The High Court has directed Fortberry Limited to provide security for Allied Irish Banks plc’s costs and said the proceedings will be stayed until that security is provided. The amount has not yet been fixed: the parties must calculate it using the court’s directions, and the judge will resolve any dispute.
Mr Justice Dignam delivered the ruling on 15 February 2024 on AIB’s application under section 52 of the Companies Act 2014. The application concerned Fortberry, the first plaintiff, and AIB, the first defendant. James Flynn is the second plaintiff. The action also names Shane McCarthy and Everyday Finance Designated Activity Company as defendants.
The underlying dispute concerns loan facilities, mortgages over three properties and a later transfer of AIB’s interests to Everyday. Fortberry’s claims against AIB included challenges to the appointment of McCarthy as receiver and to the assignment, as well as claims about disclosure of the assignment price and an indemnity. The security application did not decide those claims.
The judge found that AIB had a prima facie defence to Fortberry’s claims that AIB had to let it redeem the debt at the price paid by a third-party assignee, and that the assignment breached contract or duty on that basis. He also found a prima facie case that the assignment to Everyday was valid and that liability arising from the alleged wrongful appointment of the receiver had been assigned to Everyday.
However, the court was not satisfied that AIB had established a prima facie defence to one part of Fortberry’s challenge to the receiver’s appointment. AIB had not produced the mortgage terms and conditions applicable to the Aston House and Bracken Road properties, or explained their absence. The judge said he could not conclude that the appointment complied with those terms. He also rejected reliance on statutory appointment powers because the missing terms meant the court could not determine whether the mortgages varied the statutory conditions. The judge said this did not determine the application overall, given his conclusions on the assignment and the other claims.
Flynn offered an indemnity for any costs Fortberry might ultimately owe AIB. The judge declined to accept it in place of security, citing Flynn’s €2.5 million judgment debt, his personal insolvency proceedings and the absence of evidence that he could meet the indemnity.
For the amount, the judge preferred the evidence of AIB’s costs accountant over Flynn’s estimate. He assessed a seven-day trial as a reasonable estimate, deducted the amount attributed to senior counsel for the security motion, and reduced the remaining figure by 35% to account for Fortberry being asked to secure costs relating to two plaintiffs. The parties were directed to calculate the resulting sum for the order.