The High Court has refused a solicitor’s application requiring a property development company to provide security for his legal costs, citing a 14-year delay in making the application and concerns about his conduct as the company’s solicitor.
The ruling was made by Ms Justice Niamh Hyland on 27 March 2020 in a dispute over a development at Gortnakesh, Co. Cavan. Druminiskin Developments Limited alleges that Kevin O’Gorman acted negligently and breached contractual and fiduciary duties while acting for the company and other plaintiffs. Those allegations remain for trial; the court was deciding only whether the company should have to provide security for costs.
The company’s liabilities were €3,814,998 at the end of 2017, and the judge accepted that it would be unable to meet the defendant’s costs if successful in his defence. She also found that O’Gorman had a prima facie defence based on a 2004 settlement agreement which, if valid, could bar the company’s claim. The judge said the agreement’s legal effect would have to be determined at trial.
However, the application for security was brought in July 2018, more than 14 years after the proceedings began in March 2004. The judge found that the delay had caused significant prejudice: the company had incurred the time and expense of responding to several motions, making discovery and providing particulars before the security issue was raised. The presence of individual co-plaintiffs until 2018 did not, in her view, justify waiting, because most of the claimed losses belonged to the company.
The judge also cited conduct that caused “serious cause for concern.” O’Gorman’s counsel accepted at the hearing that a November 2003 letter to AIB, stating that 20 house sale contracts had been signed, was false. O’Gorman had also accepted that he breached a June 2003 undertaking to the bank concerning the company’s title to the land and the use of loan funds. The judge noted that the company did not then own the site and that the vendor had not obtained title. She also identified a lack of explanation about the undertaking and the settlement of earlier proceedings involving one of the individual plaintiffs.
These were interlocutory observations, the judge stressed, and did not decide the underlying allegations or the case’s outcome. She found that the company had not established on a prima facie basis that O’Gorman’s conduct caused its inability to pay costs. She also rejected the argument that his opposition to an adjournment in 2018 was a special circumstance.
The application for security for costs was refused. The judgment did not determine the company’s underlying claim.