THE SUPREME COURT

KEANE, J.
LYNCH, J.
BARRON, J.
BETWEEN:
JOHN McGILLIGAN AND JAMES BOWEN
PLAINTIFFS
AND

WILLIAM O’GRADY, PETER THORNTON,
PREMIER INTERNATIONAL MERCHANDISING LIMITED AND
PREMIER INTERNATIONAL TRADING HOUSE LIMITED
DEFENDANTS

[JUDGMENTS BY KEANE AND BARRON JJ; LYNCH J. CONCURRING]

JUDGMENT DELIVERED THE 5TH DAY OF NOVEMBER 1998 BY KEANE J.

This is an appeal from a judgment and order of the High Court (O’Donovan J.) of the 24th July last. The learned trial judge granted an interlocutory injunction restraining the defendants pending the trial of the action from removing the first named plaintiff as a director of the third and

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fourth named defendants. In addition, the third named defendants were ordered to comply with their obligations pursuant to s.202(8) of the Companies Act 1990 to make available their books of account for inspection by the officers of the company and other persons entitled to inspect them. The third named defendant was also restrained pending the trial of the action from acting ultra vires the objects set forth in its memorandum of association and, in particular, from engaging in activities which did not come within those objects.
The facts, in so far as they are not in dispute, are as follows. The first named plaintiff is the managing director of Business and Trading House Investment Company Limited (hereafter “BTH”). This is a company which at the relevant times was engaged in arranging the investment of funds on behalf of various people under what was known as the Business Expansion Scheme (hereafter the “BBS”). It was decided to make such an investment in the third named defendants, Premier International Trading House Limited (hereafter “PITH”). As a result an agreement was entered into between BTH, the Bank of Ireland and PITH on the 25th July 1989 (hereafter “the 1989 agreement”) under which the bank were to apply for 571,428 ordinary shares of £1 each at a premium of 5p (representing a total investment of £600,000) on behalf of a number of investors. Under the terms of the 1989 agreement, to which it will be necessary to refer in more detail at a later point, BTH was to be kept fully informed of the progress of the business of PITH and its financial affairs. In

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addition, the agreement provided that the first named plaintiff and a Mr. Brian Joyce were to be appointed as directors of PITH.
The first named defendant is the chairman, chief executive and secretary of the third named defendants (hereafter “PIM”) and is one of the two executive directors of the company, along with the second named defendant. It would appear that, between them, the first and second named defendants were
at all material times in a position to control the votes of at least a simple majority of the shareholders in PITH and PIM. The first named plaintiff has a small shareholding in PIM, amounting to approximately one per cent of the issued share capital.

The investors in BTH had to hold their shares for a minimum period of five years in order to avail of the tax relief under the BBS scheme. There was no mechanism provided in the 1989 agreement enabling the investment to be terminated. As the bank and BTH wished to realise their investment, a sub- committee was formed by the board of PITH with a view to establishing an “exit mechanism”, as it was called. With that in mind, the sub committee had discussions with Seamar Limited, a company which manufactured hotel, amenity and airline products of a nature similar to those marketed by PITH, the object being a possible acquisition by PITH of Seamar Limited or the acquisition of PITH by Seamar Limited. The first named plaintiff at this stage was a non-executive director of Seamar Limited. Far from this proposal

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providing an exit mechanism for the BTH investors, it became a source of acrimony between the parties to these proceedings. Proceedings were also instituted by PITH against Seamar Limited.

It should also be pointed out that on the 22nd February 1995, the shareholders in PITH accepted an offer by PIM to exchange their share holding in PITH for an equivalent share holding in PIM together with a loan note for £2.38 in respect of every seven shares held by them in PITH. As a result, PITH became a wholly owned subsidiary of PIM and the first named plaintiff was appointed a non-executive director of PIM.

The disagreements between the first named plaintiff and the first and second named defendants ultimately led to the convening of an extraordinary general meeting of PIM for the purpose of considering a resolution that the first named plaintiff be removed, pursuant to s. 182 of the Companies Act 1963 from his office as a director of that company. That notice led to the institution of these proceedings and also to the presentation of a petition by the plaintiffs pursuant to s.205 of the Companies Act 1963 claiming that the affairs of PIM were being conducted in a manner oppressive to the plaintiffs and in disregard of their interests and an order directing PIM to purchase the beneficial

shareholding of each of the petitioners or in the alternative an order winding up the company.

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Numerous affidavits were filed on behalf of the plaintiffs and the defendants in the High Court in which allegations and counter-allegations were made as to the conduct of the respective parties. While it was not possible for the High Court, or this court on appeal, to resolve the various conflicts of evidence involved, the respective positions of the parties can be summarised as follows.

The first named plaintiff claims that, following the share exchange already referred to, the investment of the BTH investors, represented by the bank, effectively became an investment in PIM. He says that the first and second named defendants are conducting the affairs of that company without regard to the legitimate interests of those investors, that they have been deliberately frustrating the proposed merger with Seamar Limited which would provide those investors with an appropriate exit mechanism and that they are doing so in order to further the acquisition by themselves, through the vehicle of a company called Tippser Limited, of as many shares as possible in PIM, thereby effectively organising a management buyout of the company. They were also intent, he claims, on converting the business of PIM into manufacturing, although hitherto its business had merely involved the selling on to customers at a profit of goods which had already been manufactured by other companies, thereby, as it was said, obviating manufacturing costs and overheads, and which, the first named plaintiff claimed, had been an attraction

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of the company as an investment from the point of view of BTH investors. The first named plaintiff claimed that he had been persistently denied the information as to the financial affairs of PIM to which he was entitled as a director and to which BTH were entitled by virtue of the agreement and, in particular, had not been furnished with the draft audited accounts of the company for the year ending 31st December 1996.

For their part, the first and second named defendants say that Seamar Limited, of which the first named plaintiff was until recently a director, has been in direct competition with PITH and PIM and has been undermining the interests of those companies in breach of an agreement with them. The first named plaintiffs interests as a director of Seamar Limited were thus, it was claimed, in conflict with his interests as a director of PITH and PIM and the latter companies were entitled to withhold sensitive commercial information from him, particularly having regard to the litigation actually existing between the companies and Seamar Limited. They also said that in these circumstances the shareholders in PIM, if so minded, were perfectly entitled to remove the first named plaintiff as a director of PIM.

The provisions of the 1989 agreement must now be considered in more detail. As already noted, the parties to the agreement were BTH, the Bank of Ireland and PITH. PITH is referred to in the agreement as “the company” and s. 1.01 provides that that expression in the agreement means:- 

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“The company and any subsidiary or holding company of the company from time to time.”

Section 2.01 (b) and (c) were as follows:- 

“Directors:

[BTH] shall be satisfied that the under mentioned shall have been appointed as directors of the company:- 

John McGilligan
Brian Joyce

(c)	[BTH] shall be satisfied that John McGilligan shall have been appointed to the executive sub committee of the board. In the event that John McGilligan is for any reason unable to attend any meeting of such sub committee then Brian Joyce may attend in John McGilligan ‘s place.”

Section 3.0.4 provides that:- 

“The company shall keep (BTH) fully informed of the progress of its business and furnish to it to such extent and in such form and detail as it may from time to time reasonably require particulars of any matter concerned with or arising out of the activities of the company and in

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particular but without limiting the generality of the foregoing shall furnish to it: -

(a) An audited certified balance sheet and profit and loss account in respect of each financial year of the company forthwith upon the same becoming available and in any event not later than the expiration of four months from the end of the financial year to which the profit and loss account in question relates together with the directors ‘ and auditors ‘ reports thereon;

(b) Quarterly management reports in such form and containing such information as any of the parties shall from time to time and at any time reasonably require within one month of the end of the quarter to which the quarterly reports relate.

(c) Such other information relating to the business of the company in such form as (BTH) may from time to time reasonably require.

The correspondence exhibited in the affidavit of the first named plaintiff includes letters from the plaintiff in which he complained that neither financial

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information concerning the performance of PIM and PITH nor draft audited accounts for the year ending 31 December 1996 had been circulated. On the 20th February 1998, the chairman of PIM, Mr Luke Mooney, wrote to the first named plaintiff stating that he had been told by the secretary, the first named defendant, that the 1997 accounts would be available within about 14 working days. The first named plaintiff in his affidavit said that that did not happen and in a letter of 24th April 1998 to him, Mr Mooney said:- 

“I refer to the recent board meeting at Clonskeagh and in particular to your correct assertion that I undertook to keep the board advised of any question which might arise as to the ongoing solvency of the group.

“In view of my stepping down as chairman and the continuing failure of all attempts to meaningfully progress successive board meetings over many months to the stage where important matters including solvency issues can be reviewed I must now deem myself relieved of this obligation.

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The first named plaintiff then wrote to the first named defendant on 1st May 1998, requesting compliance by PIM with its obligations under s.202 (8) of the Companies Act 1990. The letter continued:- 

“As the company ‘s poor performance has not permitted the fund ‘s investment to be realised, it is necessary that I continue, as a director of the company, to monitor the performance of the fund ‘s investment As I must continue to be a director, I must fulfil my obligations to the company. In that regard, I owe duties of confidentiality to the company in respect of information provided to me in relation to its affairs.

“I have, until recently, also been a director of Seamar Limited, by virtue of a different funds investment in that company My directorship in Seamar Limited has been used as an excuse by yourself and other directors of the company for denying me and the entire board of the company access to financial information of the company since December 1996.

“Given the obligations of directors under company law, this position is clearly untenable. The answer is not, however, that I should absent myself from board meetings when financial information of the company

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is being discussed Although there is absolutely no reason for me to do so I have resigned as a director of Seamar Limited to address your stated concerns. My obligations to the company require me to keep confidential and not to disclose to Seamar Limited any information in my possession relating to the company. Although it is entirely unnecessary to do so, I am perfectly willing to enter into an express confidentiality undertaking in favour of the company if this will assist”

There appears to have been no reply to this letter. The bank, which, as already noted, was the nominal holder of the shares of the BBS investors, also wrote on the 27th May 1997 to PIM stating that they had not yet received a copy of the audited accounts of the company for the year ended 31st December 1996 nor had they received notice of an annual general meeting to approve same. The bank pointed out that the relevant statutory time limits in relation to these matters had now expired and requested a copy of the accounts by return and confirmation of whether it was proposed to hold the annual general meeting. It would appear that no reply was received by the bank to this letter.

In a further affidavit, the first named plaintiff deposed that the first named defendant was a joint beneficial owner of a company called Cornforth Limited, a company which had a 10 percent beneficial holding in Seamar

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Limited. This averment is not disputed in any affidavit sworn on behalf of the defendants.

As to the issue which arose in relation to the carrying on by PIM of a manufacturing business, the position appears to be as follows. Clause 2 of the memorandum of association of PIM sets out a number of objects for which the company is established, none of which expressly refers to any manufacturing process. There is, however, a sweeping up provision at clause 13 as follows:

“To do all such other things as are incidental or conducive to the attainment of the above objects or any of them.

An extraordinary general meeting of PIM was convened for the 19th May 1997 with a view to altering the memorandum of association so as to enable it to carry on the business of manufacturing. At that meeting, the first named defendant said that he did not think this was strictly necessary, but indicated that Udaras na Gaeltachta, from whom grant aid was being sought, might require the changes to take place. A majority of the votes cast at the meeting were in favour of the proposal to alter the objects in this manner, but the majority necessary for the passing of a special resolution was not achieved so that the memorandum remained unaltered. Although the High Court order restrained PIM from acting ultra vires the objects set forth in the memorandum,

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it did not in this respect accurately reflect the judgment of the learned trial judge: he had said at p.25 of his written judgment:- 

"…. I think that the balance of convenience favours a prohibition that the third named defendants take any steps to progress the establishment of a manufacturing facility on behalf of the company pending a determination as to whether or not such a facility is ultra vires the object of the company because, in the event that such a facility was established and was subsequently to be found to be ultra vires the objects of the company, irreparable harm might be caused to its trading position."

At the hearing in the High Court, and again in this court, it was argued on behalf of the defendants that PIM could not be restrained from removing the first named plaintiff as a director, having regard to the provisions of s.182 of the Companies Act 1963 which empowers a company to remove a director before the expiration of his period of office “notwithstanding anything in its articles or in any agreement between it and him”.  It was also submitted that s.205 of the same Act, entitling the court to grant certain reliefs to shareholders who are being treated oppressively or whose interests were being disregarded did not entitle the court to enjoin the removal of a director in violation of s.182 and, in this context, they relied on the decision of the High Court (Laffoy J) in

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Feighery .v. Feighery & Ors (unreported; judgment delivered the 25th February 1998). In his judgment, the learned trial judge said that he was satisfied that the plaintiffs had established that there was a fair issue to be tried as to whether the latter decision was distinguishable, having regard to the terms of the 1989 agreement requiring the first named plaintiff to be a director, there having been no such agreement in the earlier case, and that the balance of convenience was in favour of granting the relief sought so as to preserve the position of the first named plaintiff as a director pending the trial of the action.

On the hearing of the appeal, Mr Hugh O’Neill SC on behalf of the defendants submitted that the granting of an injunction to restrain the removal of a director was clearly irreconcilable with s.182 and that Feighery & Ors was authority for the proposition that it could not be circumvented by a claim, such as that being made in the present case, that the removal constituted oppressive treatment entitling the plaintiff to relief under s.205.

Mr O’Neill further submitted that, in any event, the plaintiffs had not established even an arguable case of oppressive treatment under s.205. Although the first named plaintiff had a one per cent shareholding, it was not suggested that he had been oppressively treated in his capacity shareholder: the real complaint was that the BES investors were being as a

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oppressively treated, but neither they nor the bank who held their shares were parties to the proceedings.

Mr O’Neill further submitted that, even if the alleged breach of the agreement constituted a ground for granting relief, such relief was not available to the plaintiffs who were not parties to that agreement. Moreover, PIM, against whom the relief was sought, were not parties to the agreement.

Mr O’Neill further submitted that, apart from these considerations, the granting of interlocutory relief in the form of an order restraining the company from removing the first named plaintiff as a director was inappropriate, since that was not the relief which was being ultimately sought by the plaintiffs in the proceedings under s.205 and it was wrong in principle that an interlocutory injunction should be granted in circumstances where no perpetual injunction in the same terms would be sought at the trial.

Mr O’Neill finally submitted that, if the learned trial judge was correct in holding that the plaintiffs had established a fair case to be tried, he had erred in treating the balance of convenience as being in favour of the granting of the injunction. Even if the alleged oppression of the plaintiffs or the BBS investors was established at the hearing of the s.205 petition, the appropriate relief would be the acquisition of their shares in the company and the fixing of the price at which the shares would be purchased would not be affected by the removal of the first named plaintiff from his office as a director.

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On behalf of the plaintiffs, Mr Ian Finlay SC submitted that the plaintiffs’ claim to an interlocutory injunction should not be defeated because of the fact that the first named plaintiff was not a party to the 1989 agreement and was not the shareholder in respect of whom the allegations of oppression were principally made. The High Court had been informed, and it was still the position, that counsel for the plaintiffs had instructions, if necessary, to apply on behalf of BTH and the bank to have them joined as plaintiffs in the proceedings.

Mr Finlay further submitted that the crucial feature of the present case was that the defendants were unquestionably proposing to commit a breach of the 1989 agreement by removing the first named plaintiff and by embarking on the business of manufacturing and had already committed breaches of the agreement by failing to supply financial information and audited accounts. In these circumstances, it was quite clear that the plaintiffs had made out a fair case under s.205 that the affairs of the company were being conducted oppressively so far as some of the shareholders were concerned and in disregard of their interests.

Mr F inlay further submitted that s.182 meant no more than that a director of a company could not rely on an agreement between himself and the company or a provision in its articles to prevent the company from removing him: his only remedy was in damages. It had nothing to say to a position such

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as had arisen in the present case where the actions of the company were in breach of an agreement entered into between the company and some of its shareholders.

Mr Finlay finally submitted that the balance of convenience was clearly in favour of the granting of the injunction. The relief ultimately sought by the plaintiffs was not merely the purchase of the shares of the BBS investors: they would also be entitled, if the allegations of oppression were made out and it appeared to be the appropriate remedy, to an order for the winding up of the company. They were, accordingly, entitled to protect their interests in the assets of the company in the meantime by ensuring that the first named plaintiff was not removed from his position as director in breach of the 1989 agreement.

Since this is an application for an interlocutory injunction, I should refer to the legal principles relevant to such an application. In American Cynamid Company .v. Ethicon Limited [1975] AC 396, Lord Diplock said:- 

“My lords, when an application for an interlocutory injunction to restrain a defendant from doing acts alleged to be in violation of the plaintiff’s legal right is made upon contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is

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uncertain and will remain uncertain until final judgment is given in the action     The object of the interlocutory injunction is to protect the plaint if against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action f the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial.  The court must weigh one need against another and determine where ‘the balance of conveniences lies."

As to the balance of convenience, he said:- 

“It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case. Where other

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factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo.

He also said that the burden on the plaintiff was to establish that there was “a serious question” to be tried.

These principles were expressly adopted as applicable in this jurisdiction by this court in Campus Oil Limited .v. Minister for Industry and Energy (2) [1983] IR 88.

Section 182(1) of the Companies Act 1963 provides that:- 

“A company may by ordinary resolution remove a director before the expiration of his period of office notwithstanding anything in its articles or in any agreement between it and him so, however, that this subsection shall not, in the case of a private company, authorise the removal of a director holding office for 4fe.”

Subsection (7) provides that:- 

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“Nothing in this section shall be taken as depriving a person removed thereunder of compensation or damages payable to him in respect of the determination of his appointment as director or compensation or damages payable to him in respect of the determination of any appointment terminating with that as director or as derogating from any power to remove a director which may exist apart from this section.”

Section 205(1) of the same Act provides that:

“Any member of a company who complains that the affairs 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 interests as members, may apply to the court for an order under this section.”

Subsection (3) provides that

“If on any application under subsection (1) or subsection (2) the court is of opinion that the company ‘s affairs are being conducted or the directors ‘powers are being exercised as aforesaid, the court may, with a view to bringing to an end the matters complained of make such order of the

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as it thinks fit, whether directing or prohibiting any act or cancelling or varying any transaction or for regulating the conduct of the company s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and in the case of a purchase by the company for the reduction accordingly of the company ‘s capital, or otherwise.”

It is beyond argument in the present case that the plaintiffs have established a serious question to be tried as to whether there has been oppression or disregard of the interests of members within the meaning of s.205 (1) so far as the bank, the nominee of the BES investors, is concerned. The defendants are admittedly acting in breach of the 1989 agreement with the bank and BTH in seeking to remove the first named plaintiff as director and the withholding of relevant financial information from the first named plaintiff and the failure to produce audited accounts is equally clearly a breach of that agreement. That agreement was expressly intended to protect the interests of the BBS investors and it could not seriously be disputed that these admitted breaches of its terms would afford the bank, as the nominee of the investors, not merely a case, but a strongly arguable case, for relief under the section.

Since both the High Court and this court were informed that the bank and BTH could, if necessary, be joined in the proceedings, it is quite clear that their

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absence at this stage is not of itself a ground for refusing the relief sought. Nor is the plaintiffs’ right to relief affected, in my view, by the fact that the agreement was with PITH and not with PIM: the result of the exchange of shares in 1994 was that PITH became a wholly owned subsidiary of PIM and it is clear from the definitions section of the 1989 agreement, to which I have already referred, that its provisions were to be applicable in the case of any holding company of PITH. The plaintiffs are again in a position to present a strongly arguable case on the hearing of the s.205 petition that for the majority shareholders in, and the directors of, PIM to disregard the provisions of the 1989 agreement in their entirety on the ground that PIM were not a party to that agreement would, of itself, constitute evidence of oppressive conduct and a disregard of the interests of the BES investors.

The defendants, however, contend that, even allowing that to be so, it does not entitle the court to grant an interlocutory injunction which effectively deprives the shareholders of their statutory right, if they are so minded, to remove a director. The only remedy available in such circumstances, it is urged, is that afforded by s.205 where oppression is established, ie the purchase of the shares of the petitioners or the winding up of the company on the ‘just and equitable” ground.

It is undoubtedly the case that, if there is a relationship between shareholders in a company indicating a degree of mutual confidence and trust,

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the court may order the winding up of the company on the just and equitable ground where one or more of the shareholders and/or directors exercise their powers in a manner which is inconsistent with that relationship.  Specifically, this may arise where the right of the shareholders to participate in the management of the company is infringed, as, for example, by the removal of a director. These principles were laid down by the House of Lords in In re Westbourne Galleries [1973] AC 360 and were adopted in this jurisdiction by Gannon J in In re Murph‘s Restaurants, [1979] ILRM 141 at page 144.
However, in Feighery . v. Feighery & Ors Laffoy J rejected the submission advanced on behalf of the plaintiffs in that case that the application of the principles in re Westbourne Galleries and re Murph‘s Restaurants justified the granting of interlocutory relief restraining the removal of a director, in circumstances where the plaintiffs had established a serious question to be tried. She said:- 

“In my view, even assuming that the Petitioner has an arguable case for relief under section 20S and an arguable case that the Respondents, as shareholders and directors, owe him fiduciary duties and are in breach of those duties, I must nonetheless be satisfied that I have jurisdiction to override the shareholders’ statutory power under s. 182 to remove the Petitioner from the board. I am not satisfied that I have such jurisdiction

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and none of the cases cited by Mr Gallagher support a contrary conclusion. In particular, the relief granted by this Court (Gannon J) in the Murph ‘s Restaurants case in which the principles laid down by the House of Lords in the [Westbourne Galleries Ltd] case were applied, and in which it was held that the purported exclusion of the Petitioner by his co shareholders and directors in an irregular and arrogant manner was undoubtedly oppressive, was a winding up order under Section 213 of the 1963 Acts’

The learned judge in that case also referred to another English decision, Bentley-Stevens . v. Jones [1974] 1 WLR 638 where Plowman J refused to grant an interlocutory injunction in a case where disputes arose between the three shareholders in a company which ran a nursing home and two of the shareholders sought to remove the third shareholder as a director. Plowman J said:- 

“[The plaintiff] submitted that this was what is popularly known as a a ‘quasi-partnership’ case and that on the principles enunciated by the House of Lords in re Westbourne Galleries Ltd [1973] AC 360 the court should restrain the first and second defendants, as two of the three partners in the quasi-partnership, from expelling the third partner,

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namely, the plaint if ... In my judgment, even assuming that the plaintiff’s complaint of irregularities is correct, this is not a case in which an interlocutory injunction ought to be granted. I say that for the reason that the irregularities can all be cured by going through the proper processes and the ultimate result would inevitably be the same  

“However, that still leaves the Westbourne Galleries point But in my judgment there is nothing in that case which suggests that the plaint if is entitled to an injunction to interfere with the defendant company's statutory right to remove the plaintiff from its board. What it does decide is that if the plaintiff is removed under a power valid in law then he may, in appropriate circumstances, be entitled to a winding up order on the just and equitable ground.

“For those reasons the plaintiff is not, in my judgment, entitled to the relief which he seeks on this motion, and I must dismiss it”

It should be noted that neither in that case nor in Feighery .v. Feighery & Ors did the plaintiff seek to rely on any express agreement, such as the 1989 agreement in the present case. In the latter case, the plaintiff, who alleged that he had succumbed to family persuasion to abandon a career in an accountancy

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practice and take up employment in a family business, relied on no more than what was described as “an understanding” between himself and the other members of the family that he would continue to participate in the management of the company’s affairs and would not be wrongfully excluded therefrom. However, even allowing for that difference in the facts, it is undoubtedly the case that the general statement of the law by Laffoy J and the decision in Bentley-Stevens . v. Jones support the defendants’ contention in the present case that an interlocutory injunction should not be granted restraining the removal of the first named plaintiff

It is important to bear in mind the object of s.205 of the Companies Act 1963. Until its enactment, a majority of the shareholders in the company could, perfectly lawfully, use their powers in a manner which was harsh and unfair to the minority and had no regard to their interests. Unless the aggrieved shareholders could point to some illegality, whether flowing from a breach of the company’s constitution or the general statutory or common law applicable to companies, the law could afford them no relief

Section 205 was enacted primarily in order to remedy that defect in company law. Consequently, the fact that, in a case such as the present, the shareholders are perfectly entitled as a matter of law - s.205 apart - to remove a director even when that is in breach of a contract between him and them is not a material factor in considering whether that action, either taken in isolation or as

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part of a general course of conduct intended to exclude a particular body of shareholders from participation in the company, is a ground for relief under that section. Neither is it a relevant consideration in determining whether, in an appropriate case, that conduct should lead to the winding up of a company on the just and equitable ground: that is the effect of the decisions in Westbourne Galleries Ltd and Murph ‘s Restaurants Ltd.

Why then should the court, on an application for an interlocutory injunction, be unable to restrain the company from removing a director pending the hearing of a petition under s.205 where he has established that there is a serious question to be tried as to whether his exclusion from the affairs of the company constitutes conduct which would entitle shareholders to relief under s.205? It should be noted that in Bentley-Stevens .v. Jones . there do not appear to have been any proceedings in existence under the English equivalent of s.205 at the time the application for an interlocutory injunction was made. However, apart from that consideration, I am bound to say, with all respect, that I do not understand why it should be thought that, because the relief sought in the interlocutory proceedings is not the same as the relief which will ultimately be sought in the s.205 proceedings, an interlocutory injunction should not be granted on that ground alone. If it is desirable, in accordance with the principles laid down in the American Cynamid Company and .Campus Oil cases, to preserve the plaintiffs rights pending the hearing of the s.205

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proceedings and the balance of convenience does not point to a different conclusion, I see no reason why interlocutory relief should not be granted. To cite but one example, the relief granted in many Mareva cases is very often not the relief which is sought in the substantive proceedings.  I am satisfied that, to the extent that Bentley-Stevens . v. Jones and Feighery . v. Feighery & Ors suggest a different view of the law, they should not be followed.

As to the balance of convenience in the present case, it is clear that, if the plaintiff is excluded from participation in the board meetings of PIM and is denied the financial information and audited accounts pending the hearing of the s.205 petition, the asset base of the company could be seriously damaged and the efficacy of the winding up order to which the plaintiffs may ultimately be entitled significantly affected.  On the other side of the scales, the interests of the defendants would not appear to be seriously affected by the affording of the financial information in question or the presence of the first named plaintiff at the board meetings, given his acceptance that he is bound by a duty of confidentiality in relation to such information and, in any event, has ceased to be a director of Seamar Limited.

I am not satisfied, however, that the plaintiffs have established that the balance of convenience requires that the company be restrained from becoming involved in a manufacturing process. On the contrary, it may be that, if such a decision was thought by the majority of the shareholders to be in the best

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interests of the company as a whole and was permitted by its memorandum of association - matters on which, of course, no final judgment can be reached at this stage - irreparable damage could be caused to the company if it were to be restrained from adopting such a course which would not necessarily be met by the plaintiffs’ undertaking as to damages.

I would, accordingly, affirm the order of the High Court insofar as it granted the interlocutory relief at paragraphs 1 and 2, but discharge the interlocutory injunction granted at paragraph 3.
5/11/98

JUDGMENT delivered on the 5th day of November 1998 by BARRON J.

I agree with the judgment which has been delivered by Keane J

(2)

I would just add a few words.  In re Westbourne Galleries Limited, [1970)’ AC 360 and In re Murph's Restaurants [1979] ILRM 141 are not strictly relevant to the present application.  They establish that it is just and equitable that a shareholder in a company which is a quasi partnership should have the same right to dissolution as a shareholder in the company as he or she would have had as a partner in a partnership. Although in the Westbourne case, the complaint started with the petitioner’s removal as a director, it is not an authority touching on the instant case since relief by way of restraining his removal was not sought.
The essence of the instant case is that no absolute reliance can be placed upon a statutory right given to the general meeting of a company when the exercise of that right is alleged to be wrongful; in this case a breach of the provisions of s. 205 of the Companies Act, 1963.  In all such cases, determination of the issue as to the granting of interlocutory relief

(3)

must be dependent upon the general rules applicable.  Here they favour the granting of the relief allowed.