A dispute over payments allegedly due following the sale to another company of shares in two companies involved in developing healthcare software has been settled at the High Court. The case was adjourned by Mr Justice McKechnie for mention in three weeks time.

The founder and principal shareholder in CHL Software Ltd and CHL Software Services Ltd, Mr Cathal Lennon, of Baily, Howth, Co Dublin, had sued Irish Medical Systems (Holdings) Ltd (IMS), of Howth Road, Killester, Dublin. The latter denied the claim and filed a counterclaim alleging fraudulent misrepresentation.

When opening the case earlier this week, Mr Bill Shipsey SC, for Mr Lennon, said his client and three of his children owned 92 per cent of CHL Software, the principal of the two CHL companies. They had been developing information systems software for the healthcare industry.

Specifically, the products were for hospital radiology departments. The product was sold here initially and later exported to Britain and the US.

In late 1997, a representative of IMS, the holding company for a group of companies involved in the development of software systems for the medical sector, had approached CHL Software.

It became apparent IMS was interested in acquiring, if not the entire share capital, the majority stake in the two CHL companies.

In December 1997, agreement was reached on a price which would have valued CHL at £1 million (€1.27 million) and to acquire for £920,000 the shares held by Dr Lennon and his three children. There were further negotiations in 1998 and terms were arrived at.

Mr Lennon claimed an instalment of £205,007 became due and owing to him by IMS on January 31st, 1999, and that IMS had issued a promissory note in April 1998 pursuant to which it agreed to pay him that sum. However, he alleged, IMS had failed to pay that sum.

IMS admitted it issued the promissory note under which it promised to pay Mr Lennon £205,007 on January 31st, 1999. However, it pleaded the note was issued under an agreement of April 1998.

IMS alleged it was induced to enter into that agreement and issue the promissory note by reason of fraudulent misrepresentation of the plaintiff, his servants or agents.

It also argued that Mr Lennon misrepresented the nature of problems with the radiology information system and that there was not full and proper disclosure of the true nature of problems with the system.

It said it has already paid £350,000 for the purchase of the shares in question, which sum exceeded the true value of the CHL business.