High Court of Ireland Decisions
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Cite as: [2014] IEHC 575
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Judgment
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Neutral Citation: [2014] IEHC 575 THE HIGH COURT COMMERCIAL [2014 No. 2473 P]
[2014 No. 35 COM] BETWEEN JAMES PATRICK FLANNERY AND LEXINGTON SERVICES LIMITED PLAINTIFFS AND
MORTIMER JOHN WALTERS, BRIAN CONNELL, ACTIVITY MONITORING SOLUTIONS LIMITED, CATHARSIS TECHNOLOGIES LIMITED, ASHLEY TRUST LIMITED AND ASHLEY NOMINEES LIMITED DEFENDANTS AND
CATHARSIS TECHNOLOGIES LIMITED COUNTERCLAIM PLAINTIFF AND
JAMES PATRICK FLANNERY, BRUCE BAHEER AND SHAEF-2 LIMITED COUNTERCLAIIM DEFENDANTS JUDGMENT of Mr. Justice Brian J. McGovern delivered on the 28th day of October 2014 1. On 22nd July 2014, I delivered a judgment ordering the counterclaim plaintiff, Catharsis Technologies Ltd. (“CTL”) to furnish security costs in respect of the counterclaim. This judgment concerns the amount of security to be furnished. 2. I received both written and oral submissions from the parties as to how I should approach the issue of the correct amount of security to be furnished and the date from which that amount should be calculated. The original application was made pursuant to O. 29 of the Rules of the Superior Courts. I ordered security on the basis that I was satisfied that the defendants to the counterclaim had adduced credible evidence that there is reason to believe that the counterclaim plaintiff, CTL, will be unable to pay the costs of the defendants to the counterclaim if successful in their defence. 3. The parties are in agreement that where security for costs is ordered under O. 29 against a foreign individual plaintiff, the usual rule is to order one-third of the costs to be put up by way of security in the absence of special circumstances. Where the parties disagree in this case is whether the “one-third rule” applies in the case of a foreign corporate body against whom security for costs has been ordered. That is the position in this case. The counterclaim defendants argue that I should follow the reasoning of Clarke J. in Harlequin Property (SVG) Ltd. v. O’Halloran [2012] IEHC 13, and Cooke J. in Goode Concrete v. CRH plc. & Ors. [2012] IEHC 198. The counterclaim plaintiff, on the other hand, argues that I should follow the decision of Laffoy J. in Ticket Generator Ltd. v. Dublin Airport Authority plc. [2012] IEHC 216, in which she felt bound by the Supreme Court decision in Framus Ltd. v. CRH plc. [2004] 2 IR 20, and concluded that in the absence of special circumstances, she must apply the “one-third rule” in ordering security under O. 29 of the Rules of the Superior Courts against a foreign defendant. She distinguished the position with s. 390 of the Companies Act. 4. In Harlequin Property (SVG) Ltd. v. O’Halloran, Clarke J. held that where the Court makes an order for security for costs against a non-resident body corporate pursuant to O. 29 of the Rules, the Court should ordinarily treat the non-resident body on a par with an Irish company the subject of s. 390 of the 1963 Act, and should order that full security for costs be provided, and should depart from the one-third rule applicable to foreign personal plaintiffs. At para. 4.15 of his judgment, he stated:
5. In Goode Concrete v. CRH plc. & Ors., Cooke J. exercised his discretion to depart from the one-third rule and ordered full security under O. 29 against an unlimited company, by analogy with s. 390 of the 1963 Act. In his judgment, he set out a broad analysis of the distinction between O. 29 of the Rules and s. 390 of the 1963 Act. He also observed that the practice of the Court to order security on a one-third basis of the full estimate against personal litigants under O. 29 is not a rule, as such, but “. . . is no more than a custom or practice and the Court can depart from it in appropriate cases in exercise of its discretion to grant security”. See paras. 13-15. 6. In Ticket Generator Ltd. v. Dublin Airport Authority plc. Laffoy J. concluded at para. 14:
7. In Farrell v. Bank of Ireland [2013] 2 ILRM 183, [2012] IESC 42 (which was decided subsequent to the Ticket Generator case), the Supreme Court recognised and exercised its discretion to depart from the one-third rule in measuring security to be provided by an individual plaintiff/appellant. The judgment of the Supreme Court was delivered by Clarke J. who referred to the practice of fixing security in the amount of one-third of the estimated costs which had existed since Thalle v. Soares & Ors. [1957] I.R. 182, but stated that it was not clear as to what the origins of the practice may have been. He also raised the question as to whether an appropriate distinction should be made between foreign litigants from outside the EU between those who have assets and could provide security (but the only problem is the availability of those assets within the jurisdiction so as to be readily available to meet an order for costs) and those who do not have sufficient assets at all. That question was left over for consideration at another appropriate time and the Court went on to deal with the issue of security on the basis of existing jurisdiction. In doing so, the Court held that existing jurisprudence does permit a departure from the so-called “one-third rule” in an appropriate case, and in that case, fixed security at 50% of the estimated costs. The case underlines the discretionary principles which apply in deciding on the level of security for costs to be ordered by the courts in applications brought under O. 29. 8. In the Framus judgment at p. 59 (para. 86), Murray J. referred to the judgment of Hederman J. in Fallon v. An Bord Pleanála [1992] 2 I.R. 380 at 391, when he referred to Thalle v. Soares & Ors. and stated:
9. Like Laffoy J., I believe the legal issues surrounding the distinction to be drawn between a foreign corporate plaintiff and an Irish corporate plaintiff under O. 29 and s. 390, respectively, is anything but clear. For my part, I do not read the Framus judgment as limiting the discretion which I have to decide on the amount of the security to be ordered, although it does appear to suggest that the “one-third rule” is the default position to be adopted in the absence of special circumstances. In Farrell v. Bank of Ireland, the Supreme Court seems to have pulled back somewhat from that position and I feel I am entitled to rely on it. It is difficult to ignore the obvious problem that arises if foreign companies could maintain proceedings in Ireland on easier terms than Irish companies. Clarke J. referred to this problem in the Harlequin case (para. 4.11). Such an anomaly could not serve the interests of justice. It is one of the hallmarks of justice that there should be consistency and equality of treatment between similar parties presenting before the courts in similar circumstances. On rare occasions, the Court may find itself faced with a situation where it has to make an order that might not meet this standard, simply because of a statutory provision which requires to be fulfilled. In such cases, all the Court can do is to point out the anomaly and hope that the Legislature will act to cure the problem. 10. There seems to be no good reason in this case why the counterclaim plaintiff should be treated any differently than an Irish company would be in similar circumstances, having regard to the fact that I directed security be furnished on the basis of inability to pay the costs of the defendants to the counterclaim if successful in their defence. In those circumstances, I will fix security in the full amount of such figures as I calculate on the basis of the competing sums offered by the legal cost accountants for each party. 11. The security to be furnished will be security in respect of costs from the date of the first request. On 1st May 2014, the counterclaim defendant first requested security for costs and that is the date from which the costs should be estimated. 12. So far as the legal cost accountants for each party to this motion are in disagreement, I have approached the amount of security on the basis of a 4-day hearing related to the counterclaim. I assess the security on the basis of the following figures which I believe to be reasonable as estimates of the costs associated with the issue:
Senior Counsel Brief Fee: €10,000 Refreshers €4,000 x 4: €16,000 Other Fees: €2,700 Junior Counsel Brief Fee: €6,500 Refreshers 4 x €2,665 €10,660 Other Fees: €3,500 Stenographers: €7,500 Electronic Discovery: €3,500 VAT*: €14,046.00 Witnesses Expenses: €20,000 Total: €134,406.00 13. I will direct that the security to be furnished in respect of the counterclaim defendants’ costs be fixed in the sum of €134,406.00. |
