The Court of Appeal has dismissed Welcome Ireland Hospitality Limited’s appeal against an order requiring it to provide €150,000 security for the legal costs of Cedarcourt Developments Limited if Cedarcourt succeeds in the underlying case.
The appeal concerned a High Court order made on 27 November 2017. The parties accepted for the appeal that Welcome was unable to pay Cedarcourt’s costs, that Cedarcourt had a prima facie defence, and that the only issue was whether special circumstances justified dispensing with security for costs.
Welcome argued that its financial position resulted from Cedarcourt’s alleged wrongdoing. The dispute stems from a June 2017 option to lease premises at Cedars Hotel in Rosslare. Welcome says it intended to use the premises as an emergency reception and orientation centre for asylum seekers. The underlying claim, originally seeking specific performance, had become a claim for damages instead. Whether the agreement restricted use to a hotel, and whether the intended use was contemplated by the parties, remained substantive issues in the case.
Welcome’s director, Daniel Hughes, said the company lost €1.24 million after Cedarcourt refused to execute a lease. He said Welcome had been negotiating with the Department of Justice to operate an accommodation centre, with a proposed payment of €32.50 per person per night for at least 90 people. The discussions contemplated an initial two-year term and a possible further two-year extension, but the court noted that no concluded agreement had been reached.
Delivering judgment on 17 December 2019, Ms Justice Baker said a company resisting security for costs on the basis that alleged wrongdoing caused its inability to pay must provide credible evidence of that causal link. The court found the material did not meet even the initial, prima facie threshold. The accountant’s letter said Hughes’s projections were not unreasonable but did not give a positive assessment of the figures or explain their basis. The evidence also lacked detail about the costs and feasibility of meeting regulatory requirements for the proposed centre.
The court said the High Court judge had been correct to reject the special-circumstances argument and dismissed the appeal. The decision concerned the security-for-costs application; it did not determine the parties’ underlying dispute over the lease or Welcome’s damages claim.