Despite the perceptions of some shareholders Dairygold Co-operative Society and its subsidiary company Reox Holdings Ltd were two separate legal entities, the High Court has heard.

Former chief executive of both companies, businessman Jerry Henchy (48) from Kilmallock, Co Limerick is claiming that, although on paper he was employed solely by Reox after the limited company was “spun out” he continued to be an employee of Dairygold through certain “collateral” contracts.

He is suing Dairygold for €8m in damages arising from his dismissal for “spurious reasons” to do with alleged financial irregularities with his farm account. He is also suing the co-operative for defamation over articles, which appeared in the national and international press subsequently. Dairygold contest all counts.

Under cross-examination from counsel for Dairygold, Paul Gardiner SC, Henchy argued that while on the face of it Reox was an independent company there was a strong inter-dependence between it and Dairygold. “For Reox to succeed Dairygold had to co-operate with Reox and for Dairygold to succeed Dairygold had to co-operate with Reox.”

“You seem to be confusing joint business plans with control. You seem to be suggesting that in fact Reox Holdings was a sham and I should lift the curtain veil and see Reox Holdings as Dairygold” said Mr Justice Daniel Herbert.

Henchy told the court that Dairygold continued to exert control over Reox even after the demerger. Gardiner asked him how this control was exerted. Dairygold did not hold a majority of seats on the Reox board where they made up only four out of nine managers. He asked Henchy to explain how Dairygold exerted this control across the company’s managerial committees. Henchy told him that he was uncomfortable with the suggestion that he was implying there were different camps in Dairygold.

He said that Dairygold had a variety of “levers” to exert their influence. It wasn’t as simple as having more people on the board or on the committees, he claimed. He told the court that Dairygold could use its 29 per cent share stake in Reox to call for a Special General Meeting and stop any move they chose to.

“I’m still waiting to see where he had the contracts of employments with Dairygold,” said Judge Herbert.

“Well you won’t see it with this cross examination”, said Gardiner.

Henchy claims that Dairygold continued to exert undue influence over his Long Term Incentive Plan (LTIP) with Reox Holdings. He said previously that members of the Dairygold board held up the de-merger because they disagreed on the terms of the LTIP despite expert advice.

Gardiner asked him whether he considered a difference of €1.2m in the plan fund to be a minor difference. Henchy told him that the final draft of the plan was drawn up by a reputable firm and Dairygold’s own solicitor had not seen anything wrong with the contentious final draft.

The case continues in November at the Four Courts in Dublin.