Delta Index Ltd v Ayondo Markets Ltd

JudgeMr. Justice Heslin
Judgment Date26 January 2021
Neutral Citation[2021] IEHC 52
Docket NumberRecord No. 2018/9987P
CourtHigh Court
Date26 January 2021
Delta Index Limited
Ayondo Markets Limited

[2021] IEHC 52

Record No. 2018/9987P


Judgment of Mr. Justice Heslin delivered the 26th day of January 2021


This is an application for security for costs which is brought by the defendant in a motion which was issued on 04 April 2019. At the outset it is appropriate to point out that the hearing on 25 November 2020 proceeded on the basis that the defendant seeks an order pursuant to s. 52 of the Companies Act, 2014 and no relief was sought under O. 29 of the Rules of the Superior Courts. In advance of the hearing, Ms. Geoghegan BL for the defendant/applicant and Mr. Moran BL for the plaintiff/respondent prepared outline written submissions which were most helpful and which they supplemented by way of clear and comprehensive oral submissions at the hearing. I have very carefully considered all written and oral submissions, key elements of which I will refer to later in this judgment. As regards the relevant background, the plaintiff, which is a limited liability company incorporated in Ireland, is engaged in the business of online “spread trading”. Spread trading involves taking a position on price movements of a financial product within a range of values. The defendant, which is a private limited company incorporated in England and Wales, carries on the business of providing access to spread trading technology platforms and associated services. It is not in dispute that the plaintiff and defendant entered into two successive “White Label” contracts which provided for the ability of customers of the plaintiff to access the defendant's spread betting technology and services under the plaintiff's name and brand. It is not in dispute that the contracts, concluded on 23 November 2011 and on 01 January 2015, respectively, involved payment by the defendant to the plaintiff of a percentage of the transactional revenue earned by the defendant on foot of customers' trades. It is also common case that the defendant was required under the contracts to provide a monthly report to the plaintiff and agreed not to contact the relevant customers except as necessary for the purposes of operating the White Label site.


The plaintiff issued a plenary summons on 16 November 2011 seeking, inter alia, damages for breach of contract, damages for misrepresentation, judgment in the sum of €7,915, an order that the defendant cease trading with the plaintiff's customers and a range of further orders. A statement of claim was delivered, which is dated 18 December 2018, in which the plaintiff pleads that the defendant breached its duties to the plaintiff both during and following what was a mutually agreed termination of their contractual relationship. The plaintiff pleads that, during the term of the relevant contracts, the defendant negligently or intentionally misrepresented the figures in its monthly reports to the plaintiff. It is claimed by the plaintiff that the defendant under-reported losses made by the plaintiff's customers as a consequence of which the plaintiff was paid less than was contractually due to it by the defendant. The plaintiff also alleges that the defendant, in breach of contract, permitted customers to continue trading with the defendant. The plaintiff also pleads that the defendant failed to discharge an invoice in the sum of €7,915. It is also claimed that, on termination, the defendant had no right to continue to trade with customers of the plaintiff and was obliged to destroy or return all confidential information including customer data, never to communicate with any customer and to return customers' funds. The plaintiff's principal claims are for breach of contract, damages for misrepresentation, judgment in the sum of €7,915 and orders to the effect that the defendant ceases trading with the plaintiff's customers and/or takes steps to return those customers and to account to the plaintiff for profits.


It is not in dispute that the plaintiff's unaudited abridged financial statements for the year ended 31 December 2018 show that the plaintiff's liabilities exceed the plaintiff's assets by €513,811.00. The plaintiff concedes that if its claim against the defendant is unsuccessful, it would struggle to meet the defendant's costs of defending the action. The plaintiff also concedes that it has no real source of income at present. Furthermore, the plaintiff accepts that, for the purposes of the present application, the defendant has a prima facie defence. The plaintiff accepts that, absent special circumstances, an order for security for costs ought to be made by this court. The plaintiff asserts that there are special circumstances which should cause this court to exercise its discretion not to make an order for security for costs. Specifically, the plaintiff claims that the defendant's alleged wrongdoing has caused its inability to pay costs. This is disputed by the defendant. Before looking more closely at the pleaded claim and the evidence proffered by both sides in respect of the security for costs application, it is appropriate to refer to the statutory provision under which this application is brought and to certain relevant legal principles.

Section 52 of the Companies Act, 2014

Section 52 of the Companies Act, 2014, which replaced s. 390 of the Companies Act, 1963, provides as follows:

“52. Where a 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 or her defence, require security to be given for those costs and may stay all proceedings until the security is given.”

Legal Principles

In Harlequin Property (SVG) & Ors. v O'Halloran & Or [2012] IEHC 13 Clarke J. (as he then was) described the equivalent statutory provision as being a quid pro quo for limited liability (see para. 4.9). More recently in Hedgecroft Limited t/a Beary Capital Partners v Htremfta Limited & Ors [2018] IECA 364, Ms. Justice Costello, on behalf of the Court of Appeal, dismissed an appeal against an order for security for costs which had been granted in the High Court by Mr. Justice Binchy. Analysing the relevant jurisprudence regarding s. 52 of the Companies Act, 2014, Costello J. stated the following at para. 34:-

“34. The courts have recognised that the implications of the jurisdiction to make an order under s. 52 (and its predecessor, s. 390) are that if the members of the company, who have obtained the benefit of limited liability, do not fund the litigation or if the company is not otherwise in a position to raise the funds to meet the security required in a manner which does not offend other legal principles, that the proceedings in which the limited liability company is a plaintiff may proceed no further. In previous cases it was accepted that potentially valid claims may nonetheless be prevented from proceeding to hearing by reason of the granting of an order for security for the costs of the defendant and the subsequent failure of the plaintiff to provide the security required.”


At para. 42 of her decision, Ms. Justice Costello made clear that the principles applicable to an application for security for costs were those summarised by Morris J. in Interfinance Group Ltd. v KPMG Peat Marwick and she quoted from the said decision principles which explain the role special circumstances may play:-

  • “(1) In order to succeed in obtaining security for costs an initial onus rested upon the moving party to establish:

    • a) that he had a prima facie defence to the plaintiff's claim, and

    • b) that the plaintiff would 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 could be shown that there were specific circumstances in the case with ought to cause the court to exercise its discretion not the make the order sought.

    In this regard the onus rests upon the party resisting the order. The most common examples of such special circumstances include cases where a plaintiff's liability to discharge the defendant's 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.”

Special circumstances

It is clear from the authorities that if an applicant establishes (1) that they have a prima facie defence to the plaintiff's claim and (2) that the plaintiff would not be able to pay their costs in the event of the defendant being successful, then, normally, the court will make an order directing the plaintiff to provide security for costs. This is subject to the plaintiff being afforded the opportunity to argue that, notwithstanding the fact that the defendant has satisfied the statutory criteria, the court should, nonetheless, decline to exercise its discretion in favour of the defendant/applicant. This requires the plaintiff/respondent to establish special circumstances which would form a basis for the court to exercise its discretion against making the order sought. The foregoing is precisely the position which pertains in the present case and whether, or not, special circumstances exist is the key issue before the court in the present application. The authorities also make it clear that the onus is on the plaintiff/respondent to demonstrate special circumstances. If the plaintiff/respondent does so, the jurisdiction to grant, or not, an order for security for costs still remains a matter for the discretion of the court, with such discretion to be exercised fairly.

The relevant test


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