A German film company has opposed an application to strike out its claim against two Irish film producers whom it alleges diverted funds out of a film production company to either themselves or corporate entities controlled by them.
Berlin-based W2 Filmproduktion Vertriebs GmbH has also opposed a separate but related application by producers Morgan O’Sullivan and James Flynn to have Octagon Films Ltd, a company of which they are all shareholders, wound up.
W2 has sued the producers, claiming it has lost estimated revenues of €25 million in relation to activities of Irish-registered Octagon in which W2 owns 49 per cent of the shares.
It is claiming damages for alleged breach of contract, breach of duty and breach of fiduciary duty.
The producers reject W2’s allegations against them, describing the claims as an affront to their good characters. They also deny that any money was diverted by them that should have been paid to Octagon.
The defendants have brought motions, including one to have the W2 claim struck out on the basis it discloses no cause of action and is frivolous and bound to fail.
They also want to have a liquidator appointed to Octagon, who as an independent officer of the court can investigate the company’s affairs.
At the High Court on Tuesday, Paul Gardiner SC, with Eddie Farrelly BL, for W2 said the case should be allowed to proceed to a full trial.
The purpose of the application to wind up the company was to “stymie” his client and prevent it litigating its case, counsel argued. That application should be struck out, he urged.
Eight days
The hearing of the pretrial motions opened before Ms Justice Eileen Creedon at the High Court on Tuesday and is expected to last eight days.
W2, which invests in international film productions, claims it acquired shares under a shareholders agreement in Octagon in 2002. It claims the defendants have breached that agreement causing loss of revenue to Octagon of some €50 million, with a consequential loss to W2 of €25 million.
Among various claims, it alleges the defendants, while using the Octagon name, diverted funds, profit and income to themselves personally or corporate entities controlled by them.
The two had caused work to be sold on at cost or near cost to other entities controlled by them and misled W2 via false and misleading information, it further claims.
Mr Flynn, Monterey, Ballyedmonduff Road, Stepaside, Dublin, and Mr O’Sullivan, Ardmore Park, Bray, Co Wicklow – both directors of Octagon – deny the claims.
They say W2’s proceedings are based on an unsubstantiated claim that pre-existing businesses with which the defendants were involved were to be subsumed into Octagon following the shareholders’ agreement in 2002.
W2 knew of the continued involvement of the defendants with other companies in other projects but never raised any objection or concerns, it is claimed.
