The Court of Appeal has dismissed an appeal by IEGP Management Company Limited, which manages the Ivy Exchange development on Parnell Street, Dublin, against an order requiring it to provide security for the costs of an architectural firm being sued over alleged fire safety defects.
The company brought proceedings against ten defendants over the design and construction of the development’s common areas. The architect was engaged on the project principally between 2002 and 2004. The proceedings began in July 2018, about 12 years after construction was substantially completed.
The High Court ordered the company to provide €530,500 in security for the architect’s costs. Half was to cover costs through any contested discovery application, discovery and any mediation; the balance was due before another preliminary application or service of a Notice of Trial. The company appealed the security order and the High Court’s refusal to invite the architect to consider mediation under the Mediation Act 2017.
In a judgment delivered by Ms Justice Costello, with whom Ms Justice Donnelly and Mr Justice Pilkington agreed, the Court of Appeal held that the architect had established a prima facie defence. The court said the six-year limitation period gave the architect an arguable defence because the summons issued in 2018, while the architect’s involvement had ended by 2006. The company argued that damage became manifest in 2018, but had not provided evidence explaining why the defects had not been discoverable earlier. The court stressed that it was not deciding whether the limitation defence would ultimately succeed.
The architect also had a prima facie defence on the scope of its engagement, supported by compliance certificates referring to architectural services at work stages 1 to 5 and identifying another firm as the fire safety design specialist. Those issues remain for determination in the underlying proceedings.
The court also upheld the finding that there was reason to believe the company could not pay the architect’s costs if it successfully defended the case. The company had raised about €1.9 million from unit owners to fund the litigation, but the owners were not obliged to approve a future levy to pay an adverse costs award. The court considered that proposed funding, and the suggested possibility of recovering costs through winding-up, too uncertain to displace that conclusion.
The court found no special circumstances justifying refusal of security. It noted that the company had not argued the order would prevent the litigation from continuing and had lodged the security ordered by the High Court. It also upheld the amount and phasing of security.
The mediation request was premature, the court held, because the claim against the architect remained generic and the issues were not sufficiently defined to assess whether mediation could settle or substantially narrow them. The court said mediation could be revisited once the issues were clarified. It refused the appeal in full. Its preliminary view was that the architect should receive its appeal costs, subject to the company seeking a different order within 14 days.