The High Court has ruled that Paul Ward must pay the overdue instalments under a €31.5 million agreement to acquire shares held by Jean Kennedy and Carol O’Riordan in the Ward Cinema Group. It did not grant judgment for the full €31.5 million: only consideration that had fallen due by the date of judgment was covered, with the exact sum left for further submissions.
Mr Justice Quinn found that the binding heads of terms, signed on 18 April 2019 after mediation, required payment in instalments. The first €25 million was due by 31 October 2019, later extended to 21 November. A further €2 million was due on each of 31 October 2020 and 31 October 2021, with €2.5 million due on 31 October 2022.
The central dispute concerned Ward’s proposed use of cash reserves held by companies in the group to fund the acquisition. The plaintiffs’ advisers said that could expose the sellers to income tax, rather than capital gains tax, under tax legislation. Ward argued that the agreement’s tax-efficiency and cooperation provisions required the plaintiffs to consider a funding structure that used company reserves. He also said that company funds were always intended to finance at least part of the deal.
The judge held that the agreement did not give Ward a right to impose that funding method. The provision allowing him to nominate a transferee for the shares did not, by itself, permit him to use the nominated companies’ reserves to meet his payment obligation. Nor did the tax-efficiency or cooperation clauses require the plaintiffs to facilitate such a scheme. The judge found that the funding disagreement had emerged by July 2019 and that Ward’s insistence on the proposed arrangement led to non-payment by the agreed deadline.
Payments made in December 2019 were late and did not satisfy the first instalment in full. The judgment records that €12.5 million was paid to Kennedy and that €6 million was paid, or was said to be in the process of being transferred, to O’Riordan. The court found that the subsequent steps involving company funds had been implemented without convening company director or shareholder meetings.
The plaintiffs had sought judgment for the entire €31.5 million under the agreement’s default clause. The judge rejected that reading: the clause was not an acceleration clause, so judgment could cover only sums already due. The judgment also does not release the plaintiffs from their obligation to transfer the shares upon payment of the first tranche. Ward may pursue his counterclaim, and the court said it would hear further submissions on the precise judgment amount and how the counterclaim and remaining proceedings should continue.
The judgment addressed challenges raised by Ward concerning Carol O’Riordan’s capacity to enter the agreement and the commencement of the proceedings, finding those objections lacked substance on the evidence before it. The court noted that O’Riordan is now deceased and said the proceedings may need to be reconstituted to reflect her estate’s interests.