Supreme Court defers judgment on Fyffes appeal against ruling in favour of DCC

The Supreme Court has reserved judgment on the appeal by fruit distributor Fyffes against the High Court's rejection of its claim for some €85 million compensation over alleged "insider dealing" by DCC plc and its chief executive Jim Flavin in connection with the €106 million sale of the DCC stake in Fyffes on three dates in February 2000.

The appeal hearing concluded after five days yesterday and Ms Justice Susan Denham, presiding over the five-judge court, said the court would reserve its judgment.

The central issue in the appeal is whether Ms Justice Mary Laffoy was correct in her High Court conclusion that Mr Flavin did not have price-sensitive information - information likely to have a material impact on the Fyffes share price if known to the market - about Fyffes at the time of the sale. Mr Flavin, then a director in Fyffes, had trading reports for the fruit distributor for November and December 1999 indicating negative trading performance in the first quarter of the financial year 2000.

Another issue is whether the judge was correct in holding that Fyffes's own conduct in relation to how it dealt with the same information was relevant to the issue of price sensitivity.

A further issue in dispute between the sides is whether the judge should have considered the impact of a March 20th, 2000, profit warning from Fyffes when considering whether the information available to Mr Flavin at the time of the share sales was price sensitive.

In her December 2005 judgment rejecting Fyffes's claim after a marathon 87-day action, Ms Justice Laffoy found Mr Flavin did "deal" in the Fyffes shares and "effectively controlled the whole process", but did not do so unlawfully. She also ruled that there was "a fundamental incongruity" between Fyffes's own conduct in early 2000 and its claim that Mr Flavin had price-sensitive information.

Closing the appeal yesterday, Brian Murray SC, for Fyffes, said the insider dealing laws were enacted to achieve equality in the market place and to guard against anyone having an advantage over others dealing in shares. He urged the court to look at the information available to Mr Flavin at the time of the share sales on three dates in February 2000. Could it be "seriously argued" that, if another person saw that same information, there was not a real risk of their having a significant advantage over other investors, he asked.

"There is only one answer to that," Mr Murray said.

Earlier, Mr Murray submitted that the profit warning issued by Fyffes on March 20th, 2000, contained similar information to that available to Mr Flavin. The material drop in the Fyffes share price following the release of that profit warning was "strongly corroborative" of the materiality of the information, he said. He also argued that, when the legislature had introduced the laws prohibiting insider dealing, it had not done so on the basis of attaching any liability to an affected company for any acts or omissions. It would be "extraordinary" if the legislature had done so, he added.

While the parties in this case had conducted an exhaustive search of every avenue throughout the world for relevant legal cases, not a single case was identified where the failure of a company to announce information to the market was in any way relevant to the question of whether that information was price sensitive, Mr Murray said.

The position of a company insider who has information about a company and who is about to deal in the company's shares is not equivalent to the position of a company which also has the information and the responsibility of deciding whether to make an announcement based on it, and is not itself dealing. To argue that the positions of the insider and the company were alike was akin to comparing apples and oranges, counsel said.

It was possible for a company to have such information and not to break the rules by not announcing it, Mr Murray said. It was in that context that Fyffes was contending that Ms Justice Laffoy had erred in attaching significance to the actions of Fyffes in her finding that the information was not price sensitive.