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Neutral Citation No: [2005] IEHC 26

THE HIGH COURT

DUBLIN

RECORD NO. 2004/341/COS

IN THE MATTER OF URAL HUDSON LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 1963-2003

EX TEMPORE JUDGMENT DELIVERED BY

MS. JUSTICE FINLAY GEOGHEGAN

ON WEDNESDAY, 9TH JANUARY 2005

MS. JUSTICE FINLAY-GEOGHEGAN DELIVERED HER JUDGMENT, AS FOLLOWS, ON WEDNESDAY, 7TH FEBRUARY 2005

This is an application by way of interlocutory relief on behalf of the petitioner that Ural Hudson Limited be restrained until after the determination of these proceedings from paying out or disposing of any part of the sum of €2 million which it may receive as a result of an execution process now underway in Belgium against certain properties of Euton SA. The present proceedings are a petition under a Section 205 of the Companies Act 1963, and that section permits:-

"Any member of a company who complains that the affairs of the company are being conducted or that the powers of the directors of the

Company.are being exercised in a manner oppressive to him or any.of the members (including himself), or in disregard of his or their interest as members, may apply to the court for an order under this section."

It is undisputed that the petitioner, Euton Investment Company SAH, a Luxembourg company, is a member of Ural Hudson Limited and has a shareholding of

approximately 24.5% therein. The respondents to the present proceedings are Ural Hudson Limited and the two directors, who are also the other shareholders of Ural Hudson Limited, namely, Mr. Henri Aboutboul and Mr. Jean Louis Laborde.

The claim made on behalf of the petitioner in the proceedings is that the affairs of Ural Hudson have been and are being conducted by the respondent directors in a manner oppressive to the petitioner. If the petitioner is successful in its claim, it seeks as relief primarily an order directing the respondent directors, who are also the shareholders, to buy out its shares in Ural Hudson Limited at a fair value.

The petitioner in the proceedings and in this interlocutory applications makes a complaint about the inadequacy of the books and records of Ural Hudson Limited and the inability of the auditors to give a full certificate in a number of sets of accounts, including the most recent accounts to the year ended 2003. It seeks to have the sum of money which Ural Hudson Limited may recover in the Belgian execution proceedings retained within the company pending the determination of these proceedings. The respondent directors have indicated on affidavit an intention to use those monies to discharge liabilities of Ural Hudson Limited, including repayment of loans which they claim they have made to the company.

Even assuming that the petitioner has raised a serious question to be tried in the Section 205 petition and even assuming that that serious question to be tried includes questions as to the validity or otherwise of the loans made by the respondent directors to the company, it follows from the well established principles as determined, for example, by the Supreme Court in Campus Oil Limited -v- The Minister for Industry and Energy (No.2) [1983] IR 88, that the petitioner must establish, in order to obtain an interlocutory injunction, that it would suffer irreparable loss and damage unless the order which it seeks is granted pending the determination of the proceedings.

As I have already indicated, if the petitioner is successful in the Section 205 claim, what it seeks is an order directing the respondent directors to buy out the shares of the petitioner at a fair value. I have concluded that such a fair price will not be affected by the question of whether or not the monies recovered in Belgium will or will not be still within the company or whether they will be paid out in discharge of the directors' loans to the company. The fair price may well be affected by the validity or otherwise of the loans which the directors state they have made and in respect of which the company has liabilities to them.

Secondly, I have concluded that the respondents' ability to financially meet any order which a court in this jurisdiction might make against the respondent directors to purchase the shares of the petitioners at a fair value could not be considered, on the evidence before me, to be even potentially, adversely affected by the payment out of Ural Hudson Limited of the €2 million, approximately, which may be recovered in the Belgian execution process.

Accordingly, I have concluded that the petitioner has failed to establish that unless the order now sought is made in its favour that it will suffer irreparable loss and damage between now and the determination of the proceedings. I also wish to add that insofar as there was before the court an application on behalf of the petitioner, as is set out at paragraph (5) of the notice of Motion, a Mareva worldwide injunction seeking to restrain either the company or the respondent directors from reducing their assets below 'a sum of €2 million, that in accordance with the principles set out by the Supreme Court in John Horgan Livestock Limited -v- O'Mahony [1995] 21R 411, the petitioner has failed to establish the minimum requirements as set out therein to obtain the injunction sought and, accordingly, I am dismissing the petitioner's application for an interlocutory injunction.

END OF JUDGMENT

Approved: Finlay Geoghegan J.