FURTHER DETAILS of a dispute between brothers Michael and Kevin Lagan over the running of companies with a £400 million annual turnover have been revealed in the High Court in Belfast.
Michael Lagan claimed Kevin Lagan attempted moves that were aimed at excluding him from the management of their Lagan Group of family businesses.
Details were contained in a judgment dealing with an attempt by Michael Lagan to have the businesses wound up. The ruling in 2008 could not previously be reported due to a confidentiality order.
Mr Justice McCloskey described how the brothers became increasingly embroiled in conflict over efforts to reach agreement on reorganisation and succession issues.
It set out how, in September 2006, they agreed on a “partition” of the companies, with each brother gaining exclusive ownership of certain businesses.
Michael Lagan claimed this was reneged on in an attempt to force the disposal of his shareholdings below value, the court heard.
As part of his case that his brother seriously undermined the relationship of trust and confidence, he claimed an alleged tactical manoeuvre by Kevin Lagan designed to put pressure on him, in July 2007, to invest £9 million of his own money in Lagan Homes Ltd; that Kevin Lagan appointed office-holders to exclude his brother from management of the businesses; and that Kevin Lagan reneged on agreements between them concerning long-term reorganisation and restructuring of the group businesses.
It was also alleged that he acted in breach of his fiduciary duties over the £31 million acquisition of the company Welsh Slate.
Kevin Lagan rejected the allegations and claimed his brother’s petition had caused substantial damage to the group and was likely to inflict further harm. He said it threatened the continued trading ability of some parts of the group, while fundamentally altering its relationships with banks, business partners, finance and bond providers and insurers.
Another company director gave evidence that disclosure of the petition would put the group at a disadvantage with competitors in the Republic and would have “catastrophic” consequences.
“He expresses concern that the presentation of the petition has the effect of converting term loans to demand loans,” Mr Justice McCloskey said. “He highlights that the Lagan Cement Group Ltd has long-term debts totalling £52.4 million.”
Mr Justice McCloskey refused the application to have the petition struck out. In a postscript he said the main winding-up litigation was eventually settled without court adjudication. It was also confirmed that a previous prohibition on publication had been lifted.