The High Court has refused an application by the National Sports Campus Development Authority for security for costs in a damages action brought by Dublin Waterworld Limited over a €10 million VAT claim. The court also ordered the company to disclose anyone who had agreed, or indicated a willingness, to fund the litigation, directly or indirectly.
The ruling concerns only the Authority’s application under section 390 of the Companies Act 1963. Mr Justice Max Barrett said views in the judgment about the strength of either side’s case were tentative. The underlying claims have not been decided.
Dublin Waterworld’s action arises from a dispute over VAT on a 30-year lease of the National Aquatic Centre. The company alleges, among other things, abuse of civil process, interference with its business and economic interests, and breach of contract and other duties. The Authority denies the claims, denies that it acted without reasonable cause or with improper intent, disputes that the company suffered the losses claimed, and says the action is statute-barred.
The dispute followed an invoice for €10 million in VAT issued by Campus and Stadium Ireland Development Limited, the Authority’s legal predecessor. An arbitrator initially found that the sum was due. The Supreme Court later overturned the High Court decision upholding that award, holding that a valuation of the lease was evidence relevant to whether the VAT calculation rules could be used. After a second arbitration was contemplated, the Authority said in July 2010 that it would not contest the matter further, agreed to pay reasonably incurred costs of the first arbitration and withdrew a statutory demand notice.
For the security application, Dublin Waterworld accepted that the Authority had a prima facie defence and that the company could not meet the Authority’s costs if it lost. The judge therefore considered whether special circumstances justified refusing security. He found that the company had shown, on a prima facie basis, that its inability to pay was connected to the alleged wrongdoing and identified a public interest in the dispute proceeding. Those assessments were made for this application; they do not establish liability or the amount of any loss at trial.
The court declined to make an order under section 390. It separately directed Dublin Waterworld to disclose any person who had agreed or indicated willingness to fund any part of the proceedings. The judgment does not determine the damages action.