The High Court has ordered Salthill Properties Limited to provide security for the costs of Royal Bank of Scotland and First Active if the banks successfully defend the company’s proceedings over a 2008 property refinancing. The order is to operate in two stages, with the amounts to be fixed after Salthill has an opportunity to submit evidence on costs. The court refused to order security from co-plaintiff Brian Cunningham personally.
The proceedings concern the sale of a property at Baily Point, Salthill, County Galway. Salthill and Cunningham allege that the banks and purchaser Bernard Duffy arranged for the banks to receive a share of profits connected with the sale without accounting for it to Salthill. They seek to set aside the sale, damages and an account. Cunningham also seeks a declaration concerning assessment of any liability under his limited personal guarantee for Salthill’s debts.
The banks applied for security for costs. In relation to Salthill, the judge found its inability to pay the banks’ costs was not disputed and that the banks had established a prima facie defence. The court said an earlier decision had found Salthill had not established a prima facie case on the evidence then available, while leaving open the possibility that evidence from discovery or other pre-trial steps might change that position.
The judge rejected Salthill’s arguments that Cunningham’s presence as a co-plaintiff, the banks’ alleged conduct, or the public importance of the case amounted to special circumstances against security. The judgment said there was no evidence that Cunningham would be a “good mark” for costs, and referred to earlier costs judgments that the sheriff had been unable to enforce. It also found Salthill was already significantly insolvent by the time of the events underlying these proceedings. The case, the judge said, turned on the facts rather than a major principle of banking law.
The court directed that an initial sum be provided promptly and a further sum within six weeks after discovery is delivered to Salthill, unless the court allows more time. The judgment said the proceedings against Salthill would be struck out automatically if security was not provided by the applicable deadlines. It left the amounts to be determined after Salthill had an opportunity to file costs evidence.
As to Cunningham personally, the judge concluded that the law did not provide jurisdiction to order security against an individual resident in Ireland or a country covered by the Brussels Regulation. The judgment therefore refused that part of the banks’ application. This ruling determined the security applications; it did not decide whether the alleged profit arrangement occurred or whether the plaintiffs are entitled to the substantive relief they seek.