The High Court has ordered Leftbrook Ltd, a company in voluntary liquidation, to provide security for the defendant’s costs as its contract claim proceeds. The order concerns costs if the defendant succeeds in defending the case; it does not decide the underlying claim.
Leftbrook sued Canice Nicholas over a 2007 agreement concerning the sale of a licensed premises on Main Street, Cavan. The judgment says Nicholas was to buy shares in a new company for €3.5 million, and Leftbrook was to seek tax clearance. The parties envisaged a January 2008 closing, with Leftbrook continuing to operate the premises for ten months after the transfer.
Nicholas sought security for costs under section 390 of the Companies Act 1963 and Order 29 of the Rules of the Superior Courts. His application relied on evidence that Leftbrook had entered creditors’ voluntary liquidation in April 2010. A statement of affairs estimated a deficit of about €5.3 million and said assets valued at about €6.45 million were expected to realise nothing.
Leftbrook argued that the defendant’s alleged breach had caused its inability to pay costs. Its liquidator said the breach meant the company could not pursue rights connected with a separate development project at Stradbally, County Laois. The company also raised delay, but the court found Nicholas had acted promptly after learning of the liquidation. Leftbrook did not pursue its argument that an order would prevent access to the courts.
The judge accepted on a prima facie basis that Nicholas had breached the agreement by failing to complete. But the court said the material did not sufficiently analyse the losses said to flow from that breach or explain the company’s deficit. The claimed loss of an opportunity connected with the separate Stradbally transaction was too remote on the evidence presented. The judge also said Leftbrook had not addressed the €1 million deposit paid by Nicholas.
The court concluded that Leftbrook had not established special circumstances warranting refusal of security. It directed the company to provide security for costs. The judgment does not specify an amount or manner of security, and leaves the substantive dispute for the trial court.