A farmer co-operative which invested €1.2m in a wind farm company is entitled to be paid arrears of dividends over a three-year period, the High Court has ruled.
The precise sum will be decided later, but some €504,000 has been claimed.
The Clonakilty-based co-operative had claimed it was entitled to €504,000 in dividend arrears, but that was opposed by Tralee-based Muingnaminnane Windfarms Ltd (MWL), which argued it had insufficient profits and, therefore, could not lawfully pay dividends.
The President of the High Court, Mr Justice Nicholas Kearns, found there would have been sufficient reserves to pay dividends had the promoters not deducted rental payments to themselves for the wind farm lands, which they own, from the MWL profits.
A collateral agreement between the sides clearly required the promoters not to make such deductions where that would affect dividend payments, he ruled.
He will hear arguments later on the dividends to be paid after hearing submissions concerning profit figures.
Lisavaird Sales Ltd and Lisavaird Marketing Ltd, which operate the co-operative had sued MWL arising from the companies’ investment in the Muingnaminnane wind farm near Tralee, Co Kerry.
In his judgment, Mr Justice Kearns noted MWL is owned by Mike Barry, Dr Aidan Forde and Dr John Bourke, who also own the lands where the wind farm is sited.
The Lisavaird companies were approached by Dr Forde in 2007 about providing mezzanine financing of €1.2m to MWl for a five-year-period at a fixed annual return of 9%.
Some €20m capital expenditure was envisaged for the wind farm and about €18.6m was being advanced by Ulster Bank.
The promoters got another €1m via a BES investment provided by other investors.
Lisavaird sought to structure its investment to benefit from tax reliefs available for investment in renewable energy. That involved it making an equity investment in MWL rather than mezzanine finance, and the investment was altered to a share purchase investment intended to provide a dividend return of about 9% a year, plus further tax relief benefits.
Lisavaird also took steps to protect its investment, including procuring an amendment to the MWL articles of association providing, where a dividend is not paid in any one year, it becomes a debt payable to certain shareholders. When MWL later decided it could not structure its company so Lisavaird could get the tax relief, it was agreed the annual dividend payable would be increased to 10.5% to compensate the Lisavaird companies.
The wind farm proceeded and a dividend was declared and distributed in 2008 and 2009, but none was declared or paid in the years 2010, 2011 and 2012 because MWL said there were no profits out of which a dividend could lawfully be paid in those years.
Lisavaird then took its High Court proceedings.