The Court of Appeal has stayed Rayan Restaurant Limited’s appeal against the dismissal of its professional negligence proceedings until it provides security of €40,528.50 for each of the two respondents’ costs.
The order, made on 9 November 2015, followed applications by solicitor Gerald Kean and counsel Francis McGagh under section 390 of the Companies Act 1963. The court was considering whether security should be required while Rayan’s appeal remained pending. It did not determine the appeal itself.
Rayan alleges that Kean and McGagh negligently represented it in proceedings over the forfeiture of a commercial lease for premises at High Street, Athlone, and in a previous application for security for costs. Rayan says their alleged failures contributed to its loss of the premises and the dismissal of an earlier appeal. Those claims remain allegations in the proceedings.
The High Court had dismissed Rayan’s professional negligence case in June 2013, finding some aspects of the claim frivolous and vexatious and others bound to fail. Rayan appealed that order. The respondents argued that they had a prima facie defence to the appeal, that Rayan could not meet a costs order if unsuccessful, and that no special circumstances justified refusing security.
The Court of Appeal accepted that Rayan would be unable to pay an adverse costs order. It said the respondents had established a prima facie defence to the appeal, relying in part on the High Court judgments and evidence before it. The remaining issue was whether Rayan had shown that special circumstances should prevent an order for security.
Rayan argued that the respondents’ alleged wrongdoing had caused its financial inability to pay. The court said Rayan had not produced evidence showing the losses caused by the alleged negligence or that, without it, the company would have earned enough to meet the respondents’ likely costs. It also considered an accountant’s evidence that Rayan’s liabilities exceeded its assets before the lease was forfeited and that the company would be unable to meet costs estimated at €40,528.50 for each respondent.
The court therefore ordered that the appeal be stayed until Rayan provides €40,528.50 in security for each respondent. The judgment does not resolve the professional negligence allegations or the merits of Rayan’s appeal.