The High Court has directed Fanplex Limited to provide €670,269.34 as security for Bandan Properties Limited’s costs in their litigation over a planned housing development at Bettystown. The court had not yet settled the deadline for providing security or the final form of the order.
In a judgment delivered on 7 November 2022, Mr Justice Brian O’Moore found that Bandan had shown a bona fide defence for the purposes of its motion under section 52 of the Companies Act 2014. He did not decide the underlying dispute between the companies.
The companies’ May 2018 joint venture agreement concerned acquiring a site, seeking planning permission and developing at least 80 homes. Bandan said it had validly terminated the agreement in October 2020 because it could not secure financing on acceptable terms. It argued that the agreement then ended any further payment liability. The judge found Bandan had provided detailed, plausible evidence about its efforts to obtain finance. He said disputes in the affidavits were not for resolution on this interlocutory motion.
Fanplex was accepted to be unable to meet a costs award at the level claimed or a similar amount. It argued that Bandan’s alleged wrongdoing had caused its financial position and that an offer made alongside the termination notice supported refusing security. The judge found the evidence did not establish that the lost contractual exit option, a possible 35% share of net profits, or claimed management fees had left Fanplex unable to pay costs. He also found the August 2020 offer did not imply that Bandan regarded Fanplex’s claim as meritorious; on the evidence, a sale at the stated reserve could have left no proceeds after repayment of Bandan’s acquisition debt and interest.
The judge assessed Bandan’s likely costs at €670,269.34, applying a 7.5% discount to its costs report. He said the security was set at the full amount because Fanplex had not proposed or evidenced a lower sum that could reasonably protect Bandan. He considered the risk that security might prevent the case from proceeding, but concluded the greater injustice would be Bandan incurring substantial costs and then being unable to recover them if successful.
After announcing his decision, the judge refused Fanplex’s application to submit a further affidavit on the likely costs. He said the motion had concluded and the decision had been given before the application, and that the explanation for not providing evidence earlier did not justify it. The court was to hear the parties on 8 November 2022 about the deadline and precise terms of the order, the costs of the motion and any other relevant matter. The judgment did not determine what would happen if security was not provided.