The High Court dismissed Habbingley Limited’s application for security for costs against ABM Construction, an unlimited company, in a dispute being arbitrated over construction work at Mullingar Retail Centre.
The application was brought under section 22 of the Arbitration Act 1954. The court considered whether it could order security under section 390 of the Companies Act 1963, Order 29 of the Rules of the Superior Courts, or its inherent jurisdiction. The judge said section 390 did not apply because it provides for security against a limited company, and the respondent accepted that ABM Construction was not a limited company.
Order 29 can apply to a corporate claimant that resides outside the jurisdiction, but the court found that this prerequisite was not met. The evidence showed that ABM Construction was registered in Ireland, had its registered office in Swords, County Dublin, and that its directors and secretary resided in Ireland. The court also noted that the company’s central control and management, accounts, tax and statutory filings, and substantial construction work were in Ireland. Its shares were held by two companies incorporated in the Isle of Man, but that ownership did not establish that ABM Construction itself resided outside the jurisdiction.
The judge also rejected the respondent’s reliance on the court’s inherent jurisdiction. She concluded that creating a parallel power to order security against an unlimited company would encroach on the role of the legislature or the body responsible for court rules.
The arbitration concerned a 2004 contract for construction work, including renovation and extension of existing buildings, at Mullingar Retail Centre. ABM Construction claimed more than €1.6 million, excluding VAT, plus interest and damages for breach of contract. Habbingley pursued a counterclaim for liquidated and ascertained damages and counter charges exceeding €4.8 million. For the security application only, ABM Construction acknowledged that Habbingley had a prima facie defence; the parties also agreed that the estimated cost of defending the claim in arbitration was €450,000, excluding VAT.
The judge made observations about the financial evidence but said the question was not necessary to decide. She noted that ABM Construction had provided audited accounts, redacted bank statements showing credit balances totalling almost €3 million as of 1 November 2011, and accountant evidence of net assets of almost €5 million at 31 October 2010. A respondent-side accountant’s analysis put net assets at €1.98 million as of 30 September 2011, while raising questions about the recoverability of some debtor balances. The judge said that, if the issue had arisen, she would have inclined to the view that the respondent had not established a reason to believe ABM Construction would be unable to pay a costs order.
The court dismissed the application. It did not decide what test would apply to an application under a jurisdiction the respondent could invoke, or order security for costs. The arbitration was described as ready for hearing but delayed pending the application.