Paddy Cosgrave’s former friends and business partners “cheated on” him and his company, and the Web Summit chief executive is merely “standing up for himself” in his legal disputes with them, the High Court heard on Friday.
Mr Cosgrave is suing David Kelly, who owns 12 per cent of the shares in Web Summit, for alleged breaches of his fiduciary duties as a director of the company. He is, in turn, being sued by Mr Kelly and Daire Hickey, who holds 7 per cent of the shares in Web Summit, for alleged shareholder oppression and breaches of a profit-sharing agreement.
All five cases are being heard in a High Court civil trial, which began this week.
Delivering a response to Mr Hickey’s opening arguments, Derek Shortall SC, for Mr Cosgrave, who owns 81 per cent of Web Summit’s shares, said his client was, in “one reading” of the evidence, the person being oppressed by Mr Hickey.
He accused Mr Hickey, who resigned as an employee of Web Summit in 2017 and a director in 2019, of “being caught lining his own pockets” by working for other, unrelated parties while he was an employee of the tech conference company.
Mr Shortall – whose son, Roman Shortall, previously worked for the Ditch website, which the court heard this week Mr Cosgrave had funded to the tune of €500,000 using Web Summit funds – said Mr Hickey was looking for a “wholly unmerited, life-changing windfall at the expense of [his] former benefactors” in his oppression action.
He said Mr Hickey had not been “effective” in his role at Web Summit and an investigation uncovered “egregious’ breaches of his duties. This included doing paid work for third parties while working at the company and “unlawful exploitation” of contacts he had developed during his time with the company for his own profit.
Out of “generosity”, Mr Cosgrave, who was attending his brother’s wedding on Friday and was not in court, offered his former business partners equity stakes in the business, Mr Shortall said. “How is he repaid? They cheat on him. They cheat on the company,” he told the court.
When Mr Shortall had finished his remarks, Kelley Smith SC, for Mr Hickey, said that a number of the allegations made against her client on Friday morning went “well beyond the pleadings” in the case.
After lunch, Mr Shortall said he had received a letter from Mr Hickey’s legal team but asked if he could review it and respond next week. Ms Smith said Mr Shortall had not responded to her query and reiterated that he went “well beyond the pleaded case” against Mr Hickey.
She said she wished to “lay down a marker in respect of the submissions” and agreed the matter could be dealt with next week.
During opening statements for Mr Hickey, delivered by Eoin McCullough SC on Wednesday, the court was reminded that despite certain claims in Mr Cosgrave’s pleadings, he has never brought proceedings against Mr Hickey for breaches of his fiduciary duties as a director.
[ ‘No question’ Paddy Cosgrave knew about complaint against former Web Summit director ]
Mr Cosgrave “has still done nothing” about those alleged breaches, which he says he identified almost a decade ago in an investigation of which Mr Hickey was not aware, Mr McCullough said earlier this week.
The Web Summit chief executive even considered using them in 2017, 2018 and 2019 “as part of his campaign to force Mr Hickey out of the company”, but did not.
He is now “dredging them back up to attempt to use them in defence of the oppression and disregard of interests claim that has been brought”, Mr McCullough said.
He said his client had never had a contract with Web Summit, “let alone a contract that prohibited him from working for someone else”.
On Friday afternoon, Bernard Dunleavy SC, for Mr Cosgrave, will deliver his response to Mr Kelly’s action against the Web Summit chief executive.
Michael Cush SC, for Mr Kelly, told the court on Thursday that Mr Cosgrave had invented a claim that Mr Hickey held damaging information about his client and used for leverage against him as a way of justifying his behaviour towards his former business partners, who is alleged to have forced out of the company.
