the share options. It also provided for the payment of the exercise

price on delivery of the option shares, subject to a right of the plaintiff to postpone that payment “by a maximum of two years after

the date of exercise of the options (without interest)”. (Emphasis added)

7. After delivery of the Principal Judgment, the plaintiff’s solicitors McCann Fitzgerald submitted to the defendant’s solicitors, Arthur

Cox, a draft order which provided inter alia for a declaration that the plaintiff would be entitled to a transfer of the shares in

accordance with the exercise notice dated 28th October, 2016, “including the plaintiff’s entitlement pursuant to Article 5 of the

Share Option Plan to defer payment of the exercise price for two years from the date that shares are transferred to him.”

(Emphasis added)

8. The defendants submit that because the option was exercised on 28 October, 2016, the postponement period of two years has

expired and therefore that if the judgment of this Court as to his entitlement to the option shares is upheld, he must pay the price for

the shares on delivery of the shares.

9. At the trial of the action the entire focus of the evidence and submissions was on Article 4.3 of the SOP, and the question of

whether the option had expired by reason of the service of a notice convening a meeting for the purpose of considering the dismissal

and removal of the plaintiff from his positions, which the defendants had claimed was a “case of termination” which had occurred

before he purported to exercise the option. I decided that aspect of the case in favour of the plaintiff.

10. At no point in the evidence, submissions, or during the hearing was the question of the right of postponement of payment of the

option price canvassed from any perspective. With hindsight it is difficult to understand how this issue would not have occurred to

any of the parties or their representatives as an issue requiring determination. However, the parties are now agreed that this issue

now requires to be determined.

11. The defendants made a preliminary point in their submissions on this issue that this question had not formed any part of the

pleaded case. However, it was acknowledged at the hearing on 31 July, 2019, that the issue must be determined. The defendants

proposed that the order for specific performance should stipulate that the plaintiff must make the payment, which is €1.55 million, on

delivery of the shares. All of the defendants’ submissions on this issue are made subject to its appeal from the Principal Judgment.

12. Article 5 of the SOP governs the exercise procedure and it is important to set it out in full: -

“Exercise procedure.

5.1 Each exercise of options may pertain to all or a part of the (remaining) options.

5.2 Options can be exercised on the condition that Emerian Corporation NV has been notified of this in writing. The

exercise takes place by means of an exercise form created on the basis of the model exercise form attached as an

appendix to the current Plan (Model in Appendix 2). Upon the decision to exercise options, this exercise form must be

conveyed to a Board member of Emerian Corporation NV in conformance with the instructions listed on said form. The

delivery of the corresponding number of Shares must take place at the latest fifteen days from the exercise of the

options in the method as described above.

5.3 The payment of the Exercise price by the Beneficiary will in principle take place at the moment of the delivery of the

shares by Emerian Corporation NV. However, the Beneficiary has the right to postpone the payment of the Exercise

price by a maximum of two years after the date of exercise of the options (without interest). The Beneficiary will inform

Emerian Corporation NV of this by means of the exercise form.

5.4 Neither the right of pledge, right of usufruct, or any other security right nor rights of third parties may be

established on the Shares delivered to the Beneficiary, nor may such Shares be encumbered in any way”.

The Article itself is not numbered, but I have applied numbers for ease of reference.

13. Article 6 contained provisions governing the calculation of the Exercise price. The price calculated and accepted by all parties to

be correct in respect of the 155 shares the subject of the option notice was €1,550,000.

14. Article 6 also included a provision to the effect that at his request, the plaintiff would be entitled to obtain an interest-free loan in

the amount of the Exercise price from Emerian Corporation NV or a corporation designated by Emerian.

Exercise of the option

15. It is also appropriate to quote in full the notice of exercise of the option which, conformed with the Model, and the covering letter

which were delivered by the plaintiff on 28 October, 2016.

Notice of exercise

16. “Share Option Plan 2010

Form to be used for exercise of options.

Mr. Adrianus L. Goudriaan, residing at Groendreef 7, 2360 Oud – Turnhout, Belgium (the Beneficiary):

1. Declares that he is exercising 155 options to purchase (in total) 155 shares of Bosal Nederland BV.

2. Declares that he will pay a price of €10,000 (ten thousand) per share, being a total of €1,550,000 (one million,

five hundred and fifty thousand), to Emerian Corporation MV.

3. Invokes his right, under Article 5 of the “Share Option Plan 2010” to extend the payment period for the above

stated price to (at the latest) two years following the date of the exercise of the options (interest free).

Within fifteen days following receipt of the present Exercise Form, Emerian Corporation NV shall deliver the above stated

shares to the Beneficiary. The Beneficiary declares that he is familiar with the rights attaching to the shares, as set

forth in the Articles of Association of Bosal Nederland BV, the Shareholders Agreement of 1 April 2010 concluded between

the Beneficiary, Emerian Corporation NV, and Bosal Nederland BV, and the “Deed of Amendment and Novation” of [BLANK

DATE] concluded between the Beneficiary, Emerian Corporation NV, Bosal Nederland BV, United Trustees (NZ) Limited

and Jenda Corporate Holdings Limited.

Executed in two exemplars, at Oud – Turnhout, 8 October 2016.

Signature of the Beneficiary”

17. The covering letter, also dated 28 October, 2016, was in the following terms:-

“At Oud – Turnhout, 29 October 2016.

Subject “Share Option Plan 2010”

Adrianus Goudriaan

Application for loan in the amount of the Exercise Price (Article 6 of the Share Option Plan).

Gentlemen,

I refer you to the exercise form of 28 October 2016 in which I declared that I am exercising 155 options which have

been granted to me under the “Share Option Plan 2010” and that I am purchasing the same number of shares in Bosal

Nederland BV at an exercise price of €10,000 (ten thousand) per share, for a total of €1,550,000 (one million, five

hundred and fifty thousand).

As provided in Article 5 of the “Share Option Plan 2010” I am availing myself of my right to extend the payment for the

above stated price to (at the latest) two years following the date of exercise of the options (interest free).

By means of the present letter, I am applying to Emerian Corporation Limited, in accordance with Article 6 of the “Share

Option Plan 2010” for an interest free loan from Emerian Corporation Limited, or a company designated by the said

Emerian Corporation Limited, in the amount of the above stated exercise price for the purchase of the shares in Bosal

Nederland BV.

Sincerely yours,

(Signature)

Adrianus L. Goudriaan”.

18. The parties informed me that the court is not required to make any determination concerning the provision for an interest-free

loan from Emerian Corporation Limited and the dispute relates only to the date when the exercise price should be paid.

Submissions

19. The plaintiff submits that in circumstances where this Court has found that the plaintiff validly exercised the option on 28

October, 2016, and the defendants had refused to transfer the shares for reasons which this Court has rejected in the Principal

Judgment, the defendants are now seeking to rely on the effluxion of time caused by their unlawful act of refusing to transfer the

shares to defeat the plaintiff’s entitlement to credit under the terms of the SOP. The plaintiff submits that this would enable the

defendants to benefit from their own wrongdoing.

20. The plaintiff submits that the clear intention of Article 5 is that if the defendants had honoured the obligations under that Article

by delivering the shares within fifteen days of notice of the exercise, he would have enjoyed the shares for a period of two years (or

at least two years less fifteen days) when he would have held the shares with all benefits attaching thereto before he would have

been obliged to pay the exercise price. If the defendant had not been in breach, he would have received the shares no later than

fifteen days after the exercise notice and would not have been obliged to pay until two years after the date of that notice.

21. The plaintiff submits that the position adopted by the defendant offends the principle that a party may not seek to benefit from

his own breach of contract.

22. The plaintiff submits that the obligation to pay cannot arise before delivery of the shares. Therefore, the right to postpone

payment, and the time period for the exercise of that right, cannot be found to have expired before the payment obligation itself has

first arisen.

23. The plaintiff submits that the postponement right conferred by the second sentence of Article 5.3 must be read in the light of the

final sentence of Article 5.2, which mandates delivery of the shares within fifteen days of service of the notice of exercise.

24. The plaintiff’s claim is that absent a breach of contract by any party the SOP envisages a clear sequence of events as follows: -

(i) Service of notice of exercise of the option.

(ii) Delivery of the shares.

(iii) Payment of the exercise price on delivery of the shares, subject to the postponement right contained in the second

sentence of Article 5.3.

(iv) Should the plaintiff elect for postponement of payment of the exercise price, he would be entitled to pay the price

two years after delivery of the shares or at the earliest fifteen days before the expiry of that two years, assuming the

defendants took fifteen days from the exercise notice to transfer the shares.

25. The plaintiff submits that on any construction of the contract the postponement period can only commence after the date on

which payment has first become due, which has still not occurred in this case.

26. The plaintiff submits that the defendants’ contention would have the effect that by breaching the contractual obligations, as this

Court has found, the defendants may deprive the plaintiff of the benefit of the postponement which he would have enjoyed had the

defendants delivered the shares as they were obliged to do. He relies on the principle that a party cannot take advantage of its own

breach.

27. The plaintiff submits that the principle of construction which is relevant is that the parties must be presumed not to have

intended that a party can take advantage of his own breach. He acknowledged that this presumption is capable of being displaced if

the contract contains clear words to the contrary which the plaintiff says does not arise in this case.

28. The defendants submit that there is no ambiguity in the SOP. They submit that the language of Article 5 regarding the period of

postponement is defined in the clearest of terms as two years from the date of exercise of the option and not from delivery of the

shares, and that this is not expressed in any way to be contingent on the shares being delivered within the fifteen-day period.

29. The defendants submit that the plaintiff is inviting this Court to interpolate or imply a term to the effect that in the event that

the defendants, even in breach of contract, fail to deliver the shares as required, the period of the postponement should be a period

of two years from delivery of the shares, and not as stated in the contract, two years from the service of the exercise notice. They

submit that there is no provision in the contract making the commencement of the two-year postponement period from the exercise

date dependant on delivery of the shares within fifteen days of the exercise date. They submit that where the right of postponement

has expired, as in this case, the only proper construction is that payment must now be made on delivery of the shares, in accordance

with the first sentence of Article 5.3.

30. The defendants also say that it would have been open to the plaintiff on expiry of the deferral period, i.e. on 28 October, 2018,

to either pay the price for the shares into escrow pending ultimate determination of the liability module of this case, or indicate that

he was ready willing and able to pay the exercise price at the moment of delivery of the shares. They submit that if the plaintiff is

now compelled to pay at the point of delivery of the shares, he will have enjoyed the postponement period provided for under the

SOP itself.

31. The defendants submit that the principle that a party may not take advantage of his own breach has no application in this case

because the contractual rights which the defendants are seeking to assert, namely the right to be paid on delivery, do not arise as a

result of their breach as found by the court and subject to appeal.

Benefit

32. The defendants say that if Article 5 were applied in accordance with its terms, and the plaintiff were required to pay on delivery,

the defendants would not have benefitted from any breach of contract. The defendants submit that because the plaintiff is

maintaining that he was the legal and/or beneficial owner of the shares since November 2016 and is pursuing a claim for damages for

alleged losses since November 2016 on that basis, he cannot on the one hand maintain that claim for damages and on the other hand

assert that the period for postponement only commences on delivery of the shares.

33. The defendants submit that they had obtained no benefit by the refusal to transfer the shares pursuant to the exercise notice

served on 28 October, 2016. When questioned on this, counsel for the defendant referred to the fact the plaintiff was claiming

damages for losses he claims arose from non – delivery of the shares on a timely basis. That damages claim will be for determination

on another day, depending on the outcome of the proposed appeal. However, it is clear that by declining to transfer the shares, the

defendants have had and retained the benefit of the shares to the exclusion of the plaintiff. This was not a mere passive enjoyment

of the shares. On 19 June, 2019, they exercised rights attaching to the entire shareholding in Bosal by passing certain resolutions

amending the articles of association to provide for conversion of shares into ordinary shares and permitting the issue of new

preferential shares with conversion rights. The events of 19 June, 2019, are discussed later in this judgment, and the merits of those

actions are not for adjudication as part of this judgment. However, it is clear that the defendants enjoyed and exercised rights

attaching to the shares to the exclusion of the plaintiff.

Commentary and case law

34. Levison on the Interpretation of Contracts (6th Ed.). Paragraph 7.10 is cited as authority for the proposition that: -

“A contract will be interpreted so far as possible in such a manner as not to permit one party to it to take advantage of

his own wrong”.

35. In Levison, the authors cite the reference in Rede v. Farrar [1817] 6 M and S, p. 121 by Lord Ellenborough, to a: -

“universal principle of law that a party shall never take advantage of his own wrong”.

36. Reference has been made to the discussion in this commentary as to whether this principle is a rule of law or simply a rule of

construction. The authors comment that the preferred view based on the authorities is that this is a rule of construction and in this

regard cite the judgment of Andrew Smith J. in the following terms: -

“It is a general principle of construction that prima facie, it will be presumed that the parties intended that neither

should be entitled to rely on his own breach of duty to obtain a benefit under a contract, at least where the breach of

duty is a breach of an obligation under that contract: see Chitty On Contracts, Vol. 1 at para. 12 – 082. This is

sometimes presented not as a matter of contractual construction but an implied contractual term that a right or

benefit conferred upon a party shall not be available to him if he relies on his own breach of the contract to establish his

claim: Chitty On Contracts Vol. 1 at para. 13 – 012. However, analysed, the principle is not inflexible or absolute: it may

be displaced by express contractual provisions or by the parties’ intention to be understood from the express terms:

Ricoh International Limited v. Alfred C. Toepfer International GMBH”.

37. A leading case on this point is Alghussein Establishment v. Eton College [1988] 1 WLR 587.

38. In the Eton College case an agreement was entered into between the defendants as landlords and a developer as tenant which

provided that the tenant would use its reasonable endeavours to commence and proceed diligently with the development of a block of

flats on the relevant lands. Clause 4 of the agreement contained a provision as follows: -

“Upon the proper issue of the certificate of practical completion … the landlords will forthwith grant and the tenant shall

forthwith accept and execute a counterpart of the lease, provided that if for any reason due to the wilful default of the

tenant, the development shall remain uncompleted on the 29th day of September 1983 the lease shall forthwith be

granted, and completed as aforesaid…”.

39. By 1984, the development had not even commenced and at that point the defendants purported to treat the agreement as

repudiated because of the failure by the tenant to commence and complete the agreement. The plaintiff/tenant brought an action

claiming specific performance of the obligation to grant the lease. The House of Lords held that even the express terms of the proviso

in Clause 4 could not be relied on to compel the landlord to grant a lease having regard to the plaintiff’s breach.

40. The House of Lords approved the principle as stated in Rede v. Farrar (op. cit.), and treated the principle as one of construction.

Lord Jauncey of Tullichettle continued as follows:-

“Although the proviso refers specifically to the wilful default of the tenant it does not state that the tenant should be

entitled to take advantage thereof. It is one thing for wilful default of a party to be made the occasion upon which a

provision comes into operation, but it is quite another thing for that party to be given the right to rely on that default”.

41. In applying the rule of construction identified in the Eton College case, the next question is whether there is to be found in the

language of the SOP any provisions which would rebut the presumed intention of the parties that neither could take advantage of its

own breach of the contract.

Conclusion

42. The defendants submit that the clear words of the second sentence of Article 5.3 answer this question and that the sentence is

a standalone provision imposing a clear obligation to pay on delivery of the shares. I conclude that there is a clear interdependency

between the first and second sentences of Article 5.3 and the final sentence of Article 5.2.

43. To suggest that the provisions governing the timing of the payment and governing the duration for which the plaintiff can

postpone payment for the shares can operate and time run thereunder even before the obligation to pay has first arisen would be to

render the second sentence of Article 5.3 nugatory. There is no support in the language of the SOP for the proposition that the

parties intended that where the defendant breaches the obligation to deliver the shares within fifteen days of the notice of exercise

of the option, and that breach continues for a period of two years, the right of postponement is defeated or extinguished as a

consequence of that breach.

44. The next question is for what period is the plaintiff entitled to postpone payment. Because the SOP is silent as to what should

then occur, this court must examine the proper construct of the SOP as its terms intended it to have operated. The plaintiff’s

description of the intended sequence is as follows: -

(i) Service of notice of the exercise of the option.

(ii) Delivery of the shares.

(iii) Payment for the shares on the date of delivery, subject to the right of postponement.

(iv) The plaintiff had the right to postpone payment of the exercise price for a period of two years. Had the defendants

delivered the shares within fifteen days, then this would have been in effect a period of two years from the date of

delivery of the shares less fifteen days.

45. Having concluded that there are no provisions mandating the exclusion of the principle of construction that a party cannot benefit

or take an advantage of its own breach of contract the postponement right cannot be extinguished by the defendant’s breach of

contract and the only approach which may then be applied is to retain the original “construct” of the agreement described above.

That is that the plaintiff may elect to postpone payment for the two years conferred by the second sentence of Article 5.3, which in

the events which have occurred is a period of two years less fifteen days from the date of which the shares are delivered to him.

Stay

46. The defendants have applied for a stay on the order for specific performance pending an appeal from the Principal Judgment.

Although the stay application is the defendants’ application, the first affidavit before the court was sworn by the plaintiff on 1 July,

2019. A replying affidavit, supporting the stay application, was sworn by Mr. Martineau on 10 July 2019.

47. Apart from the matters adduced in evidence in the exchange of affidavits, legal submissions were exchanged on this point, and

open correspondence was exchanged between the parties up to and including the day before the hearing of this application and was

opened to the court at the hearing on 31 July 2019. Even during the course of the hearing itself, further exchanges took place which

reduced to a degree the issues to be determined in relation to the stay application rendering it appropriate to grant a stay on certain

terms. Before I turn to these terms it is necessary to outline the issues between the parties in relation to the stay.

48. The plaintiff complains that if the shares are not transferred to him now, and if the Principal Judgment is upheld on appeal, he will

have suffered irreparable harm by reason of the ongoing acts of the defendants. In his affidavit he refers to a number of events which

are now of only historic interest, and then to certain acts and transactions which are ongoing and therefore of more direct relevance

to the stay application. The “general” complaints amount to the following: -

(i) That Bosal is being mismanaged.

(ii) That the Bosal Group is being liquidated for cash.

(iii) That the parts of the group that have not yet been sold cannot and will not survive independently if they continue to

be run as they are being run, and therefore it is only a matter of time before Bosal ceases to exist.

(iv) That unjustifiably large sums are being paid to professional advisers associated with the activities of the group.

49. The plaintiff refers to two particular transactions which he says are directly prejudicial to his interests as a party found to be

entitled to a 15% shareholding in Bosal. The first is a transaction of the 27 March, 2017 whereby beneficial ownership of the shares in

Jenda Corporate Holdings Limited (the immediate parent company of Bosal), was transferred from United Trustees (the third

defendant) to an entity known as Feniks Sarl. The second transaction was effected on 19 June 2019, and is described in more detail

below.

27 March, 2017

50. The 2017 transaction constituted, it is said by the defendants, an ordinary restructuring of the family interests of the Bos family

for its own good reasons. It is said that its purpose was to transform a certain common law trust structure to a civil law structure

and was independent of any issue in these proceedings. The plaintiff complains that its effect was that the third named defendant,

which is a guarantor of the obligations of the second named defendant towards the plaintiff, including its obligations under the SOP, is

no longer the holder of shares in Jenda and has been rendered a “shell company”. He says that this means that it may no longer be in

a position to honour the guaranteed obligation.

51. The plaintiff complains that he only became aware of this transaction on 17 June, 2019, when he saw for the first time the

consolidated accounts of Jenda and its subsidiaries for the year ended 31 December, 2017, which had been filed at the Companies

Registration Office on 5 June, 2019, and only became available on 13 June, 2019.

52. On 19 June, 2019, McCann Fitzgerald wrote to Arthur Cox seeking an explanation for the transaction and the plaintiff says that he

is dissatisfied with the explanation given for a number of reasons. This Court is not required to adjudicate on the merits of this or

other restructuring transactions of the defendants. The essence of the plaintiff’s complaint is that when the trial of these proceedings

was underway, this Court was given to understand that the third named defendant was the shareholder in the second named

defendant, and evidence was led about the status of the group at the trial, without the court having been informed that such a

change had occurred. At this remove it cannot be said that the 2017 transaction is directly relevant to the stay application, although

the failure to disclose it informs the approach to be taken.

19 June, 2019

53. This transaction is not referred to in Mr. Goudriaan’s affidavit of 1 July, 2019, because he says that he only became aware of it in

the subsequent correspondence. On 19 June 2019, being some 26 days after the delivery of the Principal Judgment and being also the

day on which these proceedings were listed for mention before this Court resolutions were passed which altered the articles of

association of Bosal, provided for the conversion of existing shares into ordinary shares, and provided for the issue to Feniks Sarl of

certain non – voting preference shares which carried a right of conversion into ordinary shares. The right of conversion will become

exercisable as of 1 October, 2019.

54. The plaintiff complains that this transaction has the effect of facilitating a dilution of his potential shareholding. He accepts that a

certain amount of dilution of existing shareholding could be necessary on a restructuring, but says that there are questions about this

transaction which require to be answered and which have not been addressed to his satisfaction. These questions have been

ventilated in correspondence in July 2019 between McCann Fitzgerald and Arthur Cox. They relate to such matters as the manner in

which fair market value is to be determined on a conversion, with consequences for the scale of dilution of existing shareholders and

questions around the propriety of the conversion of subordinated debt into shares carrying a premium at par value, and questions

concerning the degree of control which the resolutions of 19 June, 2019, confer on Feniks – all, says the plaintiff, to the prejudice of

an unrelated minority shareholder.

55. The fact of the 19 June, 2019, transaction was made known to the plaintiff by a letter of 8 July, 2019, from Arthur Cox to

McCann Fitzgerald. The letter stated that without prejudice to the defendants’ appeal and stay application and without prejudice is

the plaintiff’s “lack of entitlement to information which a shareholder would be entitled to”, they were writing to inform the plaintiff

“of steps recently taken by Bosal to strengthen its equity position”. The letter provides basic information about the transaction,

stating that Bosal’s financial situation was precarious and that it had been forced to take measures to ensure its existence and

viability. In particular, it states that “several of Bosal’s current and potential business partners requested that the financial position,

and in particular the equity position of Bosal, be strengthened substantially in order to be able to source business to Bosal.” The

letter instanced Ford blocking Bosal as a supplier for the “Ford V710 program until Bosal strengthens its equity position”. The plaintiff

says that this letter caused him to undertake further investigations, and that it was only on further inquiry that it emerged that the

debt to equity conversion could be implemented as early as 1 October, 2019. He submits that if a stay is imposed on the order for

specific performance, he is at risk that the conversion and dilution will be implemented and that irreparable harm will be suffered by

him.

56. The defendants say that the restructuring authorised by the 19 June transaction will facilitate the conversion of circa €75 million

worth of subordinated debt into equity and that it has met the requirements of Ford, thereby securing continuity of its contract with

Ford.

57. Again this Court is not required to adjudicate on the validity or merits of any of these transactions. It is said by both parties that

for any adjudication of allegations of mismanagement or allegations of impropriety, the proper forum is the Enterprise Chamber at the

Amsterdam Court of Appeal.

Enterprise Chamber of the Amsterdam Court of Appeal

58. The plaintiff says that for so long as he is not registered as a shareholder in Bosal, he is deprived of the standing to petition the

Enterprise Chamber.

59. The Enterprise Chamber is a division of the Amsterdam Court of Appeal which has a wide and important jurisdiction in relation to

allegations of mismanagement of companies. On a petition, if it can be established that there is “sufficient grounds for doubt as to

whether the company is pursuing a proper policy or a proper course of affairs” the Chamber has power to open inquiry proceedings

which includes the appointment of investigators, examining magistrates, and ultimately to make a determination as to whether

mismanagement has occurred and if so to impose certain measures including suspension or nullification of resolutions and other acts,

and even more radical measures up to and including orders for the dissolution of the company. In certain circumstances, the Chamber

has power to impose provisional measures at any stage of the inquiry proceedings.

60. The plaintiff says that if he was registered as a shareholder he would have a right to obtain certain information concerning the

activities of Bosal and that if dissatisfied with this information or if the information reveals mismanagement, he would have a right to

petition the Enterprise Chamber. He submits that if he has to await the outcome of the appeal from the Principal Judgment and

pending that finality he has no such rights, events may occur which may be incapable of reversal. He says that he will only follow

such measures as a petition to the Enterprise Chamber if he believes, having taken advice, that his concerns are well founded. He

says and that if he obtains information which shows that his concerns are not well founded he will not petition.

61. In support of the application for the stay, the central point made by the defendants is that they apprehend that the plaintiff,

being a person feeling aggrieved about the manner in which he has been dismissed and about the affairs of Bosal. and having already

embarked upon what they describe as a campaign of litigation in Ireland, the Netherlands and Belgium will subject the Bosal Group to

continued prolonged proceedings before the Enterprise Chamber. They submit that he will do so only to serve his own personal

interests.

62. In the replying affidavit, Mr. Martineau makes a number of complaints about the conduct of the plaintiff and his stewardship of the

company whilst in office and before his removal. He refers to what he describes as a material improvement in the performance of the

group since the removal of the plaintiff. He says that if a stay is refused and if the plaintiff is registered as a shareholder, he will

subject the defendants to a “costly, distracting and time consuming battle” at the Enterprise Chamber. It is submitted that the

plaintiff has no interest in protecting the interests of the Bosal Group but only in pursuing his own litigious campaign and that if he is

permitted to maintain such a campaign or granted the standing to maintain that campaign, he will cause “serious, irreversible and

irreparable harm between now and the final determination of the matter before the Court of Appeal”.

63. The Court was referred to the relevant provisions of the Dutch Civil Code concerning the right to petition to the Enterprise

Chamber. It appears from Article 346 of the Code that the right to file a petition rests only in certain parties which are defined by

that Article. The definitions include the holder of shares holding certain minimum amounts, depending on the size and nature of the

company, the company itself, and critically “persons who are authorised to [petition] by the Articles of or under agreement with the

legal person [i.e. the company]”. [Article 346 (1)(e)]

64. Following the letter of 8 July, 2019, of Arthur Cox to McCann Fitzgerald, detailed letters were exchanged between the parties. In

that correspondence the plaintiff sought to interrogate the 19 June, 2019, transaction further and the defendant provided extensive

information and material in response. The plaintiff complains that the information is unsatisfactory and persisted in his objection to a

stay on the grounds that by reason of not being a registered shareholder he would be deprived of information and of the right to avail

of the remedy of petitioning the Enterprise Chamber. In a remarkable change of position, on 18 July, 2019, Arthur Cox, having

provided certain further information about the debt to equity conversion and other matters, informed McCann Fitzgerald that: -

“. . . in relation to your threatened application relating to the alleged inappropriate share dilution . . . our clients have

indicated that pending the decision of Mr. Justice Quinn on the payment/stay issues and/or pending your client becoming

a shareholder upon paying the €1.55 million price - (or payment of same as a condition of not granting a stay) – they

will provide a contractual right to your client to bring proceedings before the Dutch Enterprise Chamber, which would

expire within two months of your client being duly notified of any conversion (should any such conversion occur). This

ensures that your clients petition is fully protected and that any issue in relation to dilution is dealt with in the proper

forum, being the Dutch Enterprise Chamber, given that any issues relating to the preference shares and their potential

conversion are clearly matters governed by Dutch company law and should be addressed in the proper forum in the

Netherlands”.

65. In the same letter Arthur Cox stated that detailed and confidential information was being provided strictly on the condition that it

be used by the plaintiff only for the purpose of these proceedings.

66. Further correspondence was exchanged in which the plaintiff protested the following:-

(1) That the offer of standing under Article 356 (1)(e) was inadequate because in two respects it was limited to only

claims relating to the debt and equity conversion pursuant to the resolution of 19 June 2019. The two respects were

firstly that it could be withdrawn two months after the implementation of a conversion, and secondly, that the letter in its

terms referred only to claims in relation to the conversion.

(2) That the offer of information was limited by being subject to the stricture that information provided can be used only

in these proceedings which meant that the relevant information could not be relied in a petition to the Enterprise

Chamber.

67. In further exchanges of open correspondence, culminating in a letter from McCann Fitzgerald on 30 July, 2019, the plaintiff

indicated that he was willing to compromise his opposition to a stay on certain terms. The parties’ engagement and arguments as to

those terms continued before the court on 31 July, 2019.

68. The effect of these exchanges and submissions is that the parties have narrowed the issues on which I am required to make a

determination, namely the conditions for a stay. In making such a determination I am informed by the recent case law in which the

court treated an application for a stay in certain cases as a balancing exercise between the interests of the parties. In particular, in

re Star Elm Frames Limited [2016] IECA 234, Ryan P. approached such questions as follows: -

“On an application for a stay, the court seeks to balance the rights and interests of the successful respondent and the

unsuccessful appellant. Obviously, the fundamental principle is to do justice between the parties. Sometimes this can be

achieved by imposing terms, such as in the case of a personal injuries assessment by requiring payment by the

defendant to the plaintiff to meet the needs of the period between the original trial and appeal. The balance has to

recognize the entitlement of the unsuccessful party in the court below to appeal and at the same time it must

acknowledge the right of the winning respondent to the benefit of his judgment. If the court can find a workable

compromise, it will usually favour that approach. The question is how to preserve the right of appeal in the sense of

maintaining the status quo as far as possible so that if the appellant succeeds his victory will be practically meaningful.

And vice versa. The court looks at the situation that will arise in the event that the appeal is successful and contrasts

that with what will obtain if the appeal fails. A stay is not a matter of routine because that would deprive the successful

party of the justice to which he has been found to be entitled by the trial court”.

69. There are two elements to the dispute between the parties as to the terms of a stay in this case. They have each submitted

draft orders reflecting their positions, accompanied by their respective versions – similar but not identical – of a formal agreement

which would meet the requirement of Article 346 (1)(e) of the Dutch Civil Code conferring on the plaintiff locus standi for a petition to

the Dutch Enterprise Chamber. For the plaintiff to enjoy locus standi Article 346 (1)(e) requires that there be an agreement

authorising him to petition. It is not appropriate for this court to act as a “quasi-mediator” to “settle” the form of that contract, but I

shall grant a stay on the order for specific performance and stipulate below the conditions on which the stay will be effective, being

principally the minimum terms which such a contract must contain. These stipulations are in paragraphs 71, 73, and 77 below.

70. In making these stipulations, I have considered the submissions of the parties at the hearing and the respective versions of the

proposed order and of the proposed contract submitted by them.

Conditions of stay

71. As to the right to apply to the Enterprise Chamber, I shall stipulate as a condition of the stay that the defendants immediately

grant to the plaintiff a legally enforceable contractual right to petition the Enterprise Court of the Amsterdam Court of Appeal in

relation to the second – named defendant, subject to the time limit mentioned in para. 76 below.

72. The defendants urged that they should have the ability to terminate the locus standi to petition within two months of notifying

the plaintiff of any conversion of preference shares B or C of Bosal into ordinary shares. This would have the effect that the plaintiff’s

rights to petition could be limited to a challenge to such conversion. They urged that without such a limitation they would be exposed

to continuing or very late challenges to any manner of transaction in the course of their business pending the outcome of the appeal.

It is said the threshold for opening an enquiry is very low. Ultimately the plaintiff would have to satisfy the Enterprise Chamber of the

merit of his petition. It will be a matter for the defendants to respond as they see fit in relation to any such petition. Therefore, the

contract, to be effective for the purpose of the stay, may not permit such termination.

73. As for the right of information I shall stipulate a condition of the stay that the defendants immediately grant to the plaintiff a

legally enforceable contractual right to obtain all information which would be available to a shareholder in Bosal under the laws of the

Netherlands. Insofar as under the law of the Netherlands any such information is required to be obtained by the plaintiff convening a

general meeting the agreement will provide that the plaintiff may request such information in writing to the Management Board of

Bosal and that Bosal shall respond to such requests as soon as reasonably practicable

74. The plaintiff has accepted that these stipulations mean that pending final determination of an appeal he will enjoy the rights of

information and of petition to the Enterprise Chamber but not the other rights of a shareholder, such as rights to attend meetings of

shareholders or rights to dividends. That being the case the plaintiff sought to introduce the stipulation that the right to information

should extend to such information as might otherwise only be available by attendance at a meeting. I have some reservations as to

how this will operate in practice. However, since the defendants’ objections included their stated apprehension as to the disruption

the plaintiff could occasion by attendance at meetings, I consider it appropriate to accede to the plaintiff’s application to extend the

information obligation to information which might otherwise only be available at a meeting of shareholders.

75. The defendants had proposed that Bosal would “respond to any reasonable requests for information . . . and any dispute in

respect of this condition falls to be dealt with before the Dutch Enterprise Chamber”. I am not persuaded of the requirement for my

order to stipulate that the information request be reasonable. Any disputes concerning the adequacy or timing of information will be

matters for the Enterprise Chamber as appears from paragraph 78 below.

76. The agreement conferring the rights described above will expire within two months, following the occurrence of the earliest of the

following events: -

(a) The plaintiff becoming a shareholder in Bosal.

(b) These proceedings coming to an end by final order of a court against which no form of appeal is possible or the

plaintiff no longer pursuing his claim.

77. The expiry date for the agreement reflects the fact that the relevant rights are being conferred as a condition of a stay pending

an appeal. I have already rejected the defendants’ contention that it should expire on an earlier date should the debt for equity

conversion occur.

78. The parties have agreed that there will be a provision in the contract conferring the above rights, to the effect that the

agreement will be governed by Dutch law and that the courts of the Netherlands – being either the Enterprise Chamber or if it

declines jurisdiction, the District Court of Amsterdam.

79. The court will note the undertaking of the plaintiff as to damages, such undertaking to apply in the event that the Principal

Judgment is overturned by a final appellate court in Ireland and the defendants are successful in overturning a certain judgment

granted in Belgium in favour of the plaintiff in a final appellate court in Belgium and to apply only in respect of damages suffered by

the defendants as a result of the contractual rights conferred pursuant to this judgment. The reference to Belgium is to a judgment of

the Belgian court declaring the dismissal of the plaintiff unlawful, which itself is under appeal.

80. The order giving effect to this judgment will now be perfected and the parties shall have liberty to apply.