A property development company will have to put up some €771,000 so that it can proceed with a High Court case against a cement supplier which allegedly supplied under-strength concrete for an iconic office building overlooking Stephen's Green in Dublin.
KC Capital Property Group Ltd was told by Mr Justice Max Barrett it will have to furnish €771,410 in security for legal costs should it lose the case it is bringing against Keegan Quarries Ltd.
Keegan provided the concrete for the basement and ground floors for the nine-storey Greenside Building in Cuffe Street.
KC Capital says the cost of removing the allegedly defective concrete is some €9 million and its total loss and damage is €13 million.
KC terminated the contract with the original main contractor and appointed a replacement builder.
Keegan denies any wrongdoing and claims if there was any defective concrete, which is denied, there was no need to remove all of it as this increased exponentially and unnecessarily the cost of remedial works.
In advance of the hearing of the dispute, Keegan asked the High Court to order that KC Capital furnish security for costs of defending the case. KC opposed the application.
In a judgment ordering it to provide security, Mr Justice Barrett noted KC was a special purpose vehicle set up to acquire and develop the Greenside site.
With the exception of an initial €100 investment, it has been funded solely by loan finance from Fairfield, he said.
A practical consequence of the manner in which it has been set up would be to shelter it from any (if any) order for costs that might issue in favour of Keegan, he said. He also noted that KC features as part of a complex corporate structure that concerns at least one other property.
While it continued to have the support of its lender, its profitability rests essentially on a single asset (the Greenside Building) and, as recently as its 2020 accounts, concerns were being expressed as to KC’s ability to continue as a going concern, he said.
These were among the factors of relevance in deciding a security for costs application as well as the vagaries of the property market and other matters which are outside the control of KC, the judge said.
He did not find any special circumstances refusing an order for security for costs.
He ordered security for costs in favour of Keegan of €771,410 and also placed a stay on the proceedings pending provision of that security within three months of the date of his judgment.
