The proceedings principally concern contested allegations by the Plaintiff that the Defendants acted in bad faith.
The Defendants believed that the Plaintiff company would be unable to pay the Defendants' costs if the Defendants were to succeed.
The Court ruled on several issues which serve as particularly useful guidance to practitioners when considering applications of this nature. In particular, the Court identified and reaffirmed the factors which will be taken into consideration when such an application comes before it.
The Court ultimately granted an Order for Security for Costs in favour of the Defendants having taken a pragmatic approach in its consideration, ultimately with a view to levelling the playing field and ensuring the matter would progress as efficiently and expeditiously as possible.
Grounds for application
The Court considered the law in relation to security for costs applications. It was satisfied that the Supreme Court decisions in Quinn Insurance Ltd (Under Administration) v. PricewaterhouseCoopers (A Firm) IESC 15 and Protégé International Group (Cyprus) Limited v. Irish Distillers Limited IESC 16 were appropriate authorities.
The Court determined that if a defendant intends to seek security for costs, it must first establish (i) that it has a prima facie defence; and (ii) that the Plaintiff will not be in a position to pay the defendant's costs if the defendant is successful. If a defendant can establish (i) and (ii), then the default position will be that security is ordered. It noted, however, that where special circumstances exist, the court can exercise its discretion not to order security for costs.
Prima facie defence
The Court considered that the evidence in support of the Plaintiff's claim was weak. It added, however, that although it was of the view that the Defendants' had a prima facie defence, it did not necessarily follow that the Plaintiff would not be successful. The Court was not determining the merits of the full action.
Ability to pay and special circumstances
The Court then moved to consider the ability of the Plaintiff to pay the Defendants' costs in the event of the Defendants' success in the substantive proceedings. Having considered the evidence put before it by both sides, the Court considered the evidence to be persuasive in the Defendants' favour. The Court did not find any special circumstances to warrant exercising its discretion against making an Order for Security.
The judgment delivered by Mr Justice Twomey serves as helpful and pragmatic guidance to practitioners and litigants as to what the Court will consider when applications for security for costs are made.