Mavior -v- Zerko Ltd, [2012] IEHC 471 (2012)

Docket Number:2012 3956 P & 2012 85 COM
Party Name:Mavior, Zerko Ltd
Judge:Finlay Geoghegan J.
 
FREE EXCERPT

THE HIGH COURT

COMMERCIAL[2012 No. 3956 P]

[2012 85 COM]

BETWEEN

MAVIORPLAINTIFFAND

ZERKO LIMITEDDEFENDANT

JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 22nd day of November, 2012

  1. The defendant in the motion sought an order that the plaintiff give security for costs pursuant to s. 390 of the Companies Act 1963 (as amended), or, in the alternative, pursuant to O. 29 of the Rules of the Superior Courts.

  2. The plaintiff is an unlimited company registered in Ireland and with a registered address in Dublin. The plaintiff, formerly a limited company, Mountbrook Homes Limited, changed its name and was re-registered as an unlimited company prior to the events giving rise to these proceedings.

  3. The defendant, a limited company, is stated to be a “Special Purpose Vehicle”, established by Ulster Bank Ireland Ltd. for the purpose of holding the legal and beneficial interest in the Ballsbridge Inns and Tower Hotels (the “Hotels”) on behalf of Ulster Bank Ireland Ltd., in its capacity as facility agent and security trustee for a syndicate of banks.

  4. The factual background to the plaintiff’s claim in these proceedings and the defendant’s application for costs, in summary, is as follows.

  5. In 2011, MJBCH Limited, a company stated to be part of a group of companies controlled by Mr. Sean Dunne, was engaged in running and managing the Hotels pursuant to an agreement with the defendant. On 24th October, 2011, the Hotels were flooded as a result of heavy rainfall and extensive damage was done to the hotel buildings and their contents. The plaintiff pleads that following the flood damage, it was agreed between the defendant and MJBCH Ltd. that the latter would organise repair and reinstatement works to be carried out so as to render the hotel buildings safe and minimise the disruption to the Hotels. It further pleads and contends that MJBCH Ltd., acting at all material times as an agent of the defendant, entered into a building agreement with the plaintiff pursuant to which it was agreed that the plaintiff would carry out the necessary repair and reinstatement works.

  6. The plaintiff contends that it carried out the repair and reinstatement work pursuant to the alleged agreement; that the defendant made to it three separate payments in respect of such works and that there is a balance in excess of €1m now due and owing, certified by the architects as due in respect of the works. In the alternative, it claims monies due to it by the defendant for the works carried out at its request on a quantum meruit basis.

  7. The defendant disputes the terms of the alleged contracts, both between it and MJBCH Ltd. and the existence of any contract between it and the plaintiff. The defendant does not dispute that the plaintiff carried out works on the Hotels from which it now benefits; further, it does not dispute that it paid the plaintiff monies for work done. The defendant alleges that the works carried out by the plaintiff were substandard and denies that it now owes any monies to the plaintiff.

  8. The defendant brings the application for security for costs upon the basis that it has a bona fide defence to the plaintiff’s claim, and that, as a matter of probability, the plaintiff would be unable to meet an order for costs of the proceedings if the defendant were to be successful. The defendant obtained advice from Cyril O’Neill & Company, legal costs accountants, that the cost of defending the plaintiff’s claim is likely to be in the order of €500,000 to €600,000 plus VAT.

  9. On the affidavits in this application, there is dispute as to certain of the facts relating to the solvency of the plaintiff and its ability to meet any award of costs in favour of the defendant. Since its conversion from a limited to an unlimited company on 9th June, 2009, it has not been under a statutory obligation to file accounts or make public its financial statements. The defendant exhibits the last set of filed financial statements for the year ended 31st October, 2007, showing a loss on the profit and loss account of €453,859.00. The defendant also refers to other facts including the appointment of a receiver to part of the plaintiff’s properties, registered charges and the behaviour of the plaintiff in relation to the ownership of fixtures and fittings in the Hotels arising out of prior commercial dealings between the plaintiff and the defendant.

  10. The plaintiff, through a series of companies, some of which are non-resident, is stated to be ultimately owned by Ms. Gayle Killilea, the wife of Mr. Sean Dunne. Ms. Killilea and Mr. Ross Connolly are the two directors of the plaintiff.

    Issues

  11. The defendant did not pursue its application under s. 390 of the Companies Act 1963 for an order for security for costs. It only pursued the application pursuant to O. 29 of the Rules of the Superior Courts and the inherent jurisdiction of the court. It accepts that the plaintiff is to be treated as a person resident in this jurisdiction for the purposes of the application. It contends that the plaintiff is insolvent, or, as alternatively put, as a matter of probability would be unable to meet an order for costs against it if the defendant were successful. Counsel on its behalf invite me to follow the decision of Cooke J. in Goode Concrete v. CRH plc. & Ors. [2012] IEHC 116, and decide that there is jurisdiction to order security be given by the plaintiff, an unlimited company resident in the jurisdiction. It contends that insofar as that judgment differs from the judgment of Laffoy J. in ABM Construction v. Habbingley Ltd. [2012] IEHC 61, it is to be preferred. It also contends that the plaintiff should be considered as bringing these proceedings as a nominal plaintiff for the purpose of the jurisdiction on security for costs, in the sense used in the law referred to and applied by Cooke J. in his judgment in Goode Concrete.

  12. The plaintiff submits that this Court does not have jurisdiction to make an order against it for security for costs simply on the basis that it is insolvent, or is likely to be unable to meet the costs of the defendant if it were successful in its defence, as it is resident in the jurisdiction. It invites me to follow the analysis of Laffoy J. in ABM Construction and that of Clarke J. in Salthill Properties Ltd. & Another v. Royal Bank of Scotland plc. & Ors. [2010] IEHC 31 [2011] 2 I.R. 441. Insofar as the Court may have jurisdiction to make an order for security for costs against a resident plaintiff who is acting as a nominal plaintiff, it contends that it is not bringing these proceedings as a nominal plaintiff in the sense used either by Cooke J. in Goode Concrete or the decisions referred to therein.

    The Law

  13. Both parties are in agreement that s. 390 of the Companies Act 1963, does not apply to the plaintiff as it is an unlimited company. Section 390 provides:

    “Where a limited company is plaintiff in any action or other legal...

To continue reading

REQUEST YOUR TRIAL