Flynn & Anor -v- Breccia & Anor [2017] IECA 74 (08 March 2017)

Flynn & Anor -v- Breccia & Anor [2017] IECA 74 (08 March 2017)

The Court of Appeal held that the Shareholders' Agreement, properly construed, did not limit a promoter's right to enforce a loan or security acquired from a permitted assign (such as Breccia) to the procedures in clauses 3.4.3 and 3.4.5, nor did it prohibit a promoter from acquiring another promoter's loan or security. The trial judge erred in relying on extrinsic evidence and in implying terms not necessary for business efficacy. The declarations and restraining orders granted by the High Court were set aside.

Citation
[2017] IECA 74
Parties
Plaintiffs/respondents: John Flynn and Benray; First Named Defendant/appellant: Breccia; Second Named Defendant: Michael McAteer
Jurisdiction
Ireland
Judgment Date
08 March 2017
Procedural Posture
Civil Appeal / Appeal From High Court to Court of Appeal
Outcome
Appeal allowed; High Court declarations and restraining order set aside.
Legal Topics
Interpretation of Shareholders' Agreements, Implied Terms in Contracts, Enforcement of Security Over Shares, Duties of Good Faith Between Shareholders
Contract Law Company Law Interpretation of Shareholders' Agreements Implied Terms in Contracts Enforcement of Security Over Shares Duties of Good Faith Between Shareholders

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Parties

John Flynn and Benray

Plaintiffs/respondents

Breccia

First Named Defendant/appellant

Michael McAteer

Second Named Defendant

Procedural Posture

Civil Appeal / Appeal From High Court to Court of Appeal

Legal Issues

  1. 1 Proper interpretation of the Shareholders' Agreement regarding enforcement of loans and sale of shares
  2. 2 Whether terms restricting enforcement by a promoter should be implied into the Shareholders' Agreement
  3. 3 Whether a duty of good faith and fair dealing is implied between promoters/shareholders

Ratio Decidendi

The Court of Appeal held that the Shareholders' Agreement, properly construed, did not limit a promoter's right to enforce a loan or security acquired from a permitted assign (such as Breccia) to the procedures in clauses 3.4.3 and 3.4.5, nor did it prohibit a promoter from acquiring another promoter's loan or security. The trial judge erred in relying on extrinsic evidence and in implying terms not necessary for business efficacy. The declarations and restraining orders granted by the High Court were set aside.

Court Disposition

Appeal allowed; High Court declarations and restraining order set aside.

Orders

  • Set aside declarations that restricted Breccia's enforcement rights under the Shareholders' Agreement.
  • Set aside the permanent injunction restraining Breccia from selling Benray's shares except under certain clauses.