The High Court refused an application by the Neville defendants for security for costs in a dispute over the management of common areas at the Pebble Beach holiday-home development in Tramore, County Waterford.
The application was brought under section 52 of the Companies Act 2014. Mr Justice Noonan said the defendants had shown a prima facie defence to the management company’s claim. The company alleges that the defendants failed to maintain the estate’s common areas, collect adequate management charges, establish a sinking fund and properly manage its finances and administration. The defendants deny the claim and say, among other things, that they spent their own money maintaining the common areas and that the owners would ultimately have to fund any repairs in any event. Those issues were not decided in this application.
The judge also found that the company appeared unable to pay the defendants’ costs if they succeeded at trial. Its accounts showed about €140,000 in unpaid service charges and less than €8,000 in its bank account. The court considered collection of the arrears uncertain and a special levy on owners unrealistic. The defendants estimated their likely costs at €244,461.50; the company presented no countervailing evidence on that estimate.
The application nevertheless failed because of delay and prejudice. Almost two and a half years passed between delivery of the statement of claim and the security application. The judge described the defendants’ approach to the proceedings as dilatory and said they had offered no good explanation for waiting. They had received the detailed claim in April 2015, but did not seek security until July 2017.
The judge said the company had been allowed to pursue the case and incur significant costs while unaware that security would be sought. If an order for security prevented the case from proceeding, that time, effort and expense could be lost. Restricting security to the defendants’ future costs would not remedy that prejudice. The court considered that the company was entitled to decide whether to continue with the proceedings with timely knowledge that security was being sought.
The court therefore refused the application. It did not determine the underlying allegations or the defendants’ ultimate liability.