DCC chief executive Jim Flavin did not deal in the €106 million sale of Fyffes shares in early 2000 and no profit accrued to him, the High Court was told yesterday. Nor did he cause another party to deal, it was submitted.
Michael Cush SC for DCC, said it was DCC's case that its Dutch-registered subsidiary Lotus Green dealt in the shares, that it did so lawfully and that a profit accrued to it. It was also DCC's case that DCC and another subsidiary, S & L Investments "dealt" in a fashion lawful under certain provisions of the Companies Act.
The rationale for the establishment of Lotus Green was to manage Fyffes shares and make a decision when and what price they should be sold, all for tax reasons, Mr Cush said. The claim by Fyffes to the court that Lotus Green had acted as an agent for DCC in relation to the share sales was a device to try and "get at the money", he said.
Mr Cush was outlining legal submissions for DCC in the action by Fyffes alleging insider dealing in connection with the share sales over three days in February 2000. The action is expected to conclude on Friday.
The action is against DCC, Mr Flavin and the two subsidiaries - Lotus Green and S & L Investments. They deny the claims and plead the share sales were properly organised by Lotus to which beneficial ownership of the Fyffes shares was transferred by DCC and S & L in 1995 to avoid payment of capital gains tax on any subsequent sale of the shares.
Concluding submissions for DCC which focused on the duties of Mr Flavin as a director of Fyffes, Michael Ashe SC argued yesterday that only Mr Flavin, as a director of Fyffes, owed a fiduciary duty to Fyffes. DCC, S & L and Lotus Green did not have that duty and did not owe it.
The duties Mr Flavin owed did not arise from the fact DCC held shares in Fyffes, they arose solely because of the undertaking Mr Flavin gave to Fyffes to act as a director on its behalf.
Mr Ashe argued Mr Flavin was not in breach of his fiduciary duty to Fyffes. He did not give anyone the information on Fyffes which was available to him in January 2000 and he did not trade. If Mr Flavin misused confidential information and profited from it, that would have been a breach of fiduciary duty, but that did not occur.
He further argued that, even if there was a breach of fiduciary duty Mr Flavin, which was forcefully denied, there was nothing in the DCC companies' state of knowledge that would make it unconscionable for them to retain the transactions' benefit.
It would have to be shown those companies assisted with knowledge of a dishonest, fraudulent design on the part of Mr Flavin. Nothing like that had been made out by Fyffes. What was sought by Fyffes in the casewas an account of "negative profits".
Mr Ashe said a specific breach would have to be shown and the key to that was possession of price-sensitive information, unless the matter fell within the statutory exemptions.
The case continues today.
