The High Court has ordered Werdna Limited to provide €200,000 as security for the costs of two defendants in its action over alleged defects at the Timber Mills development in Artane, Dublin 5.
The order, made under section 52 of the Companies Act 2014, followed an application by MD Insurance Services Limited, trading as Premier Guarantee, and Liberty Syndicate 4472 at Lloyd’s. The court ordered security for their costs jointly. It did not determine the underlying dispute or direct how the security must be provided; the judge said counsel would be heard on that issue.
Werdna’s claim concerns the defendants’ refusal to indemnify the cost of remedying alleged structural defects. The judgment records that Werdna accepted the defendants had a prima facie defence to its claim. The application concerned whether the company would be able to pay their costs if they successfully defended the proceedings.
The defendants relied on Werdna’s accounts, which showed net liabilities of more than €16.6 million in 2016 and liabilities of €16.67 million in figures for the nine months to September 2017. Most of the liabilities were owed to group companies. Werdna argued that those debts were open-ended and offered a group company’s agreement to postpone repayment behind any costs award.
The judge was not satisfied that the proposed postponement adequately protected the defendants. The judgment identifies uncertainty about whether creditors or a liquidator could challenge the arrangement and notes that no evidence was provided about the finances of the company offering it.
Werdna also relied on higher property valuations and a compromise in separate Circuit Court proceedings concerning the development’s management company. The defendants disputed the valuations. The judge said the evidence did not allow the court to resolve the valuation dispute, and noted that Bank of Ireland held security over the company’s properties. The court concluded that the defendants had established Werdna was unlikely to meet their likely costs if they won.
The judge considered Werdna’s objection that the application had been delayed. The court did not find the delay sufficient to refuse security, but treated it as relevant to the amount. It also took account of Werdna’s expenditure of approximately €100,000 in the proceedings before the joint request for security, and the fact that some costs related to the discontinued action against a third defendant.
The defendants’ likely costs were estimated at €330,000 plus VAT. The court set security at €200,000, excluding VAT, and ordered Werdna to provide that amount for the first and second defendants jointly.