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Johnny Ronan firm must provide legal costs security for portion of case against investment group

Case is tied to dispute with Fortress Investment Group

The Ronan-related companies sought damages for breach of contract, unlawful interference with contractual relations and/or inducing breach of contract and/or negligence and/or breach of duty. Photograph: Collins

Wed Apr 24 2024 - 16:42

A company of Johnny Ronan’s RGRE Group will only have to provide security for legal costs up to a certain point for a case it is taking against the Fortress Investment Group, the Commercial Court ruled.

Any further security, which is provided by a litigant should they lose the case, will be reviewed after the court discovery process begins and would be a matter for further review at that point, Mr Justice Denis McDonald said.

RGRE Sen Borrower Ltd is one of five Ronan firms which initially took the action.

Since then, however, the relevant board members of the others have been replaced by Fortress nominees who last December said they wanted to seek to discontinue the proceedings.

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The judge, in giving a decision on the question of security for costs concerning the remaining company, said the other companies were insolvent and the directors decided they were not in a position to meet any legal costs should they lose the proceedings against Fortress.

In those circumstances, the judge said, they decided to “extricate themselves from the proceedings”.

Last year, RGRE J&R Ltd, RGRE Borrower Ltd, J&R Lehaunstown Ltd Partnership, J&R Fitzwilliam Ltd Partnership and RGRE Sen Borrower Ltd sued Collir SARL, Fortress Investment Group LLC and CF Troy Holdings LLC.

Collir and CF Troy are both indirectly owned by funds managed or advised by affiliates of Fortress which has financed some €1 billion worth of commercial property projects.

The Ronan-related companies sought damages for breach of contract, unlawful interference with contractual relations and/or inducing breach of contract and/or negligence and/or breach of duty.

They also sought declarations including that by failing to engage with the plaintiff firms’ effort to refinance facilities under a development assets facility agreement and a mezzanine facility agreement, the defendants have breached an obligation not to clog, stymie or otherwise hinder redemption rights under those agreements.

The claims were denied.

The case was admitted to the Commercial Court last July and Fortress subsequently brought an application that the Ronan firms put up security for costs.

On Wednesday, Mr Justice McDonald was urged by Michael Cush SC, for the last remaining plaintiff, not to impose a security for costs order on grounds including that it could stifle the litigation and also because of a delay in bringing the security application.

Lyndon MacCann SC, for the Fortress firms, said possible stifling of litigation was a normal part of any proceedings where security of costs was sought.

He disputed there was any delay in bringing the security application, particularly given that a standstill agreement was made between the parties until November last to allow the Ronan firms to find alternative financing.

Mr Justice McDonald ruled that the possibility of stifling litigation was ever present in a security for costs application.

He must, however, bear in mind that, while the claim made here is ambitious, there is always a possibility that “even one document” that turns up as part of the court discovery process “may change the landscape”.

It seemed to him, therefore, that the appropriate order to make was for the plaintiff to provide security for the costs up to the making of discovery.

The court can review the situation at that point and it may be that a decision will be taken not to proceed any further, or there may be a further application for discovery, he said.

He adjourned the matter to May when an application to amend the statement of claim will be made.

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