A bitter legal row involving Web Summit chief executive Paddy Cosgrave and two minority shareholders in the tech conference company, Daire Hickey and David Kelly, was heard in a civil trial at the High Court today.
The several cases – taken by Mr Cosgrave against Mr Kelly initially in 2021 and variously by Mr Kelly and Mr Hickey against Mr Cosgrave – will be heard together and are expected to take nine weeks.
In the morning, Mr Cosgrave’s representative outlined his case, which is that Web Summit shareholder David Kelly was faithless and caused a loss to the company by founding a competing venture capital fund.
While Mr Hickey and Mr Kelly had a role at Web Summit, only one man has been there through it all and that is Mr Cosgrave, his barrister, Bernard Dunleavy, said.
The hearing has concluded for the day, but it will resume tomorrow.
- News report: Web Summit director engaged in ‘active deception’, court hears
- Web Summit timeline: From 150 attendees at first event to Lisbon and then High Court
Who’s who
Paddy Cosgrave: majority shareholder and chief executive of Web Summit. In late 2021, he sued David Kelly seeking damages of $10m over claims he caused a loss to the company by, among other things, founding a competing venture capital fund using Web Summit resources.
David Kelly: owns 12 per cent of Manders Terrace, the holding company behind Web Summit. A former school friend of Mr Cosgrave. Denies Mr Cosgrave’s allegations, and sued claiming his rights as a minority shareholder have been oppressed. He said his relationship with Mr Cosgrave had become “irredeemably toxic” leading up to his resignation as an employee of Web Summit in early 2021 and that his former friend had “run the company in a manner akin to a personal fiefdom”.
Daire Hickey: owns 7 per cent of Web Summit, then brought a similar shareholder oppression action against Mr Cosgrave in November 2021. Both men sued Mr Cosgrave again in 2024, arguing that Web Summit and their shareholdings had been damaged by Cosgrave’s tweets about Hamas and Israel, his subsequent resignation from the company and later return.
Mr Cosgrave strong denies all of the allegations.
Mr Hickey and Mr Kelly want Mr Cosgrave, who strongly denies their claims, to acquire their stake in the business.
The hearing has concluded for the day, but it will resume tomorrow. The cases could run for as long as nine weeks.
Mr Murphy contacts The Irish Times in May 2021 and said that David Kelly and he were managing directors of fund 1 and continue to be. Semble, as fund 2 is known, was a successor fund and Mr Kelly and Mr Murphy were the manager directors of that. That is what gets reported in The Irish Times.
A formal letter of resignation from Mr Kelly came in on April 14th, with an end date of April 30th. Come April 15th, Mr Kelly wrote to Mr Cosgrave and there was no mention of fund 2 and Mr Kelly and Mr Murphy’s plans for that.
There was no indication that Mr Kelly was going off with fund 2, which was a maturing business opportunity for Web Summit, Mr Dunleavy said.
On March 22nd 2021, Mr Cosgrave contacted Mr Kelly, I recognise you have resigned, he said, thanking him. He proposed a three to six month transition out of fund 2.
Mr Cosgrave was being kept out of the loop because privately Mr Kelly and Mr Murphy were discussing taking fund 2 away themselves, Mr Dunleavy said.
In light of that communication with Mr Cosgrave, Mr Kelly communicated with Mr Murphy and recognised the jig was up. I think I need to resign as a director this week, he said - probably losing some leverage there. The situation is becoming urgent.
Mr Cosgrave and Mr Kelly had a difficult conversation via text on February 27th 2021.
Daire Hickey had left Web Summit under a cloud, and Mr Kelly had been involved in the investigation of Mr Hickey.
Mr Kelly said he was not wired for situations like this.
He said he had no interest in falling out and that he was going to make a simple life and start a small business. Thanks for everything but it’s time to pull the cord, he said.
As far as Web Summit and Mr Cosgrave were concerned, Mr Kelly was not going off with fund 2, Mr Dunleavy said.
Further correspondence has been shown to the court. The most benign way of putting it, says Mr Dunleavy, is that Mr Kelly is “speaking out of both sides of his mouth”. But he is “not entitled to do that” being a director of Web Summit to whom he owns fidelity and loyalty.
He can’t promote arrangements to secure the interests of Web Summit in the successor fund to Amaranthine and at the same time make arrangements with Patrick Murphy to “swipe fund 2 from under the nose of Web Summit”.
Mr Kelly was referred to in the 2020 pitch deck for fund 2 as a non-executive director, but Web Summit has no non-executive directors, the court is told.
This was the first “ripple of something” that became clear in hindsight.
Mr Kelly was “starting to distance himself” from Web Summit and responsibilities in a way that was not noticed at the time, Mr Dunleavy said.
Amaranthine, the first fund, is being positioned as a Web Summit fund in emails between Patrick Murphy and a Web Summit employee, Mr Dunleavy says.
The fund was “absolutely badged” from the outset as Web Summit’s fund. The pitch deck for fund 1 has a segment “introducing Web Summit and Amaranthine”.
There were several references to “our” network in reference to Web Summit and its relationship with Amaranthine, he said.
Mr Dunleavy is outlining that Mr Kelly and Patrick Murphy, a fund manager brought in to set up fund 1, had the majority of the carried interest, giving them the most voting rights. But Mr Kelly’s share of the interest was only a function of his being Web Summit’s representative in the partnership.
There was no confusion on Mr Kelly’s part that his fiduciary duties as a director of Web Summit carried over to the fund because it’s in the partnership agreement.
In an email Mr Kelly says he finds working in live events super stressful.
Mr Dunleavy, for Mr Cosgrave, says there’s a consistent story told by Mr Kelly since the beginning of these proceedings that it is Mr Cosgrave which makes his Web Summit experience so stressful and miserable that it makes him wish to leave.
But he owns up to in detail here that he is just someone who reacts badly to stress and dislikes the pressure of being involved in the organisation of large public events.
He says in the correspondence that he finds working with Mr Cosgrave a challenge and that is normal for coworkers.
The email is from May 2018. Mr Dunleavy says already by May 2018, David Kelly is positioning himself to go and acknowledging that Web Summit’s involvement is for the long term.
An exchange connected with setting up of fund 1 - which pre-dated the second fund over which Mr Cosgrave is suing - has been brought before court.
The text messages are between Mr Kelly and Mr Cosgrave on October 31st 2017.
Mr Kelly texts saying do you trust me.
Mr Cosgrave says yes.
Mr Kelly said he thinks Web Summit should stay separate from the fund...“Like DOB” [which references denis o brien] does.
Mr Cosgrave responds saying they need a strong ethical framework from the start and that the suggestion sounds reasonable.
Mr Dunleavy says messages show that Mr Kelly identifies himself as agent in relation to this fund. he denominates himself as Web Summit’s agent, says Mr Dunleavy, for Mr Cosgrave.
We’re back up and running at the High Court.
Mr Dunleavy says he completed his review of the law before lunch and is now bringing the court through some key documents for mapping out the chronology between David Kelly and Web Summit.
How much is Web Summit worth? In his 2021 grounding affidavit, Mr Hickey claimed that Web Summit could be worth between €200 million and €350 million at the time, valuing his 7 per cent stake holding at somewhere between €14 million and €24.4 million.
And we have reached lunch at the commercial court, so it’s time for a break. The court will pick back up where it left off shortly.
The court is busy but not packed as Mr Cosgrave’s barrister goes through the law and legal precedents.
Mr Cosgrave is sitting on one side, with Mr Hickey and Mr Kelly on the other, though not right beside each other.
There’s a court sketch artist capturing proceedings.
Ian Curran, who has followed this story for a long time for The Irish Times, has a summary of the evidence so far here.
The conference is like “the Klondike or the gold rush in California”, the barrister said, “except everyone is wearing comfortable t-shirts”. “Everyone is trying to find the next thing or be the next thing. But only one entity has all the information to be able to match capital to companies and that is the company behind the conference itself.”
The court is hearing of various aspects of companies law and previous judgments from Mr Dunleavy, representing Mr Cosgrave.
For those in need of a quick refresher on this long-running and bitter row’s background, this morning’s In The News podcast is available here.
Web Summit Showdown: Why the three co-founders are heading to court
The High Court is set to hear revealing details on the workings of one of Ireland’s most high profile companies: Web Summit.In a civil trial that is set to last nine weeks, the three former friends who founded the tech events company – Paddy Cosgrave, David Kelly and Daire Hickey – will lay out their grievances against each other.Cosgrave, the better known of the three, has a majority stake in the company with a whopping 81 per cent, Hickey has 7 per cent and Kelly 12 per cent.There are five individual cases to be heard in a civil trial that is expected to last around nine weeks.Catherine Sanz, author of Drama Drives Interest: The Web Summit Story explains the background while Irish Times business reporter Ian Curren tells what dirty laundry might be aired.Presented by Bernice Harrison. Produced by Suzanne Brennan
Mr Dunleavy has handed a bundle of papers to the judge.
Documents will play an important role in the case, he said earlier.
Alan Betson has captured some of the principals arriving to the High Court this morning.
The company’s position is that David Kelly’s resignation was effective from April 14th, 2021, Mr Dunleavy says.
The court is faced with a case of active deception on the part of David Kelly.
The company had a chance to rollout a second venture fund with its own resources, staffed, moneyed and embedded in Web Summit events. Mr Kelly co-opted that opportunity himself for his own private property. He stripped the company of its opportunity to roll out that fund.
Mr Kelly proved himself to be disloyal and faithless, says Mr Dunleavy.
There is simply nothing like Web Summit operating anywhere else, Mr Dunleavy, for Mr Cosgrave, tells the court.
Success has many fathers but failure is an orphan. There is no one person exclusively responsible for Web Summit, he says. Mr Kelly and Mr Hickey are former directors and employees and they deserve a large measure of credit - but only one person has been there through it all: Paddy Cosgrave.
The court will hear evidence from Mr Cosgrave, who has an outsized public profile and drives Web Summit forward, Mr Dunleavy says. He also says many people have an opinion about Mr Cosgrave without knowing the first thing about him.
He is never satisfied and never stops. He continually looks to generate continuing opportunities for the business, the court is told.
The claims are connected by a bitterness which animates every aspect of the parties' respective proceedings, Mr Dunleavy tells the court.
He says the court must have been reminded of the more regrettable aspects of family law rather than the sort of claims that one might expect to see in the commercial court.
Bernard Dunleavy, for Mr Cosgrave, will begin by explaining background of proceedings to court, he says. The case will feature documentary evidence.
Mr Cosgrave’s team comprises Bernard Dunleavy SC and Derek Shortall SC instructed by solicitors firm Clark Hill.
Mr Hickey is represented by Kelley Smith SC, Eoin McCullough SC and Brian Conroy SC, who are instructed by Dentons. Mr Kelly’s team includes Michael Cush SC and Joe Jeffers SC.
Welcome to our live coverage of today’s evidence in the Web Summit court case. The three men at the centre of the various claims, Daire Hickey, David Kelly and Paddy Cosgrave, have arrived. The case will begin shortly before Mr Justice Michael Twomey at the High Court.
