The High Court has proposed ordering Savanne Limited to provide €162,996 as security for costs in its action against Irish Bank Resolution Corporation (in special liquidation), formerly Irish Nationwide Building Society, and Michael Fingleton. The action is to be stayed pending lodgement of the security, which the court said should be provided within eight weeks of perfection of the final order.
In a judgment delivered electronically on 29 July 2021, Mr Justice Barr found that the bank had established that Savanne would likely be unable to meet an adverse costs order and that the bank had a prima facie defence. Savanne did not seriously dispute those two elements. The issue was whether it had shown special circumstances that should prevent security being ordered.
Savanne argued that the bank had delayed about five years after filing its defence before first requesting security, and that its financial difficulty resulted from the bank’s alleged wrongdoing. Its underlying claim alleges that the bank failed to maintain a hotel and a bar, and sold them at an undervalue. The bank denies mismanagement and undervaluation, and says the properties were sold at values advised by an independent estate agent. Those claims have not been determined in this application.
The judge held that the relevant period ran from the bank’s defence, filed on 17 February 2014, to its first request for security on 12 June 2018. He concluded that the delay did not justify refusing security in the context of the litigation. Savanne had itself taken years to serve a completed statement of claim and to reply to a notice for particulars. The bank had also pursued an application to strike out the action for want of prosecution, which was initially granted by the High Court Master and later set aside on appeal. The judge noted that Savanne had incurred no significant costs in the relevant period apart from its discovery motion, which it did not proceed with, and the costs of resisting the strike-out application. Security would cover costs likely to be incurred from the first request onwards.
The court also found no evidence that the bank’s alleged wrongdoing caused Savanne’s inability to pay costs. The judge said the allegations of mismanagement and undervaluation were unsupported by evidence in this application, and that the bank’s evidence about the company’s finances had not been contradicted. Even if Savanne recovered about €1.6 million, the judge said, outstanding investor loans would leave it insolvent.
The judgment stated that the parties had four weeks to make brief written submissions on the terms of the final order, costs and any other arising matter. The proposed security order was therefore subject to the final order being settled.