The High Court has refused Garlin Investments ICAV’s application to require Atin Investments Limited to provide security for its costs in a dispute over the termination of a consultancy contract. The court did not decide the underlying claims, and left the costs of the application open for further submissions.
Atin says Remcoll Capital Limited terminated a service agreement in April 2020 and failed to pay sums due. It claims more than €383,000 plus VAT and alleges that Garlin induced Remcoll to breach the agreement. Garlin disputes liability. The application before Mr Justice Cian Ferriter concerned whether Atin should have to secure Garlin’s legal costs if Garlin successfully defended the claims against it.
The judge found that Garlin had established a bona fide defence on a prima facie basis to both the contract claim and the alleged inducement of breach. He also accepted evidence that Garlin’s likely defence costs were €161,445. Atin’s 2020 accounts showed net assets of €163,678, but most of the recorded assets were sums claimed in the proceedings. The judge held that disputed claims could not be counted as available assets once Garlin had shown a prima facie defence to them. He concluded that Atin was unlikely to be able to meet Garlin’s costs if it lost.
The application was nevertheless refused because the judge found a special circumstance. Atin argued that its financial position resulted from Garlin’s alleged wrongdoing and that the sums claimed, if recovered, would cover Garlin’s likely costs. The judge considered that Atin had made out a prima facie case that its alleged loss was causally connected to the termination. He also found the contract claim against Garlin arguable, despite describing it as thin. Together, those points met the applicable threshold for refusing security.
The ruling addresses only Garlin’s security application; it does not establish that Garlin or Remcoll breached the contract or caused Atin’s losses. The judge’s provisional view was that the application’s costs should be costs in the cause, but he listed the matter for 20 June 2022 to hear any submissions seeking a different order.