Property and Investment Company (SE) Ltd v George Maloney and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Keane
• Judgment Date: 15 May 2015
• Neutral Citation: [2015] IEHC 291
• Date: 15 May 2015
• Court: High Court

[2015] IEHC 291

THE HIGH COURT

[No. 2827 P/2014]

Property & Investment Company (SE) Ltd v Maloney

CHANCERY

No Redaction Needed

BETWEEN

THE PROPERTY AND INVESTMENT COMPANY (SE) LIMITED

Plaintiff

AND

GEORGE MALONEY

Defendant

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

Notice Party

Banking and Finance – Repayment of loan – S. 390 of the Companies Act 1963 – O 29 r.1 of the Rules of the Superior Court – Security for costs

Facts: The defendant and the notice party sought an order for security for costs to the defendant/receiver in the proceedings commenced by the plaintiff pursuant to the failure of repayment of the loan.

Mr. Justice Keane granted an order thereby requiring the plaintiff to furnish the defendant with security for his costs in the proceedings under o. 29 r. 1 of the Rules of the Superior Court. The Court held that the defendant had discharged his onus by proving that the plaintiff prima facie would not be able to pay the legal costs to the defendant if the defendant was to succeed in the proceedings. The Court found that the plaintiff had not shown any reliable evidence except some unaudited bank statements and averments made by one person that it had means for paying back the costs to the defendant. The Court found no exceptional circumstances so as to exercise its discretion for disallowing payment of costs to the defendant.

Introduction

1 This judgment concerns an application for security for costs brought on behalf of both the defendant and the notice party against the plaintiff.

2 It would appear that the plaintiff company ("the company") was incorporated in England and Wales on the 23 ^rd August 2012

3 It is asserted that, by deed of appointment dated the 13 ^th February 2014, the notice party ("the bank") appointed the defendant ("the receiver") as receiver over certain lands and premises ("the property") at Grange, Balrothery West, described in Folio 96695F for the County of Dublin. It is asserted that the property is the subject of a deed of charge executed on the 10 ^th July 2007 in favour of the bank by one Jeremiah Donovan. The said charge was registered on the folio as a charge for present and future advances on the 18 ^th July 2007. It is common case that, at that time, the said Mr Donovan was the owner of the property. The company was registered on the folio as the full owner of the property in place of the said Mr Donovan on the 28 ^th March 2013. The company contends that the said Mr Donovan transferred the property to it on that date.

The underlying proceedings

4 The underlying proceedings were commenced by way of plenary summons issued on the 28th of February 2014. In that plenary summons, the plaintiff seeks a number of reliefs against the receiver, including: an injunction restraining the receiver from trespassing on the property; a declaration that the charge registered against the property on the 18th of July 2007 is null and void; a declaration that a deed of mortgage and charge executed by the said Mr Donovan in favour of the bank in respect of the property, and dated the 10th of July 2007, is void and of no effect; and a declaration that the deed of appointment of the receiver over the property by the bank dated the 13 ^thFebruary 2014 is null and void and of no effect.

The present application

5 In the present application, commenced by way of motion filed on the 1 ^st July 2014 and initially made returnable for the 21 ^st July 2014, the receiver and bank seek, inter alia, an order pursuant to s. 390 of the Companies Act 1963, as amended ("the 1963 Act"), directing the company to furnish security for costs to the receiver or. in the alternative, an order to the same effect pursuant to order 29, rule 1, of the Rules of the Superior Courts ("RSC"). They also seek an order staying the within proceedings pending the furnishing of such security.

Relevant legal provisions

6 S. 390 of the 1963 Act provides as follows:

2 "390.-Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given."

7 Order 29, rule 1 RSC provides as follows:

"When a party shall require security for costs from another party, he shall be at liberty to apply by notice to the party for such security; and in case the latter shall not, within forty-eight hours after service thereof, undertake by noties to comply therewith, the party requiring the security shall be at liberty to apply to the Court for an order that the said party do furnish such security."

Legal principles

8 The legal principles governing applications of this sort are not in controversy.

9 In Usk and District Residents Association Ltd v. The Environmental Protection Agency (Unreported, Supreme Court, 13th January 2006) Clarke J. ( nem.diss) quoted with approval the following statement of the law by Morris P. in Interfinance Group Limitedv. KPMG Peat Marwickt/a KPMG Management Consulting [1998] IEHC 217:

2 "1. In order to succeed in obtaining security for costs an initial onus rests upon the moving party to establish:-

(a) that he has a prima facie defence to the plaintiff's claim, and

(b) that the plaintiff will not he able to pay the moving party's costs if the moving party be successful;

2 In the event that the above two facts are established then security ought to be required unless it can be shown that there are specific circumstances in the case which ought to cause the court to exercise its discretion not to make the order sought. In this regard the onus vests upon the party resisting the order.

The most common examples of such special circumstances include cases where a plaintiff's inability to discharge the defendants costs of successfully defending the action concerned flow from the wrong allegedly committed by the moving party or where there has been delay by the moving party in seeking the order sought.

The list of special circumstances referred to is not, of course, exhaustive."

Prima facie defence

10 The receiver, George Maloney, swore an affidavit to ground the present application on the 1 ^st July 2014. Mr Maloney avers that the defendant has a bona fide defence to the plaintiff's claim.

11 In response to the plaintiff's plea that it is the valid freehold owner of the property and that the receiver is, therefore, a trespasser upon it, the receiver avers as follows.

12 By facility letter dated 28 ^th May 2007 the bank offered to advance a loan facility in the amount of €4,200,000 to Mr Jeremiah Donovan for the purpose of financing the purchase of six properties in Harrow in the United Kingdom. Mr Donovan signed and accepted the said facility on 7 ^th June 2007. The sum of €705,755 was drawn down on the facility on or about the 25 ^th June 2007. It was a condition of that facility letter that "[a]ny security held now, or at any future time, shall be security for all liabilities of the Borrower to the Bank." On the 10 ^th July 2007 the said Mr Donovan executed a deed of mortgage and charge ("the deed"), which was witnessed by his then solicitor. The schedule to the deed indicated that the property was being provided as security for the loan facility advanced. Clause 11 of the deed conferred upon the bank the...