Nightclub security debt can be offset against injury claims, High Court rules
A Dublin hotel owner is entitled to set off a €51,435 debt to its nightclub security firm against a potential €100,000 bill for four injury claims against it, the High Court has ruled.
Russell Court Hotel owner, Triglen Holdings, is entitled to set off the debt to the company which previously provided it with security for the hotel and nightclub, P&B Security Services, now in liquidation, Mr Justice Garrett Simons said.
The four claims against the hotel arise from alleged acts, negligence and/or failures of P&B, Triglen said.
Triglen admits it owes the money to P&B which, through the liquidator, brought proceedings to recover the €51,435.
But Triglen estimated it is facing a possible total liability of some €100,000 for four outstanding injury claims against it in which the claimants allege assault and negligence by the security firm's employees. One case has already settled for €25,000, it said.
Triglen said it was part of the security contract that P&B would indemnify the hotel for any such claims. Therefore, it was entitled to offset the admitted debt against them.
It also said it had requested the indemnity in circumstances where a number of security providers had previously gone into liquidation.
The security industry, Triglen said, was in general transient with a high turnover of employees which it made it difficult to defend claims of alleged assault and left the customer of the security firm having to foot the bill.
Insurance "excess" on security service provider policies can be as high as €35,000, it said.
When P&B went into liquidation, the liquidator took responsibility for dealing with debts owed to the firm.
The liquidator argued the right to set off the debt did not exist. Insofar as Triglen's right to an indemnity was concerned, it would simply rank as an unsecured creditor in the winding up of P&B, it was claimed.
Mr Justice Simons was satisfied Triglen was entitled to a right of set-off.
Where the liability under the indemnity is contingent only, the liquidator must make a “just estimate” of what that liability will be, he said.
The uncontested evidence indicates that the liability will exceed the debt otherwise owing to P&B, he said.
He dismissed P&B's application to enter judgment for the €51,435 debt against Triglen on the basis that the sum claimed was less than the amount Triglen was entitled to set-off.
