DCC yesterday concluded its legal submissions in the long-running action by Fyffes alleging insider dealing in connection with the €106 million sale of the DCC stake in Fyffes in early 2000.
After Kevin Feeney SC, for DCC, finished his submissions on the 86th day of the case yesterday, Paul Gallagher SC began his closing reply on behalf of Fyffes. Mr Gallagher is expected to complete his reply on Monday when Ms Justice Mary Laffoy is expected to reserve judgment.
The action arises from three share sales on February 3rd, 8th and 14th, 2000. The defendants - DCC, its chief executive, Jim Flavin, and two DCC subsidiaries (S&L Investments and Lotus Green) - deny claims of insider dealing and plead the sales were properly organised by Lotus, a Dutch-registered subsidiary to which beneficial ownership of the Fyffes shares was transferred in 1995 for tax reasons.
Closing his arguments yesterday, Mr Feeney said there was no basis for Fyffes' claim that the court could assess the impact of alleged price-sensitive information available to Mr Flavin prior to the February share sales by examining what happened to the Fyffes share price after the company issued a profit warning on March 20th, 2000.
The court should also reject Fyffes' "unfair and unreal" request to place Mr Flavin in a position where he knew or should have known in February 2000 matters which did not occur to Fyffes executives themselves at that time, counsel submitted. Fyffes had the same information as Mr Flavin but did nothing to alter expectations for its performance in 2000.
For these and all the other reasons advanced by DCC, it was DCC's claim that Fyffes had failed to show that the information available to Mr Flavin in his capacity as non-executive director of Fyffes (Fyffes management accounts for November 1999 and a trading report for December 1999) was price sensitive, counsel submitted.
Opening his reply, Mr Gallagher said it was the information itself which was critical when it came to assessing whether it was price sensitive or not. However, he said, DCC had adopted a different approach - they said the court should first look at what information was available in the market and then look at what was available to Mr Flavin.
This was the reverse of what was required by the Companies Act and turned common sense on its head because, in the first instance, it was for the person who held the information and who intended to deal to carry out an assessment of the information.
That person must consider whether the information they had was generally available to the market and whether it would be likely, if so available, to materially affect the share price.
The court must adopt an objective test in deciding whether the material would be likely to materially affect the share price, he also submitted. This test was not dependent on what Fyffes itself did at the time. The company was not the litmus test in relation to whether the information was price sensitive or not and the Companies Act did not mandate the court to focus primarily on the company's actions and reactions in the relevant days.
