In Ticket Generator Limited v. Dublin Airport Authority Plc & Ors.  IEHC 216, Laffoy J. made the following observation:
"Like so many aspects of the law, the jurisdiction conferred on the Court in relation to ordering that security for costs be given and fixing the amount of the security is a mire of lacunae and anomalies."
The “one third rule”
In the seminal decision in Thalle v. Soares  IR 182, the plaintiff and the defendant were, according to the High Court, “persons of lowly stations and they have their homes in New York State.” In the Master’s Court, the defendant claimed that his costs would be somewhat in excess of £3,000.00, whereas the plaintiff argued that a true estimate was just under £1,800.00. The Master fixed the amount of the security at £2,500.00, being “midway between the two figures put before him”. The Plaintiff appealed to the High Court, claiming the sum was excessive. In rejecting the Plaintiff’s appeal, the High Court cited, with approval, comments by Mr. Justice Dixon in Gibson v. Coleman  I.R. 50 where he stated:
"I can find no support for the view that the amount to be fixed should be less than a fair and reasonable computation of the costs to which he would probably be put in defending the action."
In the Supreme Court, Kingsmill Moore J. disagreed with the lower court’s approach. Having reviewed the authorities, his Lordship could find only one case “where security was ordered for the full amount of estimated costs”. In reducing the sum to £1,000.00, his Lordship made reference to the Court’s discretion with regard to fixing the amount and relied on his own experience of:
"the practice which has prevailed in Ireland from 1919 until recent years, it was customary to require as security an amount not more than about a third of the costs which would probably be incurred by the defendants."
Well established practice
Over three decades later, in Fallon v. An Bord Pleanala  2 I.R. 380, the Supreme Court (Hederman J.) expressed the following view:
"...to depart from the well established practice of ordering a sum of one third of the estimated costs to be incurred by the party against whom security has been granted, as a prerequisite to proceeding with his case, the Court would have to be satisfied on evidence that the interest of justice could only be served by increasing the amount for security for costs to a sum substantially in excess of one third of the costs to be incurred."
Section 390, Companies Act 1963
In Lismore Homes Limited (in Receivership) v. Bank of Ireland Finance Limited & Ors. [High Court, 24th March 2000] McCracken J. had to determine what “sufficient security” was in the context of an application under Section 390 of the Companies Act, 1963. That section provided:
"Where a limited company is plaintiff in any action or other legal proceeding, any judge having jurisdiction in 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 the security is given."
The phrase “sufficient security” has considerable pedigree, having previously appeared in Section 278 of the Companies (Consolidation) Act, 1908 and in Section 69 of the 1862 Companies Act.
In a departure from the one-third rule, Mr. Justice McCracken held that the word “sufficient” meant sufficient for the costs of the defendant if successful in his defence, stating:
"Where the Court orders security for costs to be given in other circumstances, such as where the Plaintiff is out of the jurisdiction, it is customary to require security of approximately one third of the probable costs. I do not see how under any circumstances this could be called “sufficient security”, and I think this section can only mean that the security required must approximate to the probable costs of the Defendant should he succeed."
Order 29, RSC
As practitioners will be aware, where a plaintiff is resident out of the jurisdiction, an application for security can be made under Order 29 of the Rules of the Superior Courts, which refers to “security” not “sufficient security”. In Harlequin Property (SVG) Limited & Anor. v. O’Halloran & Anor.  IEHC 13, the High Court looked at two specific issues, the first of which was:
"Whether, given that the order for security for costs made was under Order 29 rather than under s.390 of the 1963 Act, it is appropriate to follow the common practice in orders made under Order 29 to direct security at one third of the total amount of costs estimated as being likely to arise"
Corporate plaintiffs – foreign and Irish
In relation to the amount of security which a foreign company should be ordered to provide, Clarke J. felt that an analysis of the jurisprudence:
"...seems to me to support the view that the justice of an application for security for costs under Order 29 made against a corporate foreign plaintiff should lead to that corporate foreign plaintiff being required to put up the same type of security as an Irish corporate plaintiff would have to…I am satisfied that it is appropriate to approach the fixing of security on the facts of this case on the basis of full security rather than by the application of the one third practice."
The one-third rule restated
The same question which Judge Clarke addressed in Harlequin came before Laffoy J. in Ticket Generator. Despite describing the underlying rationale of the Harlequin decision as “compelling”, Laffoy J. felt obliged to take a different approach in light of the Supreme Court’s decision in Framus Limited & Ors. v. CRH plc & Ors.  2 I.R. 21 which, she observed, had not been drawn to the attention of Clarke J. at the hearing in Harlequin. Laffoy J.’s analysis of the ratio of the Supreme Court’s decision in Framus and her approach to the quantum of security was as follows:
"...in determining the amount of the security for costs under the Court’s jurisdiction, which is now governed by the Rules, the objective is to achieve a balance between the parties. That balance is reflected in the one-third rule, although a different approach may be warranted on the facts of a particular case… Although the matter is anything but “black and white”, with a considerable degree of diffidence, I have come to the conclusion that this Court is bound to adopt the approach taken in Thalle v. Soares, as explained in the Framus case, and to apply the one-third practice as to the amount of security ordered, notwithstanding that the order for security is against a limited company incorporated outside the State, unless there are special circumstances indicating that it should be departed from. I find no such special circumstances in this case. "
Discretion to depart from the rule
On the 8th of July 2015, the Court of Appeal gave judgment in Flannery & Anor. v. Walters & Ors.  IECA 147. In the High Court, McGovern J. had made an order for the full amount of what he determined to be a reasonable estimate of the cost. Finlay Geoghegan J. commented as follows in relation to the approach taken:
"In my judgment, the trial judge was correct in his conclusion that the Supreme Court judgments collectively do not limit his discretion to depart from the so called “one third rule” where, as on the facts herein, he has determined that a limited company registered outside the jurisdiction but within the EU should give security on the basis of inability to pay the costs of the defendants."
Companies Act 2014, section 52
Section 52 of the 2014 Companies Act (which came into effect on 1st of June 2015) repeats the wording previously found in Section 390 of the 1963 Act, but without the word “sufficient”. Nor is that word to be found in Order 29. Given this legislative change, a defendant who argues that the entire of their likely costs should be ordered as security arguable faces a greater challenge.
It appears to be settled law that, in an appropriate case, the Court may depart from the so called “one third rule” and while a decision from the Superior Courts, specifically in relation to Section 52 of the 2014 Companies Act, would provide welcome clarity, the one-third rule remains the touchstone. Meanwhile, the comments by Fitzgibbon J. made almost a century ago in Perry v. Stratham  I.R. 580 would seem to be equally relevant today:
"It must be borne in mind that security is not intended either as an indemnity against all costs which may be incurred or as an encouragement to luxurious litigation..."