KC Capital Property Group Ltd, a property development company, has been ordered by the High Court to provide €771,410 in security for legal costs to proceed with its case against Keegan Quarries Ltd, a cement supplier accused of providing understrength concrete for the Greenside Building, a nine-storey office building overlooking Stephen’s Green in Dublin.
According to KC Capital, the cost of removing the allegedly defective concrete amounts to approximately €9 million, with the total loss and damage estimated at €13 million. As a result of the issue, KC terminated the contract with the original main contractor and appointed a replacement builder.
However, Keegan Quarries denies any wrongdoing and argues that even if there was any defective concrete, which they deny, removing all of it was unnecessary and exponentially increased the cost of remedial works.
In his judgment, Mr Justice Max Barrett noted that KC Capital was a special purpose vehicle set up to acquire and develop the Greenside site, funded solely by loan finance from Fairfield, apart from an initial €100 investment. “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.
The judge also pointed out that KC Capital is part of a complex corporate structure involving at least one other property, and concerns were raised as recently as its 2020 accounts regarding its ability to continue as a going concern. These factors, along with the vagaries of the property market and other matters outside KC’s control, were considered relevant in deciding the security for costs application.
Mr Justice Barrett found no special circumstances to refuse the order for security for costs and instructed KC Capital to provide the €771,410 within three months of the judgment date. The proceedings have been stayed pending the provision of the security.
The outcome of this case could have significant implications for both KC Capital Property Group Ltd and Keegan Quarries Ltd, as well as the wider property development industry, highlighting the importance of ensuring the quality of construction materials and the potential financial consequences of disputes arising from alleged defects.