The Court of Appeal has dismissed an appeal by Hedgecroft Limited, trading as Beary Capital Partners, against orders requiring it to provide security for costs and striking out its claim against Cantor Fitzgerald Ireland Limited, the third named respondent.
The judgment, delivered by Ms Justice Costello on 27 November 2018, leaves the High Court orders in place. The security amount is to be agreed or fixed by the Master of the High Court. The proceedings are stayed pending provision of that security. The Court of Appeal did not itself set the amount.
The dispute arose from an Asset Purchase Agreement under which Hedgecroft acquired certain assets from the first and second respondents. Hedgecroft alleged breaches concerning fees from a mezzanine-finance project and work connected with NAMA contracts. It claimed damages and valued its claim at €6 million. The respondents denied liability and counterclaimed against Hedgecroft and its principal, Kevin Beary.
The parties accepted for the security application that Hedgecroft had a prima facie case, the respondents had a prima facie defence, and Hedgecroft would be unable to pay their estimated costs if they successfully defended the claim. They also accepted that Hedgecroft had established special circumstances that would ordinarily weigh against requiring security. The High Court nevertheless ordered security after finding that evidence about Hedgecroft’s interest in a property development company had been inaccurate and misleading. The Court of Appeal held that the High Court was entitled to consider that conduct when exercising its discretion, and found no basis to overturn the order.
The appeal court also rejected arguments that the order should be reversed because it might stifle a genuine claim or because the respondents had brought a counterclaim. It said there was no evidence before either court that the security order would prevent the proceedings from continuing. It also upheld the High Court’s direction that the Master fix security by reference to the respondents’ full estimated costs, rather than treating one third of those costs as a usual limit.
The third respondent’s claim concerned alleged interference with Hedgecroft’s economic interests through corporate-finance work for clients connected to the asset sale. The Court of Appeal agreed that the pleadings relied on alleged breaches by the first and second respondents and did not set out an actionable case against the third respondent. No conspiracy plea had been added. The court therefore upheld the strike-out and dismissed the appeal in full.