The High Court has ruled that a settlement agreement between two brothers released claims by Peter McCaughey against IJM Timber Engineering Ltd for payments under resolutions passed in 2017.
Mr Justice Denis McDonald made the ruling on an application by Martin McCaughey to enforce a settlement signed in January 2020. The order directs enforcement on the basis that any payment claims Peter McCaughey had under the resolutions were settled and released by the agreement’s terms.
The resolutions provided for an exit payment based on 5% of IJM’s turnover if Peter McCaughey left the company, and a €1.5 million payment plus 500,000 shares if he confirmed he would remain. The court noted that the 500,000 shares had been cancelled under a separate provision of the settlement. The present application concerned whether the payment claims had also been released.
Martin McCaughey had brought proceedings under section 212 of the Companies Act 2014, alleging that IJM’s affairs were being conducted oppressively. The dispute focused on the allotment of the additional shares. The court noted that he had not challenged the exit or loyalty payment provisions in those proceedings.
The brothers and the companies entered the settlement after the proceedings were listed for trial. It provided for IJM and McCaughey Homes Ltd to be put up for sale and the proceeds to be distributed according to agreed terms. The agreement also stated that it settled all claims or disputes between the parties and that they had no further claims against one another.
Peter McCaughey argued that the agreement did not compromise his rights under the 2017 resolutions. The judge considered the agreement as a whole and against the circumstances known to the parties when they signed it. He concluded that its broad release language covered the claims against IJM, noting that the companies and both brothers had signed as parties and that the agreement aimed to bring their business relationship to an end.
The judge also considered that the agreement did not identify or quantify the alleged payment liabilities, despite setting out other specific payments. The relevant liabilities were not recorded in IJM’s financial statements or in a valuation report prepared for Peter McCaughey, although the judge recognised that the settlement claim arose from proceedings focused on the share allotment.
The court did not determine the separate legal arguments about whether the resolutions were valid or whether Peter McCaughey could pursue claims on grounds beyond the settlement. It had earlier ruled that those broader arguments fell outside the scope of this enforcement application.
The judge’s provisional view was that Martin McCaughey should receive his costs of the application, subject to further consideration if either side sought a different costs order within 14 days or the respondents appealed.