3V Benelux BV v Safecharge Card Services Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Allen |
| Judgment Date | 29 May 2020 |
| Neutral Citation | [2020] IEHC 277 |
| Docket Number | [2017 No. 4639 P.] |
| Court | High Court |
| Date | 29 May 2020 |
[2020] IEHC 277
Allen J.
[2017 No. 4639 P.]
THE HIGH COURT
Costs – Security for costs – Costs in the cause – Defendant seeking the costs of a motion for security for costs – Whether the issues raised on the motion would be revisited at trial
Facts: This was an application for the costs of a motion for security for costs which had been the subject of two written judgments, the first given on 16th October, 2019, [2019] IEHC 675 on the substance of the application and the second given on 6th March, 2020, [2020] IEHC 139 on the amount of the security. In the earlier of those judgments, the High Court (Allen J) 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. In the later judgment, Allen J decided that the amount of the security should not be limited to a fraction or percentage of the estimate and that the defendant was entitled to security by cash or bond. Allen J decided where the costs of the application should lie. Mr Howard S.C., for the defendant, argued that the order for security for costs constituted an event, and that the costs should follow that event. Mr McGrath S.C., for the plaintiff, argued that the critical issues argued and decided on the motion would be revisited and finally decided at the trial of the action and that the appropriate order was to make the costs of the motion costs in the cause.
Held by Allen J that this was not a case in which the issues raised on the motion would be revisited at trial, or a case in which the trial judge would be in a better position to adjudicate on the liability for the costs of the interlocutory application. Allen J was satisfied that this was a case in which he could justly adjudicate upon the liability for the costs of the motion. Allen J held that, absent special circumstances, the defendant having been put to establish its entitlement to security for costs and having done so, the costs should follow that event. However, Allen J held that the costs on both sides were greater than they needed to be by reason of the introduction by the overall successful defendant of issues on which it did not succeed.
Allen J held that the appropriate order was that the defendant should have 70% of the costs of the motion, specifically excluding the costs incurred by it in connection with the proposed revision of the estimate of the amount of its costs, and less the costs incurred by the plaintiff in connection with that proposed revision. Allen J held that there would be a stay on execution of the order for the costs of the application pending the final determination of the action.
Costs awarded to defendant.
This is an application for the costs of a motion for security for costs which has been the subject of two written judgments, the first given on 16th October, 2019, [2019] IEHC 675 on the substance of the application and the second given on 6th March, 2020, [2020] IEHC 139 on the amount of the security.
In the earlier of those judgments 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.
In the later judgment I decided that the amount of the security should not be limited to a fraction or percentage of the estimate and that the defendant was entitled to security by cash or bond.
The question which I must now decide is where the very considerable costs of the application should lie.
Order 99, r. 1(4A) of the Rules of the Superior Courts, which was introduced by the Rules of the Superior Courts (Costs) 2008 (S.I. No. 12 of 2008) provided:-
“(4A) The High Court or the Supreme Court, upon determining any interlocutory application, shall make an award of costs save where it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application.”
This provision is now to be found in O. 99, r. 3 of the new O. 99 substituted by the Rules of the Superior Courts (Costs) 2019 (S.I. No. 584 of 2019).
Mr. Michael Howard S.C., for the defendant, argues that the order for security for costs constitutes an event, and that the costs should follow that event. Mr. Declan McGrath S.C., for the plaintiff, argues that the critical issues argued and decided on the motion will be revisited and finally decided at the trial of the action and that the appropriate order is to make the costs of the motion costs in the cause.
The starting point, I think, is to identify the approach in principle that ought to be taken to an application for the costs of a successful motion for security for costs. On the one hand, the defendant has achieved what it long ago asked for and the plaintiff declined to provide. On the other hand, the plaintiff may win the case. In that event, so the argument goes, the fundamental premise of the order for security for costs – that the defendant has a prima facie defence to the action – would be shown to have been wrong. Moreover, it is said, the assessment by the trial judge of the damage suffered by the plaintiff by reason of any breach of contract that may be established will effectively revisit the issue as to the cause of the plaintiff's impecuniosity.
The foundation stone of Mr. McGrath's argument is the decision of Clarke J. (as he then was) in ACC Bank plc v. Hanrahan [2014] 1 I.R. 1 in which the Supreme Court laid down the correct approach to be taken to the costs of motions for summary judgment. The principle established or applied by that decision, it is said, is that if the outcome of an interlocutory motion turns on the assessment of the merits of the action and the court at trial will be revisiting the merits, the appropriate order – unless in a case where there has been particularly unreasonable behaviour - is to either reserve the costs or to make the costs costs in the cause.
To persuade the court to make the order for security for costs, it is said, the defendant had first to satisfy the court as to the merits of its defence. The defendant, it is said, did so in part based on its version of events but those events will be revisited at the trial. It is submitted that if the action should succeed, it will follow that the order for security should not have been made in the first place and that it would be unjust that a plaintiff who has won his case ought to have to pay the costs of a motion for security for costs that ought not to have been made.
It is acknowledged that the court at trial will not revisit the precise issue as to the ability of the plaintiff to meet an order for costs but – it is said – the issue as to whether the defendant has a prima facie defence will be revisited, as – it is said – will the causation issue as to the financial impact of the defendant's actions on the plaintiff.
Mr. McGrath argues that if the costs of the motion are made costs in the cause and the defendant wins, the defendant will have those costs and will have security for those costs.
Mr. Howard, respectfully, disagrees. The issue on the motion for security for costs, he says, is whether the court should make an order for security for costs. That issue, he says, will never be revisited.
The judgment on the substantive application, it is submitted, identified three issues (1) whether the defendant has established that it has a prima facie defence, (2) whether the defendant has shown that there is reason to believe that the plaintiff will be unable to pay the costs if the action were to fail, and (3) whether the plaintiff has established on a prima facie basis that any inability to pay the costs is attributable to the alleged wrongful actions of the defendant. On each of these issues – says Mr. Howard – the defendant prevailed.
It is submitted that applications for security for costs fall to be determined on a very discrete basis. On a motion for summary judgment the court is concerned with the existence or possible existence of a legal right which, in an appropriate case, will be decided at trial. If, in an action for debt, the conclusion of the trial judge is that the money is owing, summary judgment ought to have been entered. If the decision is that the money is not owing, the defendant must in justice have the costs of defending the motion as well as the action. On a motion for security for costs, by contrast, the context in which the merits of the claim will be examined is quite different to that at trial. The issue on the motion is whether the defendant has established a prima facie defence. The issue at trial will be whether the plaintiff has made out its case on the balance of probability.
To reserve the costs, it is submitted, would mean that the trial judge would have to trawl back through the judgment on the application for security for costs to see how it fits with findings made in a wholly different context. To make the costs costs in the cause, it is submitted, would be an invitation to every plaintiff in every case to fight every request for security for costs tooth and nail.
As I...
To continue reading
Request your trial
-
Pembroke Equity Partners Ltd v Corrigan
...his approach. 47 Finally, I should mention the decision of the High Court (Allen J) in 3V Benelux BV v Safeguard Card Services Limited [2020] IEHC 277 which the Court brought to the attention of the parties. There Allen J considered the application of Order 99, Rule 1(4A) in deciding on cos......