Former Nuix CEO dials back claims in court appeal

Nuix has told investors it will continue to fight an appeal by former chief executive Eddie Sheehy for $183m against the tech company.

Former Nuix chief executive Ed Sheehy at court. Picture: Jane Dempster

Former Nuix chief executive Eddie Sheehy has filed his appeal after being dealt a defeat in an attempt to force the ASX-listed tech firm to compensate him for allegedly denying him thousands of shares in the business.

In a market update on Wednesday, Nuix confirmed it had been notified Mr Sheehy had lodged his appeal with the Federal Court, but warned it would continue to oppose the legal action by the former CEO.

Nuix said Mr Sheehy would seek to overturn elements of Justice John Halley’s judgment, which found there was no sale of the business when the company listed on the stock exchange, blocking him from exercising his 453,273 options in the company.

Mr Sheehy will contend Justice Halley was “incorrect in concluding that he was precluded from raising” the matters concerning his options but won’t seek to challenge the finding Nuix engaged in “any oppressive or unconscionable conduct”.

Justice Halley found Mr Sheehy failed to establish “there was any lack of good faith” in dealing with Nuix when he attempted to force the firm to honour his options.

Nuix said Mr Sheehy would also not seek to challenge the finding that even if he were able to make a claim against the company his maximum damages would be capped at $61m.

This is compared to Mr Sheehy’s earlier claims Nuix should pay him as much as $169m plus interest after failing to honour his options agreements.

A key issue in Mr Sheehy’s case was the finding by Justice Halley that although he had been successful in a 2018 case which saw him force Nuix to recognise he held options in the company he had not sought to force them to change the terms of the options.

“Mr Sheehy knew or ought reasonably to have been aware of Nuix’s approach to the effect of the Share Split on options, but he failed to raise in the 2018 Proceedings its application to any exercise of the Remaining 2008 Options and his entitlements under the 2008 Option Agreement,” Justice Halley said.

Mr Sheehy has been contacted for comment.

Nuix has faced a barrage of legal action in recent years since a torrid market launch.

Nuix flagged in its full year earnings it had spent $13.79m on legal bills in the 12 months fending off Mr Sheehy as well as several other cases before the courts.

The Australian Securities and Investments Commission launched action seeking to ban several current and former Nuix board members, alleging they allowed incorrect information to be published to the market.