A company for which solicitor James Flynn provided a €2.5 million loans guarantee has failed in an appeal over being required to put up nearly €200,000 as security for costs in a High Court action he and the firm are taking.
Mr Flynn is a retired Taxing Master, a role in which he dealt with disputes relating to the costs of cases which had been heard. The position is now called “Legal Costs Adjudicator”.
Mr Flynn and the firm he provided security for, Fortberry Ltd, had brought a challenge to the appointment of a receiver over three Dublin properties. One is in Anglesea Street owned by Mr Flynn and two others in Aston House, Temple Bar, and Bracken Road, Sandyford, which are owned by Fortberry.
The case is against AIB, which made loans on properties, and against the receiver Shane McCarthy who the bank appointed after the loans went into default. It is also against Everyday Finance, which took over the AIB loans.
It arose out of loans to Fortberry from AIB between 2004 and 2007. Mr. Flynn acted as guarantor for some of those facilities with various charges over the three properties.
A further facility was provided in 2008 to be secured by charges over the same three properties with a guarantee by Mr Flynn for €2.5 million.
Following separate proceedings against Mr Flynn and Fortberry, in 2016 Mr Flynn and Fortberry consented to judgment being entered in favour of AIB. The judgment against Fortberry was €5.18 million and the judgment against Mr Flynn was for €2.5 million on foot of the guarantee.
In October 2016, AIB appointed Mr McCarthy receiver over the properties and the loans were sold later to Everyday.
Fortberry and Mr Flynn then brought the challenge on a number of grounds, including over the appointment of the receiver and the transfer of the loans to Everyday. It was claimed Fortberry and Mr Flynn were given no opportunity to redeem the loan facilities at any price offered by a third party, including Everyday.
They also sought an order that they were entitled to an indemnity from AIB for the difference between the sum of €2.6 million and the amount paid by Everyday to AIB for the loans.
The defendants opposed the action.
AIB also asked the High Court to order Fortberry to provide upfront security for the costs of the case should they lose.
Fortberry argued AIB did not have a prima facie defence and even if it did the court should refuse to order that security be provided on the basis that Mr. Flynn had offered an indemnity.
The High Court found in favour of AIB and ordered Fortberry to provide security of some €198,000.
Fortberry appealed arguing that the High Court judge erred including in relation to the amount of the security it fixed.
It was also argued that the High Court failed to give any or any adequate weight to the indemnity offered by Mr Flynn.
The defendants opposed the appeal.
In a decision on Monday the Court of Appeal (CoA) dismissed the appeal.
Mr Justice Senan Allen, on behalf of the three-judge CoA, said he was satisfied that the High Court judge was correct in his ultimate conclusion that the bank had established that it has a prima facie defence to Fortberry’s action.
The High Court was also correct in finding there were no grounds on which the CoA should interfere with the judge’s assessment of the amount of the security to be provided, he said.
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