Thursday 27 October 2016

Film company's legal action against two Irish film producers will not be dealt with in fast track commercial division of High Court

Tim Healy

Published 27/06/2016 | 18:03

Four Courts
Four Courts

A GERMAN film company's legal action against two well known Irish film producers will not be dealt with in the fast track commercial division of the High Court.

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Berlin based W2 Filmproduktion Vertriebs GmbH has sued producers Morgan O'Sullivan and James Flynn, claiming it has lost estimated revenues of €25m in relation to activities of Irish registered Octagon Films Ltd in which W2 owns 49 per cent of the shares.

It is seeking damages for alleged breach of contract, breach of duty and breach of fiduciary duty.

The defendants reject W2's "unfounded allegations" against them, which are "an affront" to their good characters.

W2 sought to have the case admitted to fast track Commercial Court but it was opposed by the defendants who argued W2 delayed in bringing the action.

Paul Gardiner SC, for W2, disputed claims of delay bringing the case which he said was clearly a commercial action concerning "a suite of contracts and their meaning".

The defendants were party to a shareholders agreement on foot of which they caused Octagon to suffer loss and there was no culpable delay by his side which had sought information over some time but got that "piecemeal".

They needed all that material before finalising the statement of claim and the fact they ultimately got the information showed they were entitled to it, he said.

Lyndon MacCann SC, for the defendants, argued W2 had had sufficient information to allow it bring the case earlier and its delay doing so meant it was not entitled to the benefit of fast-track procedures.

It was also argued W2 should have sought permission to bring a derivative action but failed to do so and their case was bound to fail.

Mr Justice Brian McGovern found, on foot of material including correspondence between the sides dating back to July 2015, there was delay of a kind such as disentitled W2 to have the case fast-tracked.

The matter will now proceed through the regular court lists.

W2 claims Mr Flynn, Monterey, Ballyedmonduff Road, Stepaside, Dublin, and Mr O'Sullivan, Ardmore Park, Bray, Co Wicklow are directors of Octagon. Both have produced successful TV series including The Tudors, The Borgias, Vikings, Love Hate and Raw, and films such as Calvary.

W2, which invests in international film productions, claims it acquired shares under a shareholders agreement in Octagon in 2002 so as to join a successful start up company.

It claims the defendants have breached that agreement causing loss of revenue to Octagon of some €50m, with a consequential loss to W2 of €25m.

Among various claims, it alleges the defendants, while using the Octogon name, have diverted funds, profit and income to themselves personally or corporate entities controlled by them.

In reply, Mr O'Sullivan described allegations against the defendants as "spurious".

W2 claims are "rejected in their entirety," he said.

In his sworn statement, Mr O 'Sullivan said W2's proceedings are based on an "entirely unsubstantiated claim" that pre-existing businesses the defendants were involved with were to be subsumed into Octogon following the shareholders agreement in 2002.

Mr O'Sullivan said for 14 years W2 knew of the continued involvement of the defendants with other companies in other projects but never raised any objection or concern.

He also said that W2 were offered or given any information relating to Octagon that it was entitled to.

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