The Court of Appeal has overturned an order requiring two property companies to provide security for the costs of two engineering firms defending a dispute over piling works at a Drogheda development.
The appeal concerned a preliminary application under section 390 of the Companies Act 1963. The Court did not decide whether either side was liable for the problems at the site. It allowed the companies’ appeal and refused to order security for costs.
Paulson Investments Ltd., which owned the Dyer Street site, and Albert Enterprises Ltd. claim that piling works begun in 2001 contributed to ground movement and prevented construction of a planned basement. They seek about €2 million for wasted professional fees and about €22 million for the reduced capital value of the development that was built instead. Jons Civil Engineering Ltd. and specialist contractor P.J. Edwards & Co. Ltd. dispute liability. The judgment records competing positions about who engaged Edwards, whether ground conditions were unforeseen, and whether the companies or an individual contracted with Jons.
The High Court had ordered security after finding that the defendants had each shown a prima facie defence. On appeal, the court considered whether there was an evidential basis for a reasonably sustainable defence, as well as whether special circumstances justified withholding security. It stressed that this was an interlocutory assessment, not a trial of the underlying claims.
The appeal court found evidence of poor workmanship by Edwards, including auger withdrawals described as highly undesirable, and concluded that Edwards had not established a preliminary defence on workmanship. It also rejected Jons’ reliance on the “Norta Wallpapers” defence as a builder, while noting that other issues—including causation, the legal scope of a duty of care and whether there was damage to other property—remained open and finely balanced. The court did not resolve the competing evidence about ground conditions or the contracting parties.
After the appeal hearing, the companies lodged €500,000 to the credit of the action. The judgment said that amount was below the defendants’ estimated combined trial costs of €1,553,983.73 plus VAT, but was a significant contribution.
The court treated the complexity of the factual and legal issues, the failure to establish a preliminary defence on key points, and the lodgement as special circumstances under the 1963 Act. It therefore allowed the appeal and refused the security-for-costs order. It made no ruling on the underlying liability claims and considered it unnecessary to express a view on the companies’ argument that delay in seeking security was excessive.