The High Court declined to order Valebrook Developments Limited (in receivership) to provide a second set of security for costs in its loan dispute with Keelgrove Properties Limited, subject to Valebrook giving an undertaking that existing security in related proceedings would remain available to Keelgrove if needed.
Valebrook claims €474,878.23, plus interest, for money it says it lent to Keelgrove. Keelgrove does not dispute that the money was advanced or is owing, but argues that a shareholders’ agreement means repayment is not yet due. It says repayment depends on the joint venture project being abandoned, completed profitably or refinanced. The court described this as a prima facie defence; it did not decide whether that interpretation was correct.
The dispute over who beneficially owns the Cunningham side’s 50% shareholding in Keelgrove is being addressed in separate proceedings brought by Valebrook against Brian Cunningham. Cunningham had already obtained security for costs in that case, and the security had been provided. Valebrook offered to make that security available to Keelgrove if it was not called on in the Cunningham case.
Justice Clarke accepted that Valebrook could not meet Keelgrove’s costs if Keelgrove won. Although the loan appeared as owing in company records, the judge said it was unclear whether those funds could be used to pay costs if a finding in Keelgrove’s favour meant the loan was not yet immediately repayable. Using a set-off could effectively force repayment earlier than the court had found was due.
The judge considered whether requiring two sets of security would be unjust where the claims made it highly improbable that both Cunningham and Keelgrove could succeed. The court did not make findings on the underlying ownership or loan issues. It concluded that one set of security could be available to whichever defendant ultimately obtained a costs order.
The proposed undertaking would prevent Valebrook from securing release of the existing security without a further order in these proceedings, and would make it available to meet any costs awarded to Keelgrove if it was not called on in the Cunningham case. The court’s conclusion not to order further security was expressly subject to Valebrook being able to give an undertaking on those terms.