High Court of Ireland Decisions

1. On 30th April, 1999 the first named Respondent (the Board), on an appeal by the second named Respondent (McDonalds) against a decision of the Notice Party to refuse permission for development comprising a change of use of part of the ground floor of existing premises from a hotel facility to a restaurant with drive-through facility for the sale of hot food for consumption off the premises and other alterations and associated site works at premises adjoining the Village Inn Upper Patrick Street, Kilkenny, decided to grant permission for the said development subject to conditions.

2. The Applicant was incorporated on 24th June, 1999 as a company limited by guarantee not having a share capital under the Companies Acts 1963-1990 with the primary object of representing interested members of the community of The Village in the City of Kilkenny in the preservation and protection, improvement of the amenities and environment in the locality and taking such legal or other actions as might be considered necessary or desirable to support such interests. The Applicant has approximately 150 members, some of whom are residents of The Village and others of whom are teachers in or parents of children attending two schools in the locality and concerned citizens.

3. These proceedings were initiated by Notice of Motion dated 25th June, 1999 wherein the Applicant sought leave to apply by way of application for judicial review for various reliefs, including an order of Certiorari of the decision of the Board made on 30th April, 1999. The application for leave was heard in this Court by Geoghegan J. over three days in October 1999. During the hearing McDonalds challenged the locus standi of the Applicant. By order dated 11th November, 1999 the Applicant was granted leave to apply for an order of Certiorari quashing the decision of the Board of 30th April, 1999 on one only of the ten grounds advanced by the Applicant, that is to say, that the Board did not give adequate reasons for granting the permission in that the reasons as given did not provide an explanation or at least an adequate explanation as to why the Board made a decision which it was alleged constituted a material contravention of the development plan.

4. On 12th November, 1999 McDonalds' solicitors wrote to the Applicant's solicitors seeking an undertaking that the Applicant would furnish to McDonalds security for costs. No such undertaking was forthcoming.

5. The freehold owner of the premises at the Village Inn the subject of the decision of the 30th April, 1999, Denis Treacy, is not a party to these proceedings. The Applicant has not at any time sought a direction from the Court that the grant of leave should operate as a stay of the decision of 30th April, 1999 under Order 84, Rule 20(7) of the Rules of the Superior Courts, 1986, (the 1986 Rules) nor has the Applicant sought injunctive relief to restrain the implementation of the development to which that decision relates. On 23rd February, 2000 Mr. Treacy notified the Applicant and McDonalds that he was proceeding to develop his property in accordance with the decision of 30th April, 1999. That work commenced on 6th March, 2000.

6. There are two applications before the Court.

7. The first is the application of McDonalds, on foot of a Notice of Motion dated 29th November, 1999, seeking an order pursuant to Section 390 of the Companies Act, 1963 that the Applicant should provide security for McDonald's costs in opposing these proceedings.

8. The second is the Applicant's application on foot of a Notice of Motion dated 1st February, 2000 seeking orders in the following terms:-

9. The order in which I propose considering the issues which arise on the applications is as follows. First, I propose considering whether the Applicant is entitled to a pre-emptive costs order. This issue arises between the Applicant, on the one hand, and the Board and McDonalds, on the other hand. Secondly, I will consider whether the Applicant should be required to give McDonalds security for its costs. Only McDonalds and the Applicant are concerned with this issue. Finally, I will consider whether an order should be made at this juncture in relation to the reserved costs of the previous stage of the proceedings. In this connection, there has been only one order in these proceedings, the order of 11th November, 1999 on the Applicant's motion for leave and in that order the question of costs was reserved. Mr. Treacy for the Applicant made it clear that despite the terms in which the relief in respect of the reserved costs was sought in the Notice of Motion, his application was directed against McDonalds only and would arise only if McDonalds were given security.

10. Before addressing the issues, I propose considering the judgment delivered by Geoghegan J. on 5th November, 1999 on the application for leave insofar as it is germane to the issues.

11. Setting out the background to the locus standi challenge, Geoghegan J. stated as follows (at page 2):-

12. Later (at page 8) Geoghegan J. stated that he had come to the conclusion that, on the principles enunciated by Keane J., as he then was, in his judgment in the Supreme Court appeal in Lancefort Limited -v- An Bord Pleanala , [1998] 2 ILRM 401, the Applicant does have sufficient locus standi. He then went on to say:-

13. As to the ground on which leave was granted, Geoghegan J. summarised his views (at page 6) as follows:-

14. I understand that this is the first time an order of this nature has been formally sought in this jurisdiction.

15. It was submitted on behalf of the Applicant that the Court has jurisdiction to make what has been referred to as a pre-emptive costs order or a protective costs order analogous to the jurisdiction vested in the English High Court which was recognised by Dyson J. in R. -v- Lord Chancellor, ex p, CPAG, [1998] 2 All ER 755 and that this is an appropriate case in which to make an order pre-empting the making of an order for costs against the Applicant in favour of any other party at a later stage in these proceedings.

16. As the only authority referred to, it is necessary to consider the CPAG case in some depth. Dyson J. was there dealing with two separate and distinct applications for pre-emptive costs orders.

17. The first was sought by the Child Poverty Action Group, a registered charity, the objects of which included the promotion of action for the relief of poverty among children and families with children. It engaged in test case work in the area of welfare benefits law and supported cases before social security commissioners and in the Courts. The judicial review proceedings in which the pre-emptive costs order was sought challenged a decision of the Lord Chancellor refusing to exercise his power under Section 14 of the Legal Aid Act, 1988 to extend legal aid to at least some cases before social security tribunals and commissioners. Leave was granted.

18. There were two applicants for pre-emptive costs orders in the other judicial review proceedings, Amnesty International U.K. and The Redress Trust, two international human rights organisations, whose objects include the abolition of torture and who were concerned with the enforcement of the laws relating to weapons of torture. The decision challenged by them in the substantive proceedings was a decision of the Director of Public Prosecutions not to prosecute two individuals for possession of an electro-shock baton without a licence, a strict liability offence under the Firearms Act, 1968. Leave was granted.

19. The order sought by the respective applicants in each of the judicial review proceedings was that no order as to costs be made against it or them whatever the ultimate outcome of the relevant substantive proceedings. It was common case that the Court had jurisdiction to make such orders at an interlocutory stage in the proceedings. In his judgment, Dyson J. explained that the jurisdiction was based on -

20. Dyson J. acknowledged that there was a distinction to be made between ordinary private law litigation, on the one hand, and what he called "public interest challenges", on the other hand. In relation to the former he quoted a passage from the judgment of Hoffman L.J. in McDonald -v- Horn , [1995] 1 All E.R. 961 at 969 to the effect that the general rule that costs follow the event is a formidable obstacle to any pre-emptive costs order as between adverse parties in ordinary litigation, it being difficult to imagine a case falling within the general principle in which it would be possible for a Court properly to exercise it's discretion in advance of the substantive decision.

21. Having concluded that there was jurisdiction to make a pre-emptive costs order in a case involving a public interest challenge, Dyson J. went on to explain his understanding of the concept of a public interest challenge in the following passage at page 762:-

22. Dyson J. later stated that the discretion to make pre-emptive costs orders even in cases involving public interest challenges should be exercised only in the most exceptional circumstances and he set out his conclusions as to the necessary conditions for the making of such orders in the following passage at page 766:-

23. In applying the foregoing criteria to the applications before him, Dyson J. concluded that it had not been established on either application that the necessary conditions were fulfilled.

24. As to whether in an appropriate case this Court has jurisdiction to make a pre-emptive costs order, I did not understand either Ms. Butler for the Board or Mr. Simons for McDonalds to contend that no such jurisdiction exists. Indeed, Mr. Treacy, on behalf of the Applicant, urged that the position is much more clear cut in this jurisdiction than in England and Wales because of the existence of Order 99, Rule 5 of the 1986 rules. In my view, the jurisdiction does exist. Section 14 of the Courts (Supplemental Provisions) Act, 1961 provides that the jurisdiction vested in and exercisable by this Court is to be exercised so far as regards pleading, practice and procedure generally, including liability to costs, in the manner provided by the rules of court in force when the Act of 1961 came into operation. As far back as 1905, if not further back in time, the rules have provided that costs were in the discretion of the Court and that the general rule was that costs would follow the event unless a Court should for special cause shown and mentioned in the order otherwise direct (see Order LXV, Rule 1 of the Rules of the Supreme Court (Ireland), 1905). The position under the 1986 Rules is that Rule 1(1) of Order 99 provides that the costs of and incidental to every proceeding in the Superior Courts shall be in the discretion of those Courts respectively. The general rule reflected in sub- rules (3) and (4) of Rule 1 is that, unless otherwise ordered, costs follow the event. Rule 5 provides that costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings and that an order for the payment of costs may require the costs to be paid forthwith, notwithstanding that the proceedings have not been concluded.

25. While I am satisfied that the Court has jurisdiction in an appropriate case to deal with costs at an interlocutory stage in a manner which ensures that a particular party will not be faced with an order for costs against him at the conclusion of the proceedings, it is difficult in the abstract to identify the type or types of cases in which the interests of justice would require the Court to deal with the costs issue in such a manner and it would be unwise to attempt to do so. For the reasons adumbrated in the passage from the judgment of Hoffman L. J. quoted by Dyson J. in the CPAG case, I cannot envisage such an approach to a costs issue having any place in ordinary inter partes civil litigation. As a broad proposition the principles enunciated by Dyson J. - confining the possibility of making such orders to cases involving public interest challenges, as Dyson J. explained the concept of a public interest challenge, and requiring that the issues raised on the challenge be of general public importance and that at the stage at which it is asked to make the order the Court should have a sufficient appreciation of the merits of the claim to conclude that it is in the public interest to make the order - would seem to meet the fundamental rubric that the interests of justice should require that the order be made. Having said that, it maybe that in a particular type of case other factors may come into play. For instance, in judicial review proceedings challenging the validity of a decision of the Board or of a planning authority which has no private, as opposed to public, ramifications and, therefore, where what is at issue is a true public interest issue of general importance, perhaps a heritage protection issue or an environmental issue, it might well be that there would exist policy considerations reflected in legislation which the Courts would have to have regard to. The observations of Keane J., as he then was, on the question of locus standi in Lancefort Limited -v- An Bord Pleanala , [1998] 2 ILRM 401 highlight the multiplicity of factors and considerations which might arise and, for my part, are sufficient to discourage any generalisation as to the circumstances in which it would be appropriate to make a pre-emptive costs order.

26. In any event, I am satisfied that this case meets none of the criteria laid down by Dyson J. and, moreover, that the interests of justice do not require that the order sought by the Applicant be made. First, the challenge here is not a public law challenge in the sense that that concept was explained by Dyson J. The members of the company clearly have a private interest in the outcome of the application. Secondly, I am not satisfied that the ground on which the Applicant was granted leave raises an issue of general public importance. Within the framework of the planning code as it existed on 30th April, 1999 whether the Board was obliged to ascribe reasons for overturning a refusal by a planning authority to grant permission on the ground that it would materially contravene the development plan would have raised an issue of general public importance. However, as the passage from the judgment of Geoghegan J. which I have quoted earlier illustrates, there are a number of controversies to be disposed of before that issue is reached in the instant case, controversies in relation to the proper construction of the development plan and whether the decision of the Board was in material contravention thereof. In my view, the issue of general public importance is not sufficiently immediate to justify a pre-emptive costs order. Thirdly, I am not satisfied that I have sufficient appreciation of the merits of the application to conclude that it would be in the public interest to make a pre-emptive costs order. That on the application for leave the Applicant satisfied the "substantial grounds" test is not on its own, a circumstance from which one can conclude that it is in the public interest to insulate the Applicant against a future order for costs without awaiting the outcome of the Applicant's challenge. Fourthly, the Applicant seeks a pre-emptive costs order against a non-public body, McDonalds, which is a private company. Of all litigants embroiled in an issue as to whether the Board should give reasons for materially contravening a development plan, why should McDonalds be penalised in costs? In my view, there is no valid reason and it would fly in the face of justice to make such an order.

27. In my view, there is nothing exceptional about the Applicant's case. In fact, it is no different from most applications for judicial review of planning decisions. The Applicant has not established any basis for holding that it has an entitlement to a pre-emptive costs order either against the Board or McDonalds.

28. There is no discernible dispute as to the criteria by which the Court normally determines whether a plaintiff should be required to give security for costs to a defendant under Section 390 of the Company's Act, 1963. It is not in dispute that where, as here, it is conceded by the plaintiff or applicant that it would in all probability not be able to discharge an order for costs made against it at the conclusion of the proceedings, there remains a discretion in the Court which may be exercised in special circumstances but the onus is on the party attempting to resist the order for security to establish that the special circumstances exist.

29. Before considering the special circumstances contended for by Mr. Treacy on behalf of the Applicant, it is necessary to consider an argument advanced on behalf of McDonalds, which is peculiar to this type of proceeding, where the standing of the plaintiff or applicant has been put in issue at an interlocutory stage. Mr. Simons submitted that in this type of case the provision of security for costs may be a quid pro quo for affording locus standi . In Lancefort Limited -v- An Bord Pleanala , in which the factual matrix in which the issue of standing arose was very similar to the factual matrix in which it has arisen in this case - the Applicant being a limited liability company incorporated subsequent to the making of the decision sought to be impugned - in delivering the majority judgment in the Supreme Court, Keane J., as he then was, stated as follows (at page 442):-

30. In my view, it is quite clear from the foregoing passage that the existence of a mechanism for obtaining security for costs is a factor to which regard may be had in considering a locus standi challenge in a case such as this. It was obviously a factor Geoghegan J. was invited to have regard to on the application for leave in the instant case, although I infer from his judgment that it was to the perceived frailties of the mechanism that his attention was directed. At any rate, it is clear from the second passage of his judgment which I have quoted earlier that it was a factor he had regard to and that he envisaged that an application such as the application now before the Court might be made.

31. In delivering judgment on the application for security for costs in the Lancefort case (which is reported as Lancefort Limited -v- An Bord Pleanala [1998] 2 IR 511) Morris J., as he then was, stated (at page 517) that the application for security presented an opportunity to the promoters of Lancefort to demonstrate their commitment by providing the necessary funds to support the company's application. In my view, when the Court is invited on a challenge to standing to infer that objectors to planning decisions have clothed themselves with limited liability for the less than pure motive of conferring immunity against costs on themselves and the challenge is successfully resisted, on a subsequent attempt to resist an application for security for costs by the company the bona fides of the members of the company requires cautious consideration.

32. Turning now to the special circumstances contended for by the Applicant, my observations are as follows:-

33. It is well settled that the Supreme Court should not ordinarily entertain an application for security for costs on an appeal to that Court if it is satisfied that the question at issue in the case is a question of law of public importance (per Finlay C.J. in Fallon -v- An Bord Pleanala [1992] 2.I.R. 380 at page 384). There is certainly a parallel between a substantive application for judicial review of a decision of a planning authority or the Board, where the issues have been distilled on the application for leave and the "substantial grounds" threshold has had to be overcome by the applicant, and an appeal from the High Court to the Supreme Court in this context of the entitlement to security for costs from the moving party. I am of the view that it is appropriate in this case to consider whether a question of law of public importance exists, as Morris J., as he then was, did on the application for security in the Lancefort case. However, for the reasons outlined earlier for rejecting the Applicant's contention that this case raises an issue of general public importance, I consider that it does not raise a question of law of public importance. For the same reasons I am of the view that the criteria for determining whether a question of law of public importance exists which can be extrapolated from the judgment of Morris J. in the Lancefort case - whether the point is of such gravity and importance as to transcend the interests of the parties actually before the court and whether it is in the interests of the common good that the law be clarified so as to enable it to be administered not only in the instant case but in future cases also - are not met.

34. The Court was invited to infer from the evidence that McDonalds is acting in concert with the owner, Mr. Treacy, in implementing the development to which the decision of 30th April, 1999 relates. Having regard to the state of the evidence, which is affidavit evidence, in my view it would not be appropriate to draw that inference. In any event, the implementation of the development could not fundamentally undermine the jurisdiction of the Court, as asserted by the Applicant, because, as has been held by the Supreme Court in the State (Fitzgerald) -v- An Bord Pleanala [1985] I.L.R.M 117, in considering an application for retention permission a planning authority is not entitled to include in its consideration the degree of injury involved in the removal of a structure unlawfully erected. Moreover, it is open to the Applicant to pursue an alternative remedy to halt the development: to seek to join Mr. Treacy in the proceedings and apply for a stay under Order 84 or to seek injunctive relief. I do not consider that the implementation of the development by Mr. Treacy is a ground for refusing McDonald's application for security, nor do I find any conduct on the part of McDonalds which would preclude the giving of security.

35. The establishment of "substantial grounds" for contending that the decision of 30th April, 1999 is invalid is a statutory requirement in this and in every similar case; in order to proceed to a substantive hearing, an applicant has to overcome this threshold. Complying with the statutory requirement cannot constitute a special circumstance. In any event, it is well settled that the strength or otherwise of a party's case is not an appropriate consideration on an application for security for costs, unless the case of the plaintiff or applicant is unanswerable in which circumstance security should be refused (per Barron J. in Lismore Homes Ltd (in Receivership -v- Bank of Ireland Finance Ltd [1997] 1 I.R. 501 at page 530 citing the decision of the Supreme Court in Comhlucht Paipear Riomhaireachtha Teo -v- Udaras na Gaeltachta [1990] 1 I.R. 320.)

36. As a matter of fact, in my view, there has been no delay on the part of McDonalds in bringing the application for security. The initiating letter was despatched on the day immediately following the Order of Geoghegan J. granting leave. I do not think that McDonalds can be faulted for, as it were, giving the Applicant an initial free run, in the sense of not requiring to see the colour of the Applicant's money on the application for leave. The relevance of delay on the part of a party seeking security for costs was explained in the following passage from the judgment of Morris J., as he then was, delivered on 18th October, 1995 in the matter of Blakeston Limited, Beauross Limited -v- Kennedy :-

37. There is no evidence here that the Applicant altered its position to its detriment by reason of the application for security not having been made at the leave stage. As I have indicated, the costs of the application for leave have been reserved. The costs and expenses incurred by the Applicant on the leave application cannot be regarded as nugatory expenditure in that the Applicant got a result, in the sense that the Applicant can proceed to a substantive hearing.

38. The final ground on which it is alleged by the Applicant that an order for security for costs should not be granted is that the true purpose of McDonalds in seeking security is to stifle the Applicant's legitimate claim. Having rejected all of the other special circumstances contended for by the Applicant, having regard to the facts of this case, I cannot see how this ground, on its own, could justify refusing McDonald's Application. It is quite clear that the impetus for the incorporation of the Applicant, and I think it is reasonable to infer that its immediate sole raison d'etre was to constitute a vehicle for bringing these proceedings. By its very nature, the applicant can have no assets or finances other than those its members put into it or procure for it. In so far as there are costs and expenses involved in prosecuting these proceedings (and, even if its own legal team is prepared to act on a pro bono publico basis, there will still be Court fees and other costs of a like nature to be met), these costs and expenses must be funded by the members and, presumably, they are doing so voluntarily. By the same token, any costs and expenditure which the Applicant has to assume involuntarily must be funded by the members. I respectfully agree with the views expressed by Morris J., as he then was, in the following passage from his judgment on the Lancefort application for security at page 517, which I have already partly alluded to:-

39. If an order for security for costs is made in the instant case the judicial review proceedings will only come to a halt if the members choose not to finance the Applicant to enable it to give security.

40. I am satisfied that no special circumstance has been established by the Applicant and that McDonalds are entitled to an Order pursuant to Section 390 of the Act of 1963 that the Applicant should provide security for McDonald's costs of opposing the proceedings. The amount of the security will be quantified by the Master. There will be an Order staying all further proceedings pending the giving of security.

41. In reserving the question of costs in relation to the application for leave, Geoghegan J. was reserving or postponing the imposition of the burden of the costs for determination later either by agreement of the parties or by the judge trying the substantive application. In my view, in the absence of an express statutory provision or a rule of court (for example, Rule 75 of Order 70 of the 1986 Rules relating to matrimonial causes or matters), in the absence of agreement, a judge of this Court has no jurisdiction on an interlocutory application to determine where the burden of costs reserved on an earlier interlocutory application should lie. In any event, in the instant case, on the basis of my current appreciation of the merits of the case, even if I had jurisdiction I would be unable to decide the issue of the costs of the application for leave. In the circumstances, I will make no order in relation to the reserved costs.

42. As I have indicated, there will be an order for security on McDonald's Application and the Applicant's Application will be dismissed.