A company for which solicitor James Flynn provided a €2.5 million guarantee on loans must put up security for costs of an action he and the firm are taking challenging the appointment of a receiver, the High Court has ruled.
It is the second time in recent years the same company of Mr Flynn, Fortberry Ltd, has been ordered to put up security for costs of a case the firm is taking in the High Court.
In 2021, the court ordered Fortberry to provide security for costs of a four-day hearing of a dispute over the sale of a mediaeval castle in Co Meath.
The property, Dowth Castle, owned by Fortberry, is adjacent to the Victorian Netterville Manor which is owned by Mr Flynn. He retired in 2011 from a role held as a legal costs adjudicator when the job was known as the Taxing Master.
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A second case involving Mr Flynn and Fortberry relates to three Dublin properties on which Fortberry got loans from AIB, some of which Mr Flynn provided guarantees for.
The case against AIB, receiver Shane McCarthy and Everyday Finance, which took over loans, relates to the appointment of the receiver over the properties and related matters.
AIB asked the High Court to order Fortberry to provide upfront security for the costs of the case should they lose.
Fortberry argued AIB does not have a prima facie defence and even if it did the court should refuse to order that security be provided on the basis Mr. Flynn has offered an indemnity.
Mr Justice Conor Dignam found in favour of AIB and ordered Fortberry to provide security.
Earlier, the judge said Fortberry obtained some loan facilities from AIB between 2004 and 2007. Mr. Flynn acted as guarantor for some of those facilities with various charges over the three properties: an apartment at Aston House, Aston Quay, number 10 Anglesea Street, and Unit 2 Bracken Road, Sandyford.
A further facility was provided in 2008 to be secured by charges over the same three properties with a guarantee by Mr Flynn for €2.5m.
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 €5.18m and the judgment against Mr Flynn was for €2.5 million on foot of the guarantee.
In October 2016, AIB appointed Shane McCarthy receiver over the properties. In 2018 AIB sold the loans to Everyday.
AIB also brought bankruptcy proceedings against Mr Flynn. His efforts to get protection through an insolvency arrangement were rejected by the courts.
Fortberry and Mr Flynn then brought the challenge over the appointment of the receiver. They also challenged the bankruptcy proceedings and the transfer of the loans to Everyday, among other things. 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 and then sought security for costs.
The defendants’ costs expert estimated the level of security should be for a seven-day trial while Mr Flynn said that, as he was a former Taxing Master, he estimated there should be costs for a trial lasting no more than three to four days.
Mr Justice Dignam was satisfied that security for costs should be provided by Fortberry.
He said he preferred the defendants’ expert evidence on what the security should be. He said Mr Flynn, although having expertise in the area, lacked the independence required to give expert evidence.
He also refused an application from Fortberry to adjourn the question of security of costs to allow Fortberry to get an independent costs accountant report.
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