A minority shareholder and website designer for online insurance broker Quote Devil Ltd claims a €420,000 payment he received two years ago for most of his holding in the firm was an undervalue and he is in fact entitled to €2.2 million, the Commercial Court heard.
Francis Nesbitt, of Dunamaggan, Co Kilkenny, claims that due to “economic and emotional distress”, he had to sell 8 per cent of his 10 per cent holding at an undervalue after failing to get a loan from one of the Quote Devil founders, John Maguire, to meet his obligations.
Earlier this year Quote Devil was sold to Chill Insurance and Three Rock Subco Ltd for more than €30 million. Mr Nesbit wants an order that he be paid €2.2 million for the shareholding he sold two years ago.
Mr Maguire, a majority 71 per cent shareholder, said Mr Nesbitt’s claim is spurious.
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This was, Mr Maguire said, an attempt to extract additional money to which he had no legal entitlement and in doing so has made “a range of scandalous and wildly untrue allegations”.
He also said an injunction application from Mr Nesbitt, seeking to prevent Quote Devil from dissipating assets below €2.2 million, is being made in an attempt to jeopardise the sale of Mr Nesbitt’s shares to Chill in an effort to settle his spurious claim.
“He has failed in this objective,” Mr Maguire said.
Mr Nesbitt is suing Mr Maguire, of Tearmonn Rocks Lane, Sandycove, Co Dublin, and 12.9 per cent Quote Devil shareholder Graham Weir, of Fairways, Woodbrook Glen, Bray, Co Wicklow.
He is also suing the two men’s original brokerage, Pembroke Insurances, and a company called Daventry Commercial Ltd, which is controlled by Mr Maguire as well as Quote Devil itself.
A number of other minority shareholders against whom no reliefs are sought have been joined as defendants because of the potential effect on the share register of Quote Devil.
In his statement of claim, Mr Nesbitt says in 2006 he was approached by Mr Maguire and by Mr Weir to undertake internet development and search-engine optimisation for their Pembroke Insurances and First Credit businesses in advance of the launch of Quote Devil in 2009. By 2011 he had a 10 per cent holding in Quote Devil.
In 2020, Mr Nesbitt said he was experiencing personal financial problems in which his family home was at risk of being sold. He said he twice approached Mr Maguire for a loan which was refused. Instead, 8 per cent of his 10 per cent shares was purchased Pembroke for what he says was a considerable undervalue of €420,000.
Mr Nesbitt claims Mr Maguire and Mr Weir “acted otherwise than in a bona fide manner” and in breach of their fiduciary obligations to fully disclose all information necessary for him to make an informed decision to sell his 8 per cent.
He seeks a number of declarations including that the business of Quote Devil operated at all times as a quasi-partnership and that the sale of his shares was done at a time when Mr Maguire and Mr Weir knew the €420,000 did not reflect its true value.
He also seeks a declaration that the two men concealed from him the prospects of an onward sale and they knew or ought to have known he [Nesbitt] was “suffering from and operating under economic and emotional duress”.
He also wants orders that the affairs of the company are being exercised in a manner oppressive to him and compensation under Section 212 of the Companies Act 2014.
In a replying affidavit, Mr Maguire says Mr Nesbitt’s claims are factually baseless and legally unsustainable and his claim that he and Mr Weir took advantage of him in 2020 is “totally untrue”.
Mr Nesbitt, he says, runs several businesses and “understood exactly what the [2020] deal was” and that his shares could be worth more in the future but he decided to go ahead for his own reasons.
Mr Justice Denis McDonald admitted Mr Nesbitt’s proceedings to the fast-track Commercial Court on the application of the defendants with no objection from Mr Nesbitt’s lawyers. He approved directions for the progress of the case and said he would hear the injunction matter in July.
