'Cancer' at core of case made against Flavin, counsel argues

Counsel for DCC, two of its subsidiaries and its chief executive Jim Flavin have been summarising their case before Ms Justice Mary Laffoy this week.

The mammoth insider dealing case was due to end yesterday but will now continue into next week. The case has been taken by Fyffes, which is seeking huge damages.

During his submission, Kevin Feeney SC, for the defendants, said there was a "cancer" at the core of the case being made against his clients.

Fyffes was alleging that trading information that came into the possession of Mr Flavin in January 2000 was price-sensitive, but there was nothing in the Fyffes' records to indicate that it viewed the information with the gravity that it was now saying had to be obvious at the time to Mr Flavin.

Fyffes had said on a number of occasions that the trading information received by Mr Flavin, a long-term non-executive director of the company at the time, must have "jumped off the page".

"They are expecting and asking and demanding of Mr Flavin an approach which is utterly opposite to the one which they themselves took and that is a cancer, we say, at the core of the case," Mr Feeney said.

A profit warning was issued by Fyffes on March 20th, 2000, but there is nothing in the files of Fyffes until March 10th, or possibly March 6th, which indicated that the company had begun to change its expectations for the year, Mr Feeney said.

The company's year began in November 1999 and it had said it was expecting further growth. The DCC share sales occurred on three dates in February 2000.

Mr Feeney said senior executives in Fyffes reviewed trading at meetings on February 17th and 18th but this did not "generate one document which suggested that it was necessary to review expectations".

During January 2000 a UK-based executive of Fyffes, John Ellis, was given permission by the company to trade in shares and the share sale was announced to the market.

Mr Feeney said the only "rational credible explanation" for this was that the company did not at that time have a realistic belief that its expectations were in danger.

Fyffes was demanding that the court treat Mr Flavin in a way that was entirely different to the way the court was being asked to view the actions of Fyffes. "We say that is not to decide the case, but it is of considerable evidential value."

Mr Feeney also pointed to the fact that on the evening of the first sale Mr Flavin met Fyffes then chairman, Neil McCann, and managing director David McCann, with the latter two buying Mr Flavin a bottle of champagne.

Would this have occurred if Mr McCann truly believed Mr Flavin had just misused trading information, Mr Feeney asked.

After the first sale, Fyffes wrote to Mr Flavin saying it hoped there would be further sales. "This is again a further argument that this information cannot have been treated by the company as price sensitive," Mr Feeney said.

The case that had been made by Fyffes had "seriously and, we say, unfair damaging consequences" for Mr Flavin's reputation.

Michael Ashe SC, for the defendants, said that for a liability under the law to arise, the person dealing must know the information they possess is price sensitive and that the person must act to his advantage in using that information.

Ms Justice Laffoy asked if the mere possession of price sensitive information did not put the insider in a position of being subject to a ban? Mr Ashe said that possession implied that the person knew what they possessed. He pointed to the law whereby a person cannot be convicted for possession of drugs if that person did not know he had drugs in his possession.

The two main issues in the case are whether the information in Mr Flavin's possession was price sensitive, and whether he in fact dealt. The defendants say he did not deal. They say the shares were held by a Dutch resident subsidiary of DCC called Lotus Green and that Mr Flavin merely acted as a conduit between brokers and that company.

Michael Cush SC, for the defendants, said there was "absolutely no evidence" that Mr Flavin induced Lotus Green to make the sales. Mr Flavin had expressed a concern that the Lotus Green board might not be in a position to meet but that had been "elevated" to the status of Mr Flavin directing the board meet when there was no such evidence.