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Security for costs must be provided in proceedings concerning merger of tech companies

By: Hannah Godfrey BL

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High Court orders that plaintiffs provide security for costs in proceedings seeking declaration that a merger was valid, on the grounds that: (a) the defendants had a prima facie defence; and (b) it was acknowledged that the plaintiffs would be unable to pay any costs order and that they had failed to demonstrate that their inability to meet any such order for costs was attributable to the actions of the defendants.

Application by defendants for security for costs - underlying proceedings concerning validity of merger between first defendant and plaintiffs, being US companies - first defendant company that developed and patented antivirus security software application - second and third defendants the company's original promoters - defendants sought to avoid the merger as null and void - plaintiffs brought proceedings seeking declaration as to validity of merger - counterclaim by first defendant seeking declaration that merger null and void and/or unenforceable, inter alia, because procured by fraudulent misrepresentation and conspiracy - almost no facts agreed even for purpose of interlocutory application - agreement between parties that plaintiffs would be unable to pay costs if defendants successful - whether there was a prima facie defence - whether plaintiffs’ impecuniosity caused by the alleged wrongdoing the subject matter of the proceedings.

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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