The High Court has fixed security for costs of €350,000 to be provided by Clarksville Limited, the landlord, and €200,000 to be provided by Instant Upright Limited, the tenant, in a dispute over a commercial lease and storm damage to the premises.
Mr Justice Twomey delivered the judgment on 12 November 2021. The applications concerned security for the landlord’s claim against the tenant and for the landlord’s defence of one part of the tenant’s counterclaim. The court did not decide the underlying lease dispute or the merits of the counterclaim.
The tenant’s counterclaim included allegations that the landlord failed to reinstate the premises after a 2018 snowstorm, that the landlord’s interim Mareva injunction was unjustified, and that the building had defects dating from its design or construction in 2000 or 2001. The landlord sought €200,000 security for defending the pre-lease defects claim. The tenant conceded that the landlord had a prima facie defence to that part of the counterclaim.
The court found reason to believe the tenant would be unable to pay the landlord’s costs if it lost that claim. The tenant’s financial controller had sworn, in support of the tenant’s own security application, that it could not provide €350,000 or €200,000 security. The court considered that evidence more significant than the tenant’s older accounts, which showed net assets of €4.8 million at the end of 2018. It found the tenant’s internal forecast of future profits, prepared for its bankers, insufficient evidence that its position would improve. The forecast assumed the tenant would successfully defend the proceedings and did not account for the costs it might owe its own lawyers if it lost.
The court rejected the tenant’s arguments that the withdrawn injunction application and an error in the landlord’s original pleading about ownership of the premises amounted to special circumstances against security. It also accepted that the pre-lease defects claim could be heard separately from the other parts of the dispute. It therefore ordered the tenant to provide €200,000 security for the landlord’s costs of defending that claim.
The landlord had agreed to provide security for the tenant’s claim, leaving the amount in dispute. Although the tenant later sought €1,011,403, the court fixed the amount at €350,000. In reaching that figure, it excluded €218,862.74 claimed for costs covered by an earlier order concerning the withdrawn injunction proceedings. The court said those costs belonged to a previously determined part of the litigation and should not be included in security for the substantive proceedings. It also considered concerns about costs attributed to the counterclaim, apparent double counting and a mediation-fee estimate.
The court asked the parties to try to agree outstanding matters. If necessary, the case was provisionally listed for mention one week after judgment, at 10.45 am.