The food distribution company Fyffes has won its Supreme Court appeal against a High Court ruling in a case where the company claimed it was the victim of insider trading.
The Supreme Court found that the High Court made an error in concluding that trading reports in the possession of DCC were not price sensitive.
However the Supreme Court upheld the finding of the High Court found that Jim Flavin was not aware he was in possession of price sensitive information.
Fyffes, which is seeking compensation of €85m, welcomed the judgement, while DCC said it expected its total liability from the case to be no more than €50m. The Supreme Court has listed the case for further directions in October, after which the High Court is expected to decide how much DCC must pay.
Fyffes took the original legal action after DCC sold its stake in Fyffes a month before a March 2000 profit warning, making a profit of €85m.
Fyffes lost the action in late 2005 on the basis of Ms Justice Mary Laffoy's finding that DCC chief executive Jim Flavin was not in possession of price sensitive information about Fyffes at the time of the share sales. She found, however, that Mr Flavin had controlled the deals. Mr Flavin was a director of Fyffes at the time.
In the High Court case, DCC had argued that Mr Flavin had not dealt in the shares directly because a subsidiary had handled the sale of the shares.
Today, four rulings were delivered, all in agreement. In her ruling presiding judge Ms Justice Susan Denham asserted that the facts of the case - as established in the High Court and not subject to appeal - were that Jim Flavin was director of DCC and handled the sale of the Fyffes share in February 2000.
Mr Flavin also held a position as a director in Fyffes, which allowed him access to information contained in Fyffes trading reports for November and December 1999. This information was 'generally unavailable' and the High Court found that it was 'very bad news for Fyffes', her ruling stated.
Ms Justice Denham said that 'the core issue was whether is whether the information in the November and December 1999 trading reports was price sensitive', in other words, that it 'would be likely materially to affect the price of the shares if it were generally available'.
Once that information was made available to the markets in the form of a profit warning, issued on March 20, there was an 'immediate drop' in Fyffes' share price.
Ms Justice Denham said that it was 'an inevitable conclusion that the information was price sensitive'.
In a statement, Fyffes said it was pleased with the decision and had always believed in the merit of the legal action.
DCC said it did not expected its liability from the case, including legal costs, to be more than €50m.
'DCC believes that its liability to Fyffes resulting from this judgement will not exceed the difference between the price at which the relevant shares were sold and the price which those shares would have realised had the relevant information been generally known,' the company said.
In a later statement this evening DCC said in allowing the appeal, the judgement did not affect the High Court's finding that the sale of the shares by DCC was not motivated by the information on Fyffes which Jim Flavin possessed.
'The Board of DCC wishes to express its full confidence in and unanimous support for Jim Flavin as Executive Chairman of DCC', the statement to the Irish Stock Exchange added.
DCC shares closed down 57 cent at €21.12 in Dublin this afternoon, while Fyffes shares closed up one cent at 81 cent.
