Row breaks out in Fyffes case over discovery of documents
DCC contends Fyffes' board did not believe in the first half of 2000 that information about the company's trading performance in the first quarter of the fiscal year 2000 (beginning November 1999) was price-sensitive.
DCC claims Fyffes is only making that allegation to support its legal claim that DCC chief executive Jim Flavin had price-sensitive information in January 2000 (information which showed a poor trading performance by Fyffes in the first quarter) prior to the sale of the DCC stake in Fyffes.
DCC contends the documents read in court yesterday made available by Fyffes to its lawyers but which the lawyers judged were not discoverable support its defence.
The discovery dispute arose from cross-examination of Fyffes chairman Carl McCann last week about shareholders' dissatisfaction from March 2000 with the falling share price.
Mr McCann was asked whether there were any written records of complaints by shareholders. He said he was sure there were.
Fyffes' lawyers produced a number of documents and DCC complained these should have been produced prior to the case opening and they were very relevant to its defence.
The documents in question include an exchange of letters from March 21, 2000 between Fyffes then chairman Neil McCann, and an unnamed shareholder, arising from shareholders' concerns about Fyffes' decision to issue a profit warning on March 20, 2000 and querying whether all of the Fyffes board were aware of trading problems in the first quarter of the fiscal year 2000.
In his reply of May 11, 2000 to the shareholder, Mr Neil McCann said it was Fyffes' experience that performance in November and December "has not proved to be a particularly accurate indicator of likely trading patterns for the remainder of the financial year, and a poor performance in those months in the past has not in itself resulted in a shortfall in the first half".
In her ruling yesterday on the documents, Ms Justice Laffoy said while the documents' existence had come to DCC's knowledge by accident last week during cross-examination of Carl McCann, it was her view Fyffes had responded promptly and bona fide to the matter and it was unfair of counsel for DCC to criticise Conor McDonnell, solicitor for Fyffes, regarding his explanation of the issue.
The judge upheld arguments by Mr Michael Cush SC, for DCC, that the documents fell within a certain category for discovery.
That category related to documents dealing with whether a Stock Exchange announcement might be required about Fyffes' trading performance.
Counsel for Fyffes had argued they had understood such documents were time-limited and related to any consideration by Fyffes, at the time of the issuing of a profit warning on March 20, 2000, of the timing of such an announcement. DCC argued the documents were not time-limited.
The judge agreed such documents were not time-limited and she said DCC was entitled to have Carl McCann recalled to be cross-examined on the documents in question.
She noted Paul Gallagher SC, for Fyffes, had already offered to recall Mr McCann.
She added it would be "prudent" for Fyffes to review discovery in the case, as Mr Gallagher had also offered. She would direct Fyffes to do so.
DCC could reserve its position on whether it required to recall other witnesses for cross-examination.
Earlier, Mr Cush argued that much of his side's cross-examination of Fyffes' witnesses to date had been with a view to suggesting Fyffes' first quarter results for 2000 were relatively insignificant and that Fyffes' witnesses were putting undue emphasis on the month of January.
Had DCC had the documents in question when cross-examining, the documents would have supported their case, he said.
Mr Gallagher, for Fyffes, said his client's solicitors had made a judgment that the documents did not fall within the categories of discovery. In the course of the cross-examination of Mr McCann, it emerged the documents were relevant and they were produced forthwith, he said.
He rejected Mr Cush's suggestion his side was "fine-tuning" the discovery categories.
Yesterday was the 27th day of the proceedings in which Fyffes claims DCC and Mr Flavin organised three share sales in February 2000 which breached 'insider dealing' provisions of the Companies Act 1990.
The action is against DCC, Mr Flavin and two DCC subsidiaries. The defendants deny the claims and say the sales, which yielded a profit of €85m, were properly organised by DCC subsidiary, Lotus Green Ltd.
The case continues today.
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