The High Court has refused Ballycrag Developments Limited’s application to require Orca Financial Limited to provide security for costs in a €698,000 dispute over fees for arranging loan funding.
Mr Justice Eagar delivered the judgment on 17 November 2016. The application was made under section 52 of the Companies Act 2014 and/or Order 29 of the Rules of the Superior Courts. The judge refused the application; he did not decide the underlying claim for fees.
Orca began the proceedings with a summary summons seeking payment for work sourcing and raising funding to help buy and develop residential sites for Ballycrag or special purpose vehicles it owned and controlled. After a motion for summary judgment was adjourned by consent for a plenary hearing, Orca filed a statement of claim. Ballycrag’s defence denied that it owed the claimed sum and denied that agreements existed.
Orca’s counsel accepted that Ballycrag had established a prima facie defence, meeting the first part of the legal test for security for costs. The remaining issue was whether Ballycrag showed that Orca would be unable to pay its costs if Ballycrag succeeded in defending the claim. The court had to assess the position at the expected end of the proceedings, which it said were unlikely to finish before October 2017.
Ballycrag relied on accountant Kieran Wallace’s review of Orca’s filed accounts and his view that its available funds would not cover an estimated €150,000 to €200,000 in costs. Wallace cited net current liabilities of €468,000 in 2014 and questioned the basis for valuing Orca’s goodwill and future income.
Orca’s director Stephen Byrne and accountant James O’Hanlon argued that the accounts did not capture the value of the company’s recurring business or its expected trading position. O’Hanlon valued Orca’s renewable business at €936,000 and said the company was solvent and capable of meeting an order for costs. Byrne also cited recurring income and expected receipts, including a one-off fee said to be due by March 2016.
The judge said Wallace’s assessment was incomplete and did not address Orca’s future income streams. He noted that Orca was solvent and its Central Bank authorisation was monitored and reviewed annually. Applying the required balance between a defendant’s potential costs recovery and access to justice, the court was not satisfied Ballycrag had proved Orca would be unable to pay. It therefore refused to order security for costs.