Fyffes has lost its mammoth insider dealing High Court action against DCC, two of its subsidiaries and its founder and managing director, Jim Flavin.
In a lengthy judgment, Ms Justice Mary Laffoy said the defendants were "not in possession of price-sensitive information" and did not act unlawfully in February 2000 when DCC sold shares in the company worth €106 million, making a profit of €85 million.
At the time, Mr Flavin was a non-executive director of Fyffes. In March of the same year, Fyffes issued a profit warning and the share price dropped 25 per cent.
The action was brought against DCC plc, its chief executive, Mr Flavin, and two DCC subsidiaries - S&L Investments Ltd and Lotus Green Ltd. The defendants denied insider dealing in connection with the share sales, arguing that the sales were properly organised by Lotus.
In her judgment today, Miss Justice Laffoy said today the two essential issues she had to decide on in the case were whether Mr Flavin "dealt" in the shares within the meaning of the relevant provisions of the Companies Act and whether information available to him prior to the sales was "price-sensitive". She also said she had to rule on the consequences for Fyffe's if the above were found to be true.
Miss Justice Laffoy found that DCC and its subsidiaries had operated as a single entity, and that Mr Flavin had acted as an agent for DCC and its subsidiaries. He was "not in possession of price-sensitive information" at the time of the share sale. "Therefore, the dealing was not unlawful ... and no civil liability to account arises," she said.
The question of consequences was rendered redundant, she said.
The case was heard on 87 sitting days between December 2004 and July of this year. Legal costs are expected to be in excess of €10 million. A ruling on costs is up for mention in the High Court on the first day of the new court term on January 11th.
DCC today welcomed the ruling. "When legal proceedings were first initiated by Fyffes ... the board of DCC made a Stock Exchange announcement expressing its clear view that Fyffes' claim was wholly unjustified, totally inconsistent with Fyffes' own actions at the time and utterly without merit," DCC said in a statement. "The board of DCC believes that today's judgment vindicates that view."
Fyffes chairman Carl McCann said the company would consider appealing the judgment. "We are obviously very disappointed with the outcome of the judgment this morning," Mr McCann said outside the court. "We are absolutely certain that it was the right thing to take this case. We intend to consider appealing this matter and will be discussing this with our lawyers later today."
