Second Web Summit shareholder's oppression proceedings admitted to fast track list

It was alleged Paddy Cosgrave has an explosive temper which "he frequently exercises against employees".
Second Web Summit shareholder's oppression proceedings admitted to fast track list

A High Court judge has fast tracked to the Commercial Court a second alleged shareholder oppression case in the Web Summit dispute.

The action by Lazvisax Ltd, owned by former Web Summit director Daire Hickey whose company holds a 7 per cent shareholder in the main events firm, follows an earlier separate case by the other minority shareholder, David Kelly and his firm Graigueridda Ltd.

Mr Justice Denis McDonald, on Monday, said the Lazvisax case should be admitted to the fast track list because Mr Hickey says he only recently learned of allegations of attempts to destroy his reputation and to undermine his shareholding.

The judge said he was unimpressed by historic allegations made by Mr Hickey, relating to a period of time when he (Hickey) was an employee and director of the Web Summit firm, Manders Terrace Ltd, which never prompted any action by him in the past.

Manders Terrace, and Proto Roto Ltd, the company through Web Summit CEO Paddy Cosgrave holds an 80 per cent shareholding in the firm, along with Mr Cosgrave himself, are respondents in the action by Mr Hickey, who runs a PR firm in New York.

The respondents "categorically deny" the allegations and were given until January to file papers giving their response to the claims.

Allegations

The judge said the court was confronted with allegations which on the face of it would suggest that Mr Hickey only recently learned, following conversations with Mr Kelly, of alleged attempts being made by Mr Cosgrave to destroy Mr Hickey's reputation and undermine the value of his shareholding.

On that basis, the judge said, he did not think an application to admit the case to the commercial list could be refused on the basis of delay, as alleged by the respondents.

The judge also expressed surprise that parts of Mr Hickey's affidavit, containing the allegations, had been published in the media, and he was therefore conscious that the respondents wanted time to deliver a replying affidavit.

This was in circumstances where the allegations were made and in light of the "extraordinary fact" that the detail of Mr Hickey's affidavit was made available to the newspapers in advance, he said.

It seemed to the judge the respondents must have an opportunity to respond, and he therefore gave directions for how papers and pleadings should be exchanged.

The judge also said it might be possible that the Hickey case can be dealt with along with the separate oppression proceedings by Mr Kelly who filed a supplemental affidavit for the Lazvisax case supporting Mr Hickey's claim of only recently learning of certain matters.

Historic nature

Earlier, Bernard Dunleavy SC, for the respondents, objected to the entry of the case to the commercial list given the delay in doing so and in circumstances where most of the allegations were of a historic nature.

Kelley Smith SC, for Mr Hickey's Lazvisax firm, said there had not been any culpable delay. The more recent allegations were something Mr Hickey knew nothing about because he resigned as a director of the Web Summit firm in 2019, she said.

Mr Hickey, in an affidavit, alleged that in the course of his time working for the Web Summit, he came to realise Mr Cosgrave "is a highly egocentric, manipulative, volatile and vindictive individual".

Mr Cosgrave, he said, demands nothing less than unsupervised control of all the company's affairs, seeking to run it "entirely for his own benefit and without any oversight from the board or anybody else".

Mr Cosgrave, he alleged, has an explosive temper which "he frequently exercises against employees" and his conduct has been and continues to be extremely damaging to the company's business and reputation.

He said he recently learned from Mr Kelly that following his departure from Web Summit, Mr Cosgrave and his company, Proto Roto, had engaged in conduct liable and, in several instances, deliberately directed towards undermining the value of Mr Hickey's shareholding.

Mr Hickey has alleged a failure to observe corporate governance norms, a concerted strategy to force him out of the company, a refusal to comply with a profit share agreement, use of company funds without proper authorisation or oversight and a concerted strategy to damage his reputation.

Among the allegations he makes is that when businessman Denis O'Brien stopped sponsoring the Web Summit, Mr Cosgrave then "formed the view Mr O'Brien was involved in supporting the Dublin Tech Summit".

In recent years, he said, Mr Cosgrave "has conducted a campaign of abuse against Mr O'Brien through his Twitter account, despite having a close relationship with the businessman in the early years of the Web Summit".

More in this section

Sponsored Content

Add Echolive.ie to your home screen - easy access to Cork news, views, sport and more