The High Court has ordered Be-Spoke Capital AG to provide €750,106 in security for costs to Altum Capital Management LLC while Be-Spoke’s contractual claim proceeds. Mr Justice Brian O’Moore made the order on 28 July 2022 after finding that Altum had shown a bona fide defence and that Be-Spoke had not established special circumstances to avoid security.
The amount is 90% of the €833,451.67 estimate put forward by Altum’s costs accountant. The judge preferred that estimate over Be-Spoke’s €477,850 estimate, but reduced it by 10% to account for reservations about some of the figures and the possibility that costs would be reduced on assessment. VAT was not chargeable on the fees. The court declined to stagger the security, finding the case did not have the level of complexity that would justify such an arrangement. It left the precise form of the order for a later hearing with the parties.
Be-Spoke’s claim concerns a Bad Performance Notice issued by Altum on 6 August 2021 in relation to a shareholder identified in the judgment as LSO. Be-Spoke alleges the notice was unlawful and says it led to the cancellation of warrants connected to shares in an Irish company. Its pleaded case includes implied terms limiting Altum’s contractual discretion. Those allegations remain to be decided at trial; the security ruling did not determine the merits of the underlying claim.
The parties agreed that Be-Spoke was unable to pay Altum’s costs if Altum successfully defended the proceedings and received a costs award. They disputed which legal test applied because Be-Spoke is a foreign limited liability company. The judge held that the court should consider the factors used for security applications against Irish limited companies under section 52 of the Companies Act 2014. He found Altum had made out a prima facie defence on the evidence and on the contested implied terms.
Be-Spoke argued that Altum’s alleged wrongdoing had caused its inability to pay, pointing to the value of the cancelled warrants and possible additional funding. The judge found that the valuation evidence relied mainly on a fund’s valuation of the Irish company and the opinion of Be-Spoke’s major shareholder, without adequately addressing matters including the warrants’ transfer restriction. He concluded that Be-Spoke had not established this special circumstance on a prima facie basis.
The court also rejected Be-Spoke’s argument that its claim raised a point of exceptional public importance and found that the order was not likely to bring the action to an end. Be-Spoke’s counsel had said the claim “may be stifled” by the full amount sought, but did not say it would not proceed.