The Court of Appeal has dismissed Fortberry Limited’s appeal against an order requiring it to provide €198,147.40 as security for Allied Irish Banks plc’s costs. The court affirmed the High Court order, finding that the Bank had a prima facie defence to Fortberry’s action and that there was no basis to interfere with the amount set. The appeal concerned security for costs; the court did not determine the underlying claims at trial.
Fortberry had borrowed from the Bank in 2007 and 2008. The loans were secured by mortgages over two properties owned by Fortberry and one owned by its director, James Flynn, and by Flynn’s personal guarantee. The mortgages were executed in May 2016. After Fortberry defaulted, the Bank obtained judgments against the company and Flynn in April 2016, and enforcement was stayed on terms that the security would be put in place.
The Bank appointed, or purported to appoint, Shane McCarthy as receiver over the properties in October 2016. It later assigned, or purported to assign, the loans and security to Everyday Finance DAC. Fortberry and Flynn claimed that discussions with Everyday led to a written agreement in March 2021 to settle the loans for €2.6 million. They sought specific performance of that alleged agreement and other relief, including disclosure of the assignment price. Fortberry also claimed the Bank should have given it an opportunity to redeem the loans at the price Everyday paid.
The Court of Appeal said the pleaded claim did not challenge the assignment’s validity on the grounds Fortberry later raised, such as alleged defects in the transfer documents. The claim against the Bank was that Fortberry had not been given an opportunity to redeem at the price paid by Everyday. The High Court had found the Bank had a prima facie defence to that claim, and Fortberry did not appeal that conclusion.
The appeal also concerned the Bank’s defence to Fortberry’s challenge to McCarthy’s appointment. The Court of Appeal held that the High Court had set the evidential bar too high on whether the Bank had prima facie authority to appoint a receiver under the mortgages and statute. It concluded there was a reasonable prospect of the Bank establishing that it had the right to appoint a receiver following default. The court also held that the High Court had erred in finding that Everyday had assumed liability for any wrongful conduct by the Bank relating to the appointment, but said that error did not affect the appeal’s outcome.
The High Court had set security at €198,147.40 after reducing the Bank’s costs estimate by 35%. The Court of Appeal rejected Fortberry’s challenge to that amount and dismissed the appeal. The Bank was presumptively entitled to its appeal costs. Fortberry was given 14 days to file a written submission on any different costs order; the Bank could respond within the following 14 days.