Apartment owners in Co Meath sue developers over defects

Judge refused to direct Saltan Properties to provide security for costs

Photograph: Chris Maddaloni/Collins

Photograph: Chris Maddaloni/Collins

 

The owners of apartments in Ratoath, Co Meath are suing the developers over alleged defects in the development.

Twenty-six owners of apartments in Riverwalk Court, built in 2003/2004, are suing developers Saltan Properties, whose principal is developer Michael Ryan.

Mr Ryan was acquitted in 2013 of making corrupt payments in 2006 to a town councillor, Fred Forsey, who was imprisoned for six years for the offence.

The residents are also suing a contractor and architects and engineers who provided professional advice for the development.

It is alleged a series of defects were later found in structural and other elements of the development.

Part of the cost of remedying the defects and damage caused was covered by insurance held by the owners but considerable damage was not covered by the policy.

Proceedings were issued in 2012 on a subrogated basis - where an insurer steps into the shoes of the plaintiff - against the defendants with three cases being pursued as master claims.

In December 2019, before the case proceeded to full trial, the High Court refused Saltan Properties discovery of documents which it said it needed from the apartment owners for its defence, and also awarded costs against Saltan for discovery sought by the plaintiff in the lead case.

Saltan appealed that decision to the Court of Appeal (CoA).

The leading plaintiff for the apartment owners then asked the CoA to order Saltan to provide security for costs of the appeal, arguing, among other things, Saltan was grossly insolvent.

The court heard Companies Office returns for September 2019 showed Saltan’s total net liabilities of some €32 million with current liabilities of €2.6 million.

Saltan denied it should provide security for costs for the appeal, arguing section (52) of the 2014 Companies Act dealing with security for costs applied not to an insolvent defendant but to an impecunious plaintiff.

Ms Justice Caroline Costello, on behalf of the three-judge CoA, said the apartment owner in the lead case had satisfied two preconditions for an order for security of costs of an appeal, but the issue for the court was whether special circumstance had been established to demonstrate a risk of added and unnecessary injustice in bringing the appeal.

The judge said the lead plaintiff argued it was an insolvent company which had vigorously defended the proceedings for eight years. While Saltan did not deny it was being funded in the litigation, it was not “a mark” for costs and this amounted to special circumstances, it was argued.

It was further argued the apartment owners will be prejudiced by delay such as has already occurred for one owner who had lost a sale by reason of the existence of the legal proceedings.

Ms Justice Costello agreed with submissions on behalf of Saltan that the Companies Act applied to an impecunious plaintiff, not an insolvent defendant.

The interpretation advanced on behalf of the apartment owner would allow an insolvent company to be sued but effectively deprived that company of a right of appeal against any orders made during the course of litigation prior to the full trial by seeking security for costs, she said.

This could potentially work a grave injustice against a defendant and hinder it in defence of its claim, she said.

She refused to direct Saltan to provide security for costs, with the effect the appeal over the discovery order can proceed.