The High Court has refused an application by Zerko Limited for security for costs in a dispute over repair work at the Ballsbridge Inns and Tower Hotels.
Mavior, an unlimited company registered in Ireland, claims it carried out repair and reinstatement work after the hotels were flooded in October 2011. It says MJBCH Limited, which was managing the hotels under an agreement with Zerko, contracted with Mavior as Zerko’s agent. Mavior claims more than €1 million remains due, or alternatively seeks payment on a quantum meruit basis for work done at Zerko’s request.
Zerko disputes the alleged contractual arrangements and denies that it owes a balance. It accepts that Mavior carried out work from which Zerko benefits and that it made payments for work done, but alleges the work was substandard.
Zerko sought security for its legal costs under Order 29 of the Rules of the Superior Courts and the court’s inherent jurisdiction. It did not pursue its alternative application under section 390 of the Companies Act 1963. The company argued that Mavior was insolvent or would probably be unable to meet an adverse costs order. Its legal costs accountants estimated the cost of defending the claim at €500,000 to €600,000 plus VAT.
Justice Finlay Geoghegan considered earlier High Court decisions on whether an Irish resident plaintiff could be ordered to provide security because of insolvency. She held that poverty or insolvency alone was not a basis for such an order against a resident plaintiff, including an unlimited company. A separate, longstanding jurisdiction may apply where an insolvent person brings proceedings as a nominal plaintiff for someone else, to prevent abuse of process.
The judge concluded that Mavior was not a nominal plaintiff. It was the legal person bringing a claim for work it says it performed, and the cause of action belonged to Mavior alone. The court made no judgment on whether Mavior’s claim was meritorious or whether any sum was owed.
The application for security for costs was refused. The judgment, delivered on 22 November 2012, determined that application only; it did not decide the underlying payment dispute.