A dispute has arisen over payments allegedly due following the sale to another firm of shares in two firms involved in developing healthcare software, the High Court was told yesterday.
The founder and principal shareholder in CHL Software and CHL Software Services, Mr Cathal Lennon, Baily, Howth, Co Dublin, has brought proceedings against Irish Medical Systems (Holdings), Howth Road, Killester, Dublin. The latter denies the claim and has filed a counterclaim alleging fraudulent misrepresentation.
Mr Bill Shipsey, for Mr Lennon, said his client and three of his children together owned 92 per cent of CHL Software, which was the principal of the two CHL companies. They had been developing information systems software for the healthcare industry. Specifically, the products were for hospital radiology departments. The product was sold in Ireland at first and was later exported to Britain and the US.
In late 1997, a representative of IMS (Holdings), the holding company for a group of firms involved in developing software systems for the medical sector, had approached CHL Software expressing interest in certain of the latter's products. After discussions, it became apparent that IMS was interested in acquiring, if not the entire share capital, the majority stake in the two CHL firms. In December 1997, agreement was reached on a price which would have valued CHL at £1 million (€1.27 million) and to acquire for £920,000 the shares held by Mr Lennon and his three children. There were further negotiations in 1998 about payments, and terms were arrived at.
Mr Lennon claims an instalment of £205,007 became due and owing to him by IMS on January 31st, 1999 and that IMS had issued a promissory note in April 1998 pursuant to which it agreed to pay him that sum. But he alleges, IMS had failed to pay that sum.
In its defence, IMS admits it issued the promissory note under which it promised to pay Mr Lennon £205,007 on January 31st, 1999. But it pleads the note was issued pursuant to an agreement of April 1998. IMS alleges it was induced to enter into that agreement and issue the promissory note by reason of fraudulent misrepresentation of the plaintiff, his servants or agents.
IMS also contends that Mr Lennon misrepresented the nature of problems with the radiology information system in a letter of April 16th, 1998 and in the Share Sale Agreement and that there was not full and proper disclosure of the nature of problems with the system. IMS pleads it has already paid £350,000 for the purchase of the shares in question and that this sum exceeds the true value of the CHL business taking into account the state of the system.
The hearing, before Mr Justice McKechnie, continues tomorrow and is expected to last about two weeks.
