The Court of Appeal has allowed an appeal by Mary and Joseph O’Brien Developments Limited (In Liquidation) against an order requiring it to provide €74,800 in security for the costs of a defendant in ongoing proceedings over two properties in County Galway.
In a judgment delivered on 9 May 2016, Ms Justice Irvine said the High Court had erred in granting the security order because Robert Sobol and Mary O’Brien Sobol’s co-defendant, Anthony Allen, had not put forward evidence showing a prima facie defence to the company’s claim. The appeal concerned the amount measured by the High Court Master in May 2014, following a 2012 order that the company provide security or face a stay of proceedings.
The company, which entered voluntary liquidation in April 2012, says it funded the purchase of two properties registered in the names of the first and second defendants. Its liquidator relied on a 2007 bank loan sanction letter addressed to the company and a company bank statement, and said €492,500 had been advanced towards the properties. The company seeks a declaration that Allen’s judgment mortgage over the properties is subject to its earlier unregistered interest, or that the properties are held on trust for the company.
Allen had obtained a €200,000 judgment, plus costs, against the company and the first and second defendants in 2012 over alleged unpaid wages and bonuses. He registered the judgment as a mortgage against the properties and sought to have it declared well charged on them. That proceeding and the company’s claim about the properties remain distinct from the security-for-costs application considered on appeal.
Irvine said Allen’s affidavit relied on his judgment and registered mortgage, the defendants’ registered ownership, and the absence of a written instrument supporting the company’s claimed interest. But he did not challenge the liquidator’s evidence about the loan and purchase, or provide evidence supporting another defence. The court said the existence of a judgment mortgage did not itself establish a defence to the company’s claim about priority.
The appeal dealt only with whether Allen had shown a prima facie defence, one of the requirements for security for costs. The company did not pursue its other arguments on special circumstances. The court did not decide the underlying property dispute or finally determine priority between the competing interests. It allowed the appeal because Allen had not met the evidential threshold for security. The judgment does not state the precise consequential order made after allowing the appeal.