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Cite as: [2006] IESC 1, [2006] 2 IR 260, [2006] 1 ILRM 363

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Judgment Title: Usk and District Residents Association Limited -v- Environmental Protection Agency Neutral Citation: [2006] IESC 1 Supreme Court Record Number: 548/04 High Court Record Number: 2004 694 JR Date of Delivery: 13/01/2006 Court: Supreme Court Composition of Court: Kearns J., Macken J., Clarke J. Judgment by: Clarke J. Status of Judgment: Approved

Judgments by	Result	Concurring	Dissenting
Clarke J.	Other (see notes)	Kearns J., Macken J.

Notes on Memo: Dismiss Appeal, Vary Order of High Court in respect of costs by reserving the costs of the security issue before the High Court to the Judge who will have carriage of the leave application.

19

KEARNS J. JUDICIAL REVIEW
MACKEN J. APPEAL No. 548/2004
CLARKE J.BETWEENJUDGMENT of Mr. Justice Clarke delivered the 13th day of January, 2006.

1. Introduction
1.1 The applicant/appellant (“Usk”) is a company limited by guarantee which was incorporated on 23rd April, 2001 for the purposes of operating as a residents association for the District of Usk in County Kildare. The company has been involved in local issues and campaigns since its establishment.
1.2 In particular Usk has campaigned in relation to a proposal by the notice party/respondent (“Greenstar”) to construct and operate a waste disposal facility in the area. As part of the necessary permissions which Greenstar would require in order to operate the facility concerned, a waste licence from the respondent (“The EPA”) was required. On the 8th of June, 2004 the EPA granted a waste licence (register reference no. 168-1) to Greenstar for a non-hazardous waste disposal facility.
2. The Proceedings
2.1 Usk brought an application for leave to seek judicial review for the purposes of challenging the validity of the grant of that waste licence. It is accepted that any such challenge must be by way of judicial review and that an application for leave must be brought on notice to all relevant parties. Furthermore, substantial grounds must be established. There is no controversy as to the applicability of those requirements in this case.
2.2 The application for leave to seek judicial review in respect of the waste licence was initiated on 5th August, 2004. In the statement required to ground that application Usk seeks an order of certiorari quashing the decision of the EPA to grant the waste licence and declaratory relief concerning certain of the conditions attached to that licence. In paragraph E of the statement 14 separate grounds for the relief sought are set out. I will refer, in due course, in more detail to certain of the grounds which are relevant to this application.
2.3 In opposition to the application for leave the EPA filed an affidavit sworn by Patrick J. Nolan on 5th November, 2004. Greenstar filed an affidavit sworn by Gabriel Dennison also on 5th November, 2004. Finally a supplemental affidavit on the part of Usk was filed being that of Jack O’Sullivan sworn on 19th November, 2004.
3. Security for Costs
3.1 On the 17th November, 2004 Greenstar brought a motion before the High Court seeking security for costs pursuant to s. 390 of the Companies Act 1963. On the 26th November, 2004 that application came on for hearing before the High Court (Kelly J.) who delivered an ex tempore judgment on that day. It is as against that judgment that Usk appeals to this court. The starting point of any consideration of the appeal must, therefore, be that determination of the High Court.
4. The High Court Judgment
4.1 As appears from the approved note of his judgment, Kelly J. was satisfied on the evidence that it was likely that Usk would be unable to pay Greenstar’s costs in the event that Greenstar was successful. On that basis the Court was satisfied that Greenstar had established a prima facie entitlement to security for costs.
4.2 As further appears from the approved note of the judgment, the central contention advanced by Usk in response to Greenstar’s application for security was to assert that Greenstar had not, in respect of a number of aspects of the claim as set out in the statement of grounds, established a prima facie defence. In particular, and is confirmed by the note of the judgment, Usk argued that in respect of grounds 7, 9 and 14 of the statement of grounds Greenstar had not established that either it (Greenstar) or the EPA had a prima facie defence. For the reasons set out in the judgment, Kelly J. rejected the contention in respect of each of the grounds advanced and came to the conclusion that Greenstar had established that a prima facie defence existed.
4.3 The High Court, therefore, found that Usk would be unable to meet Greenstar’s costs in the event that Greenstar should succeed. Kelly J. also found that Greenstar had established that there was a prima facie defence to Usk’s application. Therefore, having regard to the absence of any contention that there were other special circumstances which would justify the court in exercising its discretion against the grant of an order for security for costs, Kelly J. ordered that such security be provided.
4.4 Two further aspects of the hearing before the High Court need to be noted.
Firstly, at the level of principle, Kelly J. confined the order made in respect of security for costs at that stage to the costs that might be incurred in relation to the application for leave.
It would appear that the reason for confining the order in that respect was to take into account the possibility that Usk might fail to obtain leave and that the entire proceedings might thereby come to an end. In those circumstances the only costs which would have been incurred by Greenstar would be the costs of appearing to oppose the leave application.
No appeal is brought in respect of that aspect of the decision. It would appear that the question of ordering further security for costs in respect of a substantive hearing was left over until after the leave hearing had been determined.
4.5 Secondly, in accordance with normal practice, both parties submitted evidence by way of a report from a legal cost accountant as to the costs that would be likely to be incurred by Greenstar in an unsuccessful application by Usk for leave. The court preferred the lower sum indicated by the cost accountants instructed on behalf of Usk and fixed the amount of the security in that sum.
5. The Appeal
5.1 Against that decision Usk appeals to this Court. As the only real ground of opposition to the making of an order for security of costs in favour of Greenstar in the High Court was to assert that Greenstar had failed to establish a prima facie defence to certain aspects of Usk’s claim the appeal, not surprisingly, was directed to the same matter. Therefore, in substance, the appeal concerns the sole question of whether it can properly be said that a prima facie defence has been established.

6. Security for Costs – The Jurisdiction
6.1 The general principles which are applicable to the grant of security for costs are now well settled. That those principles have application to cases such as this (where the corporate entity concerned is a vehicle for a group of persons who have an interest in pursuing environmental issues) is clear from the judgment of this Court in Lancefort Limited v. An Bord Pleanála (2) [1999] 2 IR 270 where, in delivering the majority judgment of this court, Keane J. stated as follows at p.317:-

“It is, understandably, a matter for concern that companies of this nature can be formed simply to afford Residents Associations and other objectors immunity against the costs of legal challenges to the granting of planning permissions. Our law, however, recognises the right of persons associating together for non-profit making or charitable activities to incorporate themselves as limited companies and the fact that they have chosen so to do should not of itself deprive them in every case of locus standi. While shielding the members against an order for costs in the event of the company becoming involved in litigation may well be a consequence of limited liability, it is not necessarily the only reason why citizens concerned with issues as to the environment may decide to incorporate themselves as a company. It must also be remembered that, in the case of such a company, the High Court may order security for costs to be provided under s. 390 of the Companies Act, 1963, as indeed happened in this case.”

6.2 The overall approach to security for costs was helpfully summarised by Morris P. in Interfinance Group Limited v. KPMG Pete Marwick (High Court, Unreported, Morris J. 29th June, 1998) as follows:-

“1. In order to succeed in obtaining security for costs an initial onus rests upon the moving party to establish:-
(a) that he has a prima facie defence to the plaintiff’s claim, and
(b) that the plaintiff will not be able to pay the moving party’s costs if the moving party be successful;
2. In the event that the above two facts are established then security ought to be required unless it can be shown that there are specific circumstances in the case which ought to cause the court to exercise its discretion not to make the order sought. In this regard the onus vests upon the party resisting the order.

The most common examples of such special circumstances include cases where a plaintiff’s inability to discharge the defendants costs of successfully defending the action concerned flow from the wrong allegedly committed by the moving party or where there has been delay by the moving party in seeking the order sought.
The list of special circumstances referred to is not, of course, exhaustive.”
6.3 In this case there is no dispute but that the trial judge was more than entitled to find that Usk would not be able to pay Greenstar’s costs in the event of Greenstar being successful.
6.4 Furthermore there were no special circumstances urged such as might require the court to exercise its discretion against the making of an order for security for costs. In those circumstances it is clear that on the facts of this case the making or refusal of the order sought turns entirely on the question of whether Greenstar has established that it has a prima facie defence.
6.5 Before passing from the overall jurisdiction it is necessary to refer to the text of the relevant statute that is s. 309 of the Companies Act 1963. The relevant part of this section provides:-

“Where a limited company is plaintiff in an action or other legal proceedings, any judge having jurisdiction of the matter, may, if it appears by credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings until security is given.”

6.6 While the section speaks of “plaintiff” and “defendant” it is clear that the intent of the section is that it should apply not only to an “action” but also to “other legal proceedings”. It is not contested that the section can apply to any form of proceeding. For example in Village Residents Association Limited v. An Bord Pleanála and Others [2000] 4 IR 321 Laffoy J. made an order for security for costs in favour of a respondent as against an applicant for judicial review. Similarly, it seems to me that any person or body who is a necessary party to judicial review proceedings, even though termed a “notice party” rather than a “respondent” comes within the scope of a “defendant” for the purposes of s. 390. On the facts of this case there can be no doubt but that Greenstar are a necessary party given that a successful judicial review would have the effect of depriving Greenstar of the benefit of the waste licence which has been granted.
7. Preliminary Questions
7.1 Before going on to consider the central issue as to whether Greenstar can be said to have established a prima facie defence, two preliminary questions need to be addressed. They are:-
(a) to what must it be said that Greenstar has established a prima facie defence? The matter currently before the High Court is an application for leave. Usk argues that, at this stage, it is necessary for Greenstar to establish that it has a prima facie defence to that application, that is to say the application for leave. Greenstar argues that it is only necessary for it to establish that it has a prima facie defence to the proceedings as a whole, that is to say the substantive judicial review proceedings; and
(b) by reference to what materials is the court to consider the question of whether Greenstar has established a prima facie defence? Usk draws attention to the specific matters set out on behalf of Greenstar in the affidavit sworn to ground the motion seeking security for costs. It is, in substance, argued that Greenstar are confined to those matters in arguing for the establishment of a prima facie defence. Greenstar argues that, in the context of judicial review proceedings in which affidavits have been filed, it is permissible to refer to any of such materials in order to persuade the court that it has established a prima facie defence.
I deal with both issues in turn.
7.2 Section 309 speaks of security being given in respect of the costs “of the defendant if successful in his defence”. It seems to me that the section, therefore, requires the court to address the question as to whether a defendant (or for the reasons indicated above a party in a position analogous to a defendant) has established a prima facie defence to the proceedings as a whole.
7.3 It was, in the circumstances of a case such as this, entirely appropriate for the trial judge to limit the quantum of costs in respect of which security has to be given for the time being, to the costs which might reasonably be expected to arise at the leave application. That limitation was in ease of Usk. The reason for the limitation was, clearly, that if Usk were to be required to give security for the costs of the entirety of the proceedings at this stage the quantum of that security might well significantly exceed the costs that would be awarded in circumstances where Usk failed to obtain leave. However it seems to me that that rationale applies only to the quantum of the security and not to the grounds for granting security in the first place.
7.4 It is impossible to determine, at this stage, whether it would be appropriate for the High Court to deal with the costs of the leave application, in the event of Usk being successful, immediately after the delivery of judgment in respect of the leave application on the one hand or to reserve such costs to the judge who will have trial of the substantive issue that would, in those circumstances, need to be tried, on the other hand. While it may well be that the requirements of the specific rules applicable to the Commercial Court (Order 63A Rule 30) might cause a judge who hears the leave application to lean in favour of dealing with the costs of the leave application as a discrete item of costs, same should not be assumed. The judge may, alternatively, in accordance with that rule take the view that it was not possible, at that stage, to adjudicate justly upon liability for the costs of that application. It cannot, therefore, be assumed that the costs of the leave application will be treated as a discrete item of costs. It may well, therefore, be that in order for Greenstar to succeed in obtaining an order for costs in relation to the leave application it will be necessary for Greenstar to succeed at the substantive hearing.
7.5 This latter fact, taken together with the wording of s. 309 which, as I have indicated above, speaks of a successful defence of the proceedings leads me to the view that the question of whether or not Greenstar may be said to have established a prima facie defence should be taken as meaning a defence to the proceedings as a whole rather than a defence to the leave application.
7.6 The second issue concerns the materials which it is appropriate for the court to consider in determining whether Greenstar may be said to have established a prima facie defence. It is well settled that it is insufficient for a defendant, or a party in a position analogous to a defendant, to simply assert that he has a defence. It is necessary that he establish, by evidence, a prima facie defence. In plenary proceedings it is inevitable that the moving party will require to file an affidavit setting out sufficient facts to enable the court to conclude that he has a prima facie defence. The mere denial in pleadings (if the case has reached that stage) of the plaintiffs claim will not, obviously, be sufficient. A mere assertion in a grounding affidavit that the defendant has a good defence will not establish a prima facie case to that effect.
7.7 However it seems to me that very different considerations apply in circumstances, such as those present in this case, where the parties have already filed lengthy affidavits in support of their respective cases. Indeed in judicial review proceedings the case itself, whether it may be an application for leave, or a substantive hearing, will be tried on affidavit unless the court otherwise directs. In those circumstances it seems to me that it would be unreal to assess the question of whether the moving party had established a prima facie defence without reference to any affidavits which had been filed for the purposes of either a leave or substantive hearing together with, of course, any documents exhibited in such affidavits.
7.8 In the course of argument in this Court, counsel for Usk argued that it would be in breach of fair procedures if Greenstar were to be permitted to rely on materials which while before the court, in the sense of being part of the papers for the leave application, had not been specifically referred to in the grounding affidavit filed in relation to the security for costs application. It does not seem to me that that contention is well founded. It may well be that, in many cases, the only evidence which will be before the court on a security for costs application from which it might be concluded that the moving party has established a prima facie defence will be found in the affidavit grounding the application for security for costs. However, where, as here, in accordance with the ordinary procedures appropriate to the type of proceeding involved, affidavits have been filed setting out the position of the parties, it seems to me that the moving party is entitled to point any aspect of that evidence in support of his contention that he has established a prima facie defence. To permit him so to do does not amount to an unfair procedure. When the substantive issue comes to trial (in this case, initially, by the hearing of the leave application) the relevant affidavits will form the basis of Greenstar’s opposition to the application for leave. If Usk is, by virtue of the contents of those affidavits, on sufficient notice of the nature of the defence being put forward on behalf of the EPA and Greenstar to enable it to deal with the leave application itself then it is equally on sufficient notice to be aware of the nature of the defence being put forward so as to deal with the question of whether there has been established a prima facie defence sufficient to permit the court to exercise its jurisdiction to order security for costs.
7.9 Finally, before passing from this aspect of the matter, it should also be noted that in certain types of proceedings the real defence may amount purely to legal argument. In such a case while it may, as a matter of convenience, be normal practice for the deponent of a grounding affidavit in a security for costs application to state his advice and belief in respect of such a defence and thus to depart from the normal practice by including an outline of the legal defence in such an affidavit, there is no reason in principle why the existence of a prima facie defence, sufficient for the purposes of an application for security for costs, could not be established by legal argument alone. For that to be the case, however, it would, of course, be necessary that the defence proffered did not depend upon any factual contest or factual matters which were not otherwise clear from the materials already before the court.
7.10 It seems to me, therefore, that is open to a moving party seeking security for costs to rely, for the purposes of establishing a prima facie defence, on any factual matters which are properly before the court (including any matters which are contained in affidavits filed in the substantive proceedings) and also to rely on any legal argument which may be open on the basis of the facts asserted by the plaintiff or facts which have been prima facie established in the materials properly before the court.
8. The Issues in this Case
8.1 In substance it is argued on behalf of Usk that in relation to three of the grounds set out in the statement required to ground the application for judicial review no prima facie defence has been established. It was properly accepted by counsel for Usk that in order for it to be established that Greenstar had failed to show a prima facie defence it would be necessary for him to satisfy the court that the grounds, to which he asserted no prima facie defence had been put forward, would, either individually or collectively, be sufficient, of themselves, to entitle Usk to succeed. This is undoubtedly correct. The test is as to whether there is a prima facie defence to the proceedings, not to any individual ground put forward in support of the claim. Unless, therefore, a ground or basis for claim in respect of which it is said that no prima facie defence has been put forward, would be sufficient to ensure that the plaintiff would succeed, then the absence of a prima facie defence to that ground would not of itself necessarily mean that the defendant might have a prima facie defence to the proceedings as a whole.
Applying that overall approach it is now necessary to turn to the individual grounds in respect of which Usk contends no prima facie defence has been established.
Ground 7
8.2 The case made on behalf of Usk in relation to that ground relies on the provisions of s. 13 of the Waste Management (Licensing) Regulations 2000 and Article 25 of the European Communities (Environmental Impact Assessment) Regulations 1989 (as amended) for the proposition that an applicant for a waste licence is required to include certain information in an environmental impact statement accompanying his application (the “EIS”). It would appear, on the evidence currently available, that such an EIS did accompany the application for the waste licence in this case. The complaint specified at ground 7 asserts that, since the date of the submission of the EIS concerned, further unauthorised quarrying continued at the lands the subject matter of the application. As a consequence, it is said, the relevant information about the site contained in the EIS was out of date as a consequence of which it is contended that the EPA was not in a position to carry out a proper environmental impact assessment (“EIA”) for the purposes of the Waste Management Acts 1996 to 2003.
8.3 In response counsel for Greenstar draws attention to the fact that in the report of the inspector appointed to consider the matter on behalf of the EPA it is made clear that the site “is currently owned and operated as a sand and gravel quarry” by a third party. The report further noted that “the quarry will continue in operation for a period during the development of the landfill, but the applicant indicated that quarrying will cease prior to the commencement of waste acceptance and that they plan to purchase the site”.
8.4 Furthermore attention is drawn to the fact that, notwithstanding a significant involvement on the part of Usk, and experts employed on its behalf, in the licensing process, no complaint was made by or on behalf of Usk in relation to an allegation that the EIS was allegedly materially out of date.
8.5 Finally attention is drawn to the fact that there is a distinction between an EIS which is a document which must be prepared on behalf of an applicant for a licence and the EIA which is the process that must be engaged in by the licensing authority prior to the grant of a licence.
8.6 On the basis of the contents of the inspector’s report it is contended on behalf of Greenstar that it was clear that the inspector, and therefore the EPA, were well aware of the continuing quarrying and must, therefore, be taken to have had regard to that fact in their assessment of the environmental impacts of the grant of the licence.
8.7 In Bula v. Tara Mines [1988] I.R. 474 Murphy J., at p. 501, in respect of an application for security for costs, said the following:-

“(I)t is no part of my function as I see it to forecast the outcome of the litigation or to pre-judge the facts or express an interim view on the questions of law involved. On behalf of the defendants it was argued that the weakness of the plaintiff’s case is a factor to which regard should be had. While it must be established that the plaintiffs do have an arguable case it does not seem to me that it is either necessary or proper to evaluate the prospects of success”.

That passage was approved by McCarthy J. in this court in Comhlucht Páipéar Ríomhaireahta Teo .v Udarás na Gaeltachta [1990] 1 I.R. 320 at p. 331 and 332.
8.8 Similarly, in the assessment of the question of whether a moving party may be said to have established a prima facie defence, similar considerations apply. Indeed it would be wholly inappropriate for this court to express any view on the strength or otherwise of the case (which remains to be heard in the High Court) other than to reach a conclusion on the issue necessary to resolve the matter currently before the court, that is to say whether a prima facie defence has been established.
8.9 On that basis I should go no further than expressing the view that it seems to me that the matters addressed on behalf of Greenstar, and referred to above, amount to an arguable defence to the issue raised by the plaintiff in respect of its contention that the EIS was out of date and that, therefore, no proper EIA had been conducted by the EPA.
Ground 9
8.10 Ground 9 and certain connected grounds concern the application of the so called BATNEEC. This is an acronym for “best available technology not entailing excessive cost”. The term is to be found in s. 40(4)(c) of the Waste Management Act 1996 which provides that the EPA shall not grant a waste licence unless it is satisfied that:-

“The best available technology not entailing excessive costs will be used to prevent or eliminate or, where that is not practicable, to limit, abate or reduce an emission from the activity concerned”.

8.11 It seems to me that it is at least arguable that the question as to what might be the BATNEEC in any particular case is primarily a matter for the judgment of the EPA which is the statutory body entrusted with the licensing regime and which has the expertise to exercise appropriate judgments of that type. Insofar as relevant to the facts of this case the technology concerned would appear to relate in particular to the existence of buffer zones.
8.12 Thus Usk argues that the licence required the establishment of the best available buffer zone in accordance with current standards. However, on the evidence currently before the court it is at least arguable that there is no specific buffer zone established by standard in respect of activities of the type with which the EPA was concerned in this case. In those circumstances it is at least arguable that the EPA had a wide discretion as to what it might consider to be an appropriate buffer zone which would comply with the BATNEEC test. On that basis it is, in turn, arguable that the decision of the EPA, under this aspect of the case, would only be subject to review if its decision were to be established to be irrational in the legal sense, that is to say if it could be shown that the EPA could not have rationally come to the view that the buffer zone which they imposed did amount to the BATNEEC. In those circumstances it seems to me that Greenstar has established that there is an arguable defence to this aspect of the case. For the reasons indicated above it would be wholly inappropriate to express any further view concerning the strength or otherwise of that defence.
Ground 14
8.13 Finally it is said on behalf of Usk that no prima facie defence has been established to ground 14 which asserts that the licence ultimately granted related to an activity “materially different” from that in respect of which the application was made. The basis for that contention concerns the allegation that by allowing the deposition of inert waste in certain areas the EPA had, in effect, extended the area for waste deposition.
8.14 Any such question would appear likely to turn on the materiality of any alleged distinction between the activity the subject of the licence application and the activity actually licensed. It may well, therefore, amount to a question of degree. As argued by counsel for Greenstar the determination of an issue such as the one that arises under this ground, will necessarily involve a careful analysis of the activity in respect of which the licence was sought together with a similar analysis of the activity actually licensed. On the basis of the materials before the court it does not appear to me that it can be said that it is clear that Usk will necessarily succeed. On this ground too I will refrain from expressing any further view as the matter will require to be determined at the substantive hearing.
9. Conclusions on Security for Costs
9.1 For all of the above reasons I am satisfied that Greenstar has established a prima facie defence to each of the grounds upon which reliance was placed by Usk. In those circumstances Greenstar has established a prima facie defence to the proceedings as a whole. As the absence of such a defence was the only substantive reason put forward on behalf of Usk for resisting the order for security of costs it follows that in my view the substantive appeal must fail and that the order for security for costs made in the High Court should be upheld.
10. Costs of High Court
10.1 A separate appeal was brought on behalf of Usk in respect of the decision of the High Court to award the costs of the security application in favour of Greenstar and against Usk.
10.2 While the costs of any matter before the High Court are to an extent discretionary and while, therefore, this court should be slow to interfere with the decision of the High Court as to costs in cases where a substantive appeal has not succeeded, I am satisfied that there are grounds for this court taking a different view of the costs of the High Court.
10.3 As was pointed out at paragraph 7.4 above the rules applicable to the Commercial Court (Order 63A Rule 30) suggest that a judge of that court should lean in favour of making an order for costs in respect of each interlocutory matter which may come before the court as such matters arise and are determined. The obvious intent of that rule is that parties should be encouraged to direct their mind to the specific issues that arise at an interlocutory hearing so as to avoid any unnecessary disputes arising in relation to such interlocutory applications. Where it is clear, as a result of the determination of the issue raised at the interlocutory hearing, that the application either should not have been brought or should not have been opposed then the court should undoubtedly attempt to award the costs as appropriate, irrespective of which party may ultimately prove to be in the right in the substantive proceedings. A party which is generally unmeritorious so far as the proceedings as a whole are concerned may nonetheless have been correct to resist a particular interlocutory application.
10.4 However in order to exercise the relevant discretion it is necessary to analyse fully which party may be said to have succeeded and which party may be said to have failed in respect of the various elements of the interlocutory application with which the court was concerned. While there is no doubt but that Greenstar succeeded in establishing the principle of its entitlement to security for costs it is equally true that Usk succeeded to the extent that the costs were restricted to the costs which would be referable to the leave application (at least for the moment) and were also fixed at the sum suggested by Usk rather than that sought by Greenstar. While it is true to state, as pointed out by counsel for Greenstar, that Usk at no stage, whether before the High Court, or this Court indicated a preparedness to give any security it nonetheless also has to be acknowledged that the position ultimately arrived at is one which was, to a material degree, less than that initially sought on behalf of Greenstar. In those circumstances, while respecting the provisions of Order 63A Rule 30, I have come to the view that it would be appropriate to vary the order of the High Court in respect of costs by reserving the costs of the security issue before the High Court to the judge who will have carriage of the leave application.