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Donegal Investment Group plc (“DIG" or the “Company”)
1 February 2017
As previously advised, the Company took a shareholder oppression claim relating to its shareholding in Elst (the unlimited holding company of Monaghan Middlebrook Mushrooms business) (“Monaghan”). The respondents to this claim were the majority shareholders in Monaghan (the "Respondents"). The Commercial Court, a division of the High Court, gave judgment on 5 December 2014 in an individual module of the case, being the price at which the Respondents might purchase the Company’s interest in Elst (the “Valuation Module”). The Court determined this price to be €30.6m. This price was based on a shareholding of 35% in Elst (the “High Court Valuation Order”). In separate proceedings, the Court held that the Respondents had an option to acquire 5% of Elst that was held by the Company. This Option has been exercised and the Company’s shareholding in Elst is now 30%. On the basis of a 30% shareholding in Elst, the Company’s interest in Elst is valued by the Commercial Court pursuant to the judgment of 5 December 2014 at €26,228,570.
After the Valuation Module, the Commercial Court proceeded to a hearing on oppression and the appropriate remedy that ought to be directed (the “Remedy/Oppression Module”). On 21 May 2015, the Respondents (being the majority shareholders in Elst) admitted specified and unspecified acts of oppression and on 21 May 2015 the Commercial Court ordered the Respondents to purchase the shares held by the Company in Elst at the price fixed by it on 5 December 2014 (the “High Court Remedy Order”). On 5 June 2015, the Commercial Court made an order for costs in respect of the Valuation Module and Remedy/Oppression Module in favour of Donegal (the “High Court Costs Order”).
The Company appealed the High Court Valuation Order and High Court Remedy Order to the Court of Appeal. The appeals were heard by the Court of Appeal in April 2016. The Court of Appeal delivered judgment on 8 June 2016. The Court of Appeal allowed the Company's appeal in respect of the High Court Valuation Order. It vacated the said Order and remitted back to the High Court for a rehearing on the price at which the Respondents should purchase the Company's 30% shareholding in Elst (the “Court of Appeal Valuation Order”) (the “Rehearing”).
The Court of Appeal upheld the decision of the High Court in respect of the High Court Remedy Order save in relation to the precise amount which falls to be determined in the Rehearing.
The Respondents also appealed the High Court Costs Order to the Court of Appeal. The appeal was heard on 7 July 2016 and judgment was delivered on 27 July 2016 allowing the appeal. The High Court Costs Order was vacated and the Court of Appeal directed that there be no Order as to costs in respect of the Valuation Module and the Remedy/Oppression Module (the “Court of Appeal Costs Order”).
The Respondents sought leave to appeal the Court of Appeal Valuation Order to the Supreme Court (“Respondents’ SC Appeal”) and following that the Company sought leave to appeal the Court of Appeal Costs Order (“DIG SC Costs Appeal”). Leave to appeal was granted by the Supreme Court in both applications and the Supreme Court heard the Respondents’ SC Appeal on 31 January 2017. After judgment is delivered by the Supreme Court in the Respondents’ SC Appeal (which may take a number of weeks), a hearing date will be allocated to the DIG SC Costs Appeal.
The Rehearing was scheduled for December 2016, however, it was vacated pending the outcome of the Respondents’ SC Appeal.
Padraic Lenehan
Finance Director
Donegal Investment Group PLC, Ballyraine, Letterkenny, Co Donegal
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