The High Court has ordered Connective Energy Holdings Limited to provide Energia Group ROI Holdings DAC with €370,919 as security for costs in their contract dispute. It rejected Connective’s proposal to secure the amount with a charge over a residential property in Donegal, ruling that security must be provided in cash or by bond.
The order was made by Mr Justice Twomey on an application by Energia, before the underlying dispute has gone to trial. Connective does not dispute that it should provide security for Energia’s estimated trial costs, but the companies disagreed on the amount and form. The court did not decide whether Energia breached the contract or owes the disputed consideration.
The dispute concerns a share purchase agreement dated 31 May 2018. Connective says payment of €3 million in deferred consideration depended on a bioenergy facility reaching a takeover date, which did not happen after Energia terminated an engineering, procurement and construction agreement. Connective argues that Energia was required to arrange an alternative contractor before ending that agreement. It also pleads that the contract should be rectified to reflect the parties’ common understanding, or that Energia misrepresented whether the payment would be due. Energia says the conditions for payment were not met. These are the parties’ claims, not findings on the merits.
The parties’ costs experts offered sharply different estimates, which the judgment attributed principally to different assumptions about trial length. Energia sought security based on a four-week hearing plus two further days for judgment and costs. Connective’s estimate assumed a 7½-day hearing. The judge considered the case’s five trial issues, including contract interpretation, rectification, alleged misrepresentation and whether the agreement’s termination was contrived. He concluded that the dispute should be capable of being heard within 7½ days and that its €3 million value did not, by itself, justify more court time. He also rejected the proposed allowance of two full days for post-judgment work.
The court adopted the lower of Connective’s estimates, €443,930 including VAT, then added €12,300 including VAT for costs Energia incurred before filing its security motion. It fixed the security at €370,919 excluding VAT, stating that this was the amount sought on Energia’s behalf because it was registered for VAT.
The judgment also rejected Connective’s proposal to provide security through a first charge over a property valued at €350,000. The judge cited the property’s illiquidity and uncertain value, among other practical risks, and held that cash or a bond would provide better security. The order directs the parties to try to agree outstanding matters and submit any draft order to the Registrar. The judgment does not resolve the contract claim.