Brothers urged to use mediation in dispute

Tue, Mar 27, 2012, 01:00

TWO BROTHERS who own the Carraig Donn clothing company have been urged by a High Court judge to use mediation to settle a dispute between them over the running of the firm.

Mr Justice Peter Kelly urged Vincent and Patrick Hughes not to allow a court battle distract them from their business, which has a turnover of €30 million a year, 350 employees and 100 more jobs in the pipeline.

The judge made the comments when agreeing yesterday to transfer to the Commercial Court proceedings by Vincent Hughes against his brother Patrick.

Vincent claims he can no longer trust his brother to honour the terms of a 1997 restructuring agreement and he wants orders under section 205 of the Companies Act 1963 bringing an end to “acts of oppression” against him by either cancelling or varying various transactions.

The judge has adjourned the matter to next May and urged the brothers to make serious efforts in the interim to resolve the dispute.

Vincent Hughes, who owns 44.5 per cent of the Carraig Donn holding company, Six Mile Investments (Unlimited), claims Patrick, who is chairman and holds the balance of the share capital, is trying to make the firm “as uncomfortable a place as possible” for him so as to force him to sell his shares.

Patrick denies the claims.

Vincent, of Carabaun, Westport, Co Mayo, said in an affidavit he is mainly involved in the manufacturing of knitwear products and sourcing from other countries.

Patrick, of Belclare, also Westport, principally manages the marketing and retail wing.

Vincent says he initially saw “nothing untoward” in the restructuring and buying-out of the original shareholders – all members of the family, including their father Pádraic.

However, Patrick had become “increasingly dominant” in the business and “increasingly possessive” in relation to the retail section. It had become clear “the true intention” of Patrick was to “have me removed” and Patrick to be the sole beneficial owner of the business operated by the group, Vincent said. Unsuccessful efforts had already been made to buy him out and the relationship between him and his brother was very difficult.

Before the restructuring, Vincent said he had the same remuneration package as Patrick but it now appeared Patrick believed his involvement in the stronger retail area entitled him to disregard the obligations of equality agreed during the restructuring.

In December 2009, the company board sanctioned a substantial increase in Patrick’s remuneration despite Vincent’s objections, he said. That same meeting was preceded by “an increase in a hostile series of events in which I [Vincent] was effectively accused of fraud”, for which he had to account to Patrick and Colette Caulfield, who is financial controller and a director of the group, he said. Vincent said Ms Caulfield was “very much aligned” with Patrick and his relationship with Ms Caulfield had deteriorated.

She had made a formal complaint of harassment against him that he did not accept was valid and was made against a background of conflict over access to information, he said.