A development company has been ordered to provide €400,000 security for legal costs should it lose a High Court action over the sale of a 25 per cent interest in the Burlington Plaza commercial building on Dublin's Burlington Road.
The 25 per cent interest was sold by Lington Developments Ltd to Davy Target Investment plc (DTI) for €51 million in 2017.
Coolbrook Developments, which was a 75 per cent owner of the property and had offered in excess of €49 million, claims the sale was in breach of an owners’ agreement.
Coolbrook brought proceedings seeking to have the sale rescinded.
Among various claims against Lington, it alleged Lington was in breach of the owners’ agreement requiring any sale to be to an “arm’s length third party”.
Coolbrook claims DTI was a connected entity to Lington.
It is also claimed Lington failed to allow Coolbrook participate further in the sale process in accordance with the owners’ agreement or to market the property properly or at all.
In its claims against DTI, Coolbrook alleges DTI unlawfully combined or conspired with Lington to prevent Coolbrook acquiring the 25 per cent interest.
Lington and DTI deny the claims and they had applied to the court to direct Coolbrook to provide security for the costs of its action.
Coolbrook offered, should a security for costs order be made, to lodge €250,000 in an escrow account pending determination of proceedings.
Lington and DTI, which claim Coolbrook will not be in a position to pay their costs if unsuccessful, argued the court has discretion to direct full security.
The court was not bound by any rule or practice that one-third of total costs be lodged as Coolbrook argued should be the case, the defendants argued.
Mr Justice David Barniville ordered that security for costs in the amount of €400,828 should be provided by Coolbrook.
A stay applies on the action until the money is provided.
The judge said it was unclear where the €250,000 sum offered by Coolbrook came from.
The evidence was Coolbrook would be unable to provide that sum from its own resources and the company had chosen not to disclose the source of those funds, he said.
That sum would in any event be insufficient to provide security for the costs of the Lington and DTI, he said.
