Electronic payments group Payzone cannot defend the claims of chief executive John Nagle and chief financial officer John Williamson that they must be treated as remaining in their jobs as they have not been lawfully removed, the High Court was told yesterday.

Paul Gardiner SC, for Mr Nagle, said it appeared Payzone chairman Bob Thian became so annoyed after reading a letter of January 14th last from Mr Nagle, that he had abandoned the process required under contract and the company's own articles of association for the removal of Mr Nagle, had called the company's directors and had announced the removal of Mr Nagle and Mr Williamson.

In that January 14th letter, Mr Nagle strongly criticised Mr Thian's behaviour as chairman, alleged Mr Thian was after Mr Nagle's job, invited him to "consider" his position and referred in a critical way to Mr Thian's performance while holding key positions with other companies in the past.

Payzone had no defence to the claims by Mr Nagle and Mr Williamson that there was no board meeting held to pass a resolution for the removal of both men, Mr Gardiner said. That was and remained the central problem for the company in the action.

Payzone had admitted there was no such meeting, but Mr Thian appeared to hold the view that, if he said often enough that the board would have sanctioned the men's removal if a meeting was held, that meant a meeting had been held, counsel said. If there is uncertainty in the market now about Payzone, that uncertainty is a result of the unlawful conduct of Mr Thian and of the other non-executive directors of the company, counsel said.

Any uncertainty would end if Mr Nagle and Mr Williamson secured court orders enabling them to continue carrying out their duties pending the outcome of a full court hearing of the dispute between them and the company, he submitted. Eoin McCullough SC, for Mr Williamson, said his client appeared to have been purportedly dismissed because of Mr Thian's annoyance over Mr Nagle's letter.

Payzone had alleged misconduct by Mr Williamson relating to alleged failures to provide financial information and other matters. Mr Williamson had denied such claims in his affidavit but had never been given an opportunity by the company to answer such claims before his "removal" was announced to the market earlier this month.

This was in breach of Mr Williamson's rights under his contract, under the articles of association of the company and the rules of natural justice, counsel said.

Mr Gardiner and Mr McCullough were applying to Ms Justice Maureen Clark to continue injunctions pending the outcome of full court proceedings, restraining Payzone from treating their clients as dismissed and requiring the company to permit them continue their duties.

Opposing the applications, John Gordon SC, for Payzone, said that, given the "clear hostility" between Mr Nagle and Mr Williamson on the one hand and the Payzone board on the other, it would be a recipe for trouble on a daily basis if the court granted orders permitting them to continue to run the company.

No court on these islands had ever granted an order permitting a chief executive and chief financial officer to continue to run a company when that company had lost confidence in them, he said. A chief executive could not run a plc without the confidence of its board. It was an "impossibility" and would indeed be "a world gone mad".

Mr Gordon also said the letter of January 14th from Mr Nagle to Mr Thian was written "to provoke" Mr Thian and was written after Mr Nagle secured legal advice. After that letter, it was unimaginable that there could be trust between the sides. There was considerable tension between the sides prior to January 14th, he added. It was clear Mr Nagle and Mr Williamson were, prior to January 14th, taking legal advice on how best to "play the game" for control of Payzone.

Mr Nagle and Mr Williamson had come from an environment where they were not answerable to a board and they did not like the fact there was a board with "a keen interest" in what was going on, he said.

Payzone was formed last year from the merger of Mr Nagle's e-payments company Alphyra with the British ATM firm Cardpoint.

The case continues today.