The High Court dismissed Haulbowline Industry Limited’s application for security for costs in a dispute over land at Passage West, finding that the defendant had not established a prima facie defence to Maulbawn Limited’s claim. The ruling did not decide the underlying claim for possession.
In a judgment delivered on 7 October 2011, Miss Justice Laffoy also extended the time for Haulbowline to deliver a defence by two weeks. She awarded Maulbawn the costs of its motion for judgment in default of defence. The court was to hear submissions on the costs of Haulbowline’s security application.
Maulbawn, which was in receivership, seeks possession of the Passage West premises for its receiver. Its claim concerns a licence that allowed Haulbowline to use the Passage West Docks. Maulbawn says that licence was terminated with effect from 8 October 2010 and that Haulbowline remained in occupation. It disputes the validity of a later agreement said to extend Haulbowline’s occupation, arguing that Maulbawn was not a party and that the agreement lacked consideration and Anglo Irish Bank’s consent. These are pleaded claims, not findings on the final possession dispute.
Haulbowline argued that the 2009 variation continued or extended the original licence, and that the investors had authority to make it. It also argued that the bank had notice of the arrangement and was estopped from challenging it.
The judge rejected those arguments for the purpose of the security application. She said the variation purported to give Haulbowline use of the land for an indefinite period at a peppercorn rent, until the investors paid amounts owed to the Hills. In her view, that would benefit the investors personally without benefiting Maulbawn, the landowner, and was not legally permissible under company law principles. She also noted that the plaintiff’s mortgage prohibited creating rights over the land without the bank’s prior consent, and that there was no evidence of such consent or of conduct establishing estoppel.
The court applied the statutory test for security for costs against a company: the defendant had to show both a prima facie defence and that the plaintiff would be unable to pay its costs if successful. Maulbawn’s receiver accepted that the company was insolvent, and that the insolvency was not caused by the matters in dispute. The judge found the defence requirement was not met, while cautioning that courts should be careful about reaching that conclusion on an interlocutory application.
The judge added that, had a prima facie defence been established, the timing of Haulbowline’s application would not have been a reason to refuse security. She noted that NAMA had approved the application to have the proceedings admitted to the Commercial Court, but said public interest considerations did not supersede the parties’ private law rights.