The Court of Appeal has dismissed an appeal by Elvertex Limited, in voluntary liquidation, against an order requiring it to provide security for the costs of Geraldine Lyons in a dispute over the Galleon Restaurant in Salthill, Galway.
The appeal concerned a High Court order made on 11 September 2020 under section 52 of the Companies Act 2014. That order required Elvertex to provide security in an amount to be fixed by the Master of the High Court and stayed further proceedings if it failed to do so. The High Court also ordered the company to pay Lyons’ costs of the motion.
Elvertex claims that it owns the goodwill attached to the restaurant business and alleges that Lyons passed off her business as its own after taking over the premises in 2019. Lyons denies that the goodwill belonged to the company. Her evidence included that the restaurant’s name and reputation predated Elvertex, that she took a lease from the landlords, and that she made clear she was operating the restaurant herself.
The Court of Appeal upheld the High Court’s finding that Lyons had established a prima facie defence. It noted evidence that the restaurant had operated from the premises since about 1965, and that the leases restricted changes to the premises’ external appearance and required the premises to be yielded up when the tenancies ended. The court also noted that goodwill was not listed among the company’s assets in its statement of affairs, and that a 2019 asset sale agreement attributed no value to it. These were findings for the security application, not a final determination of who owns the goodwill or whether passing off occurred.
The court agreed that Elvertex could not meet an adverse costs order and that Lyons had put forward an uncontested estimate of her legal costs of just under €85,000. It rejected the company’s argument that alleged appropriation of goodwill amounted to a special circumstance warranting refusal of security. The company had accepted at the appeal hearing that Lyons was not responsible for its estimated €1.468 million deficit, and the alleged passing off began after the company had ceased trading. The court also found no affidavit evidence that requiring security would actually stifle the proceedings.
The Court of Appeal dismissed the appeal and affirmed the High Court decision. It stated a provisional view that Lyons was entitled to her appeal costs. Either party could seek a short further hearing on costs within 14 days; absent such an application, an order in those proposed terms would be made. The judgment records that Justices Noonan and Ní Raifeartaigh agreed.