3V Benelux BV v Safecharge Card Services Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Allen
• Judgment Date: 06 March 2020
• Neutral Citation: [2020] IEHC 139
• Date: 06 March 2020
• Docket Number: [2017 No. 4639 P.]
• Court: High Court

BETWEEN

3V BENELUX BV

PLAINTIFF

AND

SAFECHARGE CARD SERVICES LIMITED

DEFENDANT

[2020] IEHC 139

Allen J.

[2017 No. 4639 P.]

THE HIGH COURT

Security for costs – Estimate – Breach of contract – Defendant seeking security for costs – Whether the plaintiff should give security for the full amount of the defendant’s estimate, or a fraction or percentage

Facts: The High Court (Allen J), on 16th October, 2019, decided that the defendant, Safecharge Card Services Ltd, had established that it had a prima facie defence to the claim of the plaintiff, 3V Benelux BV, that the defendant had established that there was reason to believe that the plaintiff would be unable to pay the costs of the action if it were to fail, and that the plaintiff had failed to establish on a prima facie basis that the cause of the apprehended inability to pay costs was actionable wrongdoing on the part of the defendant. At the opening of the application for security for costs, counsel informed the court that, subject to the court, the parties had agreed to leave over any issue as to the amount of the costs which should be secured if the court was persuaded to make an order. That issue as to the amount of the security was the issue as to the percentage or fraction of the costs for which security (if any) should be given, and not the amount of the defendant’s costs. At the substantive hearing, the parties put forward estimates of party and party costs. Allen J preferred the defendant’s estimate to the plaintiff’s estimate and considered the issue of the apprehended inability to pay on the basis of the higher estimate. What remained to be decided was whether the plaintiff should give security for the full amount of the defendant’s estimate, or a fraction or percentage. The defendant wanted security for the full amount of the estimate, and wanted cash or a bond. On the one hand, the plaintiff offered what was said to be security for €417,642. On the other, there was a complex legal argument which canvassed the difference between “sufficient security” in s. 390 of the Companies Act 1963 and “security” in s. 52 of the Companies Act 2014, the balancing of the plaintiff’s right of access to justice against the risk that the defendant’s costs would not be paid, the requirement for proportionality, and the risk that a meritorious claim might be stifled. The premise of the plaintiff’s offer was that at the end of 2021 it would be able to put up €417,642 in cash.

Held by Allen J that the evidence was that the plaintiff was, and until the end of 2021 would be, unable to put up security from its own resources, but the plaintiff was nevertheless entitled to time to provide security. In the ordinary way, Allen J would have thought that a period of nearly two years was at the very outside of any time that might reasonably be allowed for the provision of security. Counsel were agreed that it would be far less than ideal to put the action on hold for a substantial period of time, but Mr Howard did not make the case that a postponement of the progress of the action would seriously prejudice the prospect of a fair trial. Allen J took into account the fact that the fixing of a substantially shorter period within which security was to be provided might precipitate an appeal which, in any event, would delay the progress of the action.

Allen J held that he would make an order that the plaintiff was to provide security for costs, by way of cash or bond, in the sum of €417,642 by no later than 5th January, 2022, which was three business days after 31st December, 2021, and he would stay all further proceedings in the action until that security was provided.

Security for full amount of defendant's estimate ordered.

JUDGMENT of Mr. Justice Allen delivered on the 6th day of March, 2020

1 On 16th October, 2019, for the reasons given in a lengthy written judgment, I decided that the defendant had established that it had a prima facie defence to the plaintiff's claim; that the defendant had established that there was reason to believe that the plaintiff would be unable to pay the costs of the action if it were to fail; and that the plaintiff had failed to establish on a prima facie basis that the cause of the apprehended inability to pay costs was actionable wrongdoing on the part of the defendant.

2 At the opening of the application for security for costs, counsel informed the court that, subject to the court, the parties had agreed to leave over any issue as to the amount of the costs which should be secured if the court was persuaded to make an order. That issue as to the amount of the security was the issue as to the percentage or fraction of the costs for which security (if any) should be given, and not the amount of the defendant's costs.

3 At the substantive hearing, the defendant put forward an estimate of its party and party costs of £394,700 and the plaintiff an estimate of £252,000. For the reasons given, I preferred the defendant's estimate to the plaintiff's estimate and considered the issue of the apprehended inability to pay on the basis of the higher estimate. What remained to be decided was whether the plaintiff should give security for the full amount of the defendant's estimate, or a fraction or percentage.

4 To an officious bystander there might, I suppose, have been some ambiguity in the final sentence of my judgment - that the amount of the security would be left over - but it should, I think, have been clear to the parties that what I postponed was what I had been asked to postpone.

5 The estimates of the likely costs of the security for costs application were both based on the assumption that it could be disposed of in one day. The plaintiff's estimate assumed that only junior counsel would be instructed – at least on behalf of the defendant. In the event, there was a protracted exchange of affidavits and expert reports and the motion (apart from the issue the subject of this ruling) took three days.

6 When the motion came back into the list for argument in relation to the issue which had been left over, it transpired that further affidavits had been filed which sought to reopen the amount of the estimates. The defendant sought to make the case that the previous estimate of the costs of the security for costs application of £35,400 should be revised to £205,664.55, and the initial overall estimate of £394,700 should be revised to £688,214.55.

7 While steadfastly maintaining that the exercise was not one which had been contemplated by the judgment, the plaintiff commissioned a revised estimate on more or less the same basis which took the estimate of the costs of the application for security for costs to £116,779.04 and increased the overall estimate by £162,779.04. I have to say that, like the legal costs accountant instructed on behalf of the plaintiff, I was taken aback by the level of fees proposed for the motion for security for costs. On the defendant's revised estimate, the costs of the motion for security for costs are more than half of the estimated costs of a six day trial of the substantive action.

8 In any event, absent the agreement which had been made between the parties, any issue as to the percentage or fraction of the costs for which security is to be given would ordinarily have been argued and decided as part of the application for security, in which event, no issue as to revisiting the estimates could have arisen.

9 Having read the additional affidavits, I ruled that the only...