The High Court has ordered Fides Capital Limited to provide €91,500 security for Alchemy Projects Limited’s costs in a contract dispute, and stayed the proceedings until the security is provided in a form to be determined after further submissions from the parties.
In a judgment delivered on 5 May 2017, Mr Justice Max Barrett found that Alchemy had established a prima facie defence and that Fides was unlikely to be able to pay Alchemy’s costs if it lost. The court stressed that it was expressing no view on whether the defence would ultimately succeed.
Fides claims it was retained to provide professional services to Renewable Energy Dynamic Holdings Limited for the benefit of its shareholders, including Alchemy. It seeks specific performance or damages, alleging breach of contract, and relies on a purported Financial Advisory/Executive Services Agreement dated 12 August 2010. Alchemy denies that the agreement was made on the alleged terms or at all.
Alchemy argued that the agreement depended on a proposed purchase of Renewable Energy Dynamic Holdings by Enervest Capital Limited, which did not proceed, and that a later “roll-in” arrangement did not trigger the fee clause. The court said the denial of the agreement, the argument that conditions for the clause had not occurred, and planned expert evidence supporting that position together established a prima facie defence.
The court said Fides’ latest filed accounts did not indicate that it could meet likely costs, which were expected to reach hundreds of thousands of euro for a three to four day trial. Alchemy estimated recoverable party-and-party costs of €274,500. Fides had offered a personal guarantee of €91,667 from Mr McCann, but the court had no evidence of his ability to pay and considered a third-party guarantee unsuitable as a substitute for security from the plaintiff company.
Fides argued that its financial position resulted from Alchemy’s alleged wrongdoing and also relied on the guarantee as a special circumstance. The court found the guarantee point unpersuasive. It also said there was no trading history before it to support Fides’ claim that Alchemy’s work had prevented it from taking on other valuable work.
The court set security at one-third of Alchemy’s estimated costs, or €91,500. It said that amount balanced the need for meaningful security against avoiding an indemnity for all costs or an obstacle to a fair hearing. The form of security remains to be decided after the parties are heard further. The underlying contract dispute was not resolved by this application.