Music promoter John Reynolds has claimed that payments of more than €500,000 were put through the Electric Picnic operating company for the benefit of members of the majority shareholding company. The payments remained "entirely unexplained", he said.

He has also alleged payments due to the festival operating company – EP Republic Ltd – arising from the sale via Ticketmaster of Electric Picnic tickets were being claimed by members of Festival Republic Dublin Ltd (FRD) in breach of a shareholders' agreement. Those alleged payments date back to 2009 but Mr Reynolds claims he only discovered them in 2012.

He also alleged management decisions made by Melvin Benn of FRD relating to the 2012 and 2013 events were damaging to POD Music Ltd, the 100 per cent shareholder of EP Republic Ltd, but were to the benefit of the FRD Group.

FRD has denied claims of shareholder oppression and has alleged Mr Reynolds himself had decided he did not want the Electric Picnic to proceed in 2013.

In an affidavit, Mr Benn said no decision had been taken by FRD in relation to Electric Picnic since 2009 that had any other purpose but to benefit EP Festival Ltd. He also described as "false and misleading" the claims related to the alleged €500,000 payment.

There was an agreement between Ticketmaster and EP Republic Ltd involving a €1 booking fee for every Electric Picnic ticket sold through Ticketmaster being paid to EP Festivals Ltd, he also said.

He said FRD had not, and was not, facilitating the diverting of funds to other members of the FRD group which properly belonged to EP Festivals Ltd.

Affidavits from Mr Reynolds and Mr Benn were before Mr Justice Peter Kelly in the Commercial Court yesterday when he was asked to decide whether the issue of liability should be first determined in the case brought by POD Music Ltd against FRD.

Rossa Fanning, for FRD, sought to have that issue determined first and rejected arguments on behalf of Mr Reynolds that FRD was engaged in a “tactical manoeuvre” to exclude matters from the hearing.

The judge ruled the liability issue should be decided first, saying it would achieve efficiencies in terms of costs and court time. While noting a mediation had failed, the judge again urged the parties to try to resolve their differences in advance of a full court hearing.

Mr Reynolds alleges there were discussions this year about whether the festival should go ahead because of the “crowded market” and Mr Benn had told him via email that, unless they got Blur, they had “nowhere to go with the Picnic and I will be recommending not to go ahead”.

In opposing the claims, FRD alleges Mr Reynolds had been engaging in a deliberately obstructive pattern of behaviour and was seeking to have his shares bought out at “grossly inflated prices”.

It also denies Mr Reynolds has been excluded from managing the Picnic or that the FRD Group's controlling companies, Live Nation and Gaiety Investments, want to make the Picnic just a part of their stable of festivals and outdoor events.

In 2009 FRD bought a 71 per cent stake in EP Festivals Ltd, a subsidiary of POD Music, for €4.2m. Mr Reynolds has alleged breach of a March 2009 shareholders’ agreement concerning the Picnic, and oppression of the petitioner’s interests.