Ditt v Drohne

JurisdictionIreland
JudgeO'Neill J.
Judgment Date20 July 2012
Neutral Citation[2012] IEHC 312
Date20 July 2012
CourtHigh Court
Docket Number[2009 No. 861
Ditt v Krohne

BETWEEN

RALF DITT
PLAINTIFF

AND

MICHAEL KROHNE
DEFENDANT

[2012] IEHC 312

[No. 861 S/2009]

THE HIGH COURT

PRACTICE & PROCEDURE

Security for costs

Non-European Union national - Test to be applied - Discretion of court - Impecuniosity - Enforcement of costs order - Whether foreign residence of plaintiff precondition to exercise of jurisdiction - Whether foreign residence or impecuniosity of plaintiff gave rise to right to security - Whether grant of security matter of discretion of court - Whether impossibility or difficulty of enforcement determinative factor - Lugano Convention - Proportionality test - Whether Lugano Convention provided effective enforcement process - Whether court should apply proportionality test to exercise of discretion - Whether disproportionate to grant security where defendant could avail of effective enforcement mechanism - Whether grant of security would breach requirement of judicial notice of Lugano Convention - Whether impermissible judicial extension of law - Consitituion - Equality - Whether principle of equality before law required irrelevance of impecuniosity of Irish resident be extended to foreign residents - Proetta v Neil [1996] 1 IR 100 and Berkeley Administration Inc v McClelland [1990] 2 QB 407 considered; Collins v Doyle [1982] 2 ILRM 495 and Maher v Phelan [1996] 1 IR 95 approved; Malone v Brown Thomas & Co. Ltd. [1995] 1 ILRM 369 considered - Rules of the Superior Courts 1986 (SI 15/1986), O 29, rr 1 to 4 - Jurisdiction of Courts and Enforcement of Judgments Act 1998 (No 52), s 18 - Constitution of Ireland 1937, Article 40.1 - Lugano Convention 1988 and 2007 - Application refused (2009/861S - O'Neill J - 20/7/2012) [2012] IEHC 312

Ditt v Krohne

Facts: The plaintiff, a German national resident in Switzerland, provided architectural services to the defendant in relation to properties in County Clare. The plaintiff contended he was owed a substantial sum of money in relation to the services provided. The defendant submitted he had a full defence, and later sought an order of security for costs in the matter.

Held by O'Neill J, that notwithstanding any lack express provision in the Rules of the Superior Court, the key factor in motions such as the instant case was that the plaintiff did not have assets within the jurisdiction. Before an order for security was made, the Court would have to be satisfied that enforcing a costs order against a plaintiff overseas would be impossible or substantially increased compared to a plaintiff resident, or possessing assets, within the state.

In relation to the EU jurisprudence on the matter, the case of Mund & Fester v Hatrex International Transport [1994] ECR 1-46 represented the state of the law where no treaty obligations intervened. This decision had been considered domestically in cases such as Salthill Properties Ltd & Another v Royal Bank of Scotland & Others [2010] IEHC 31. Mund & Fester v Hatrex International Transport [1994] ECR 1-46 and Salthill Properties Ltd & Another v Royal Bank of Scotland & Others [2010] IEHC 31 considered.

The plaintiff in this case was resident in a country which was a party to the Lugano convention on jurisdiction and the enforcement of judgments in civil and commercial matters. The defendant had under that convention the right to enforce costs against the plaintiff, in the event costs were awarded. As such, enforcement was clearly not impossible, and to make an order for security for costs ran the risk of preventing the plaintiff from litigating his claim.

Having considered the above, and the recent EFTA case of Dr. Joachim Kottke v Präsidial Anstalt and Sweetyle Stiftung (Case E-5/10), the Court believed a proportionality test was suitable. Applying that test in the instant case, the defendant"s motion would be dismissed. Dr. Joachim Kottke v Präsidial Anstalt and Sweetyle Stiftung (Case E-5/10) applied.

RSC O.29

RSC O.29 r1

RSC O.29 r2

RSC O.29 r3

RSC O.29 r4

PROETTA v NEIL 1996 1 IR 100

FARES v WILEY 1994 2 IR 379

BERKELEY ADMINISTRATION INC v MCCLELLAND 1992 2 QB 407

MALONE v BROWN THOMAS & CO LTD 1995 1 ILRM 369

CONSTITUTION ART 40.1

MUND & FESTER v HATREX INTERNATIONAL TRANSPORT 1994 ECR 1-467

TREATY OF ROME ART 7

TREATY OF ROME ART 220

MAHER v PHELAN 1996 1 IR 95

PITT v BOLGER 1996 1 IR 108

EUROPEAN FASHION PRODUCTS LTD & MURA v EENHOORN & ORS UNREP BARR 21.12.2001 2001/9/2343

SALTHILL PROPERTIES v ROYAL BANK OF SCOTLAND & ORS 2011 2 IR 441

LUGANO CONVENTION ART 25

JURISDICTION OF COURTS & ENFORCEMENT OF JUDGMENTS ACT 1998 S18

1

1. In this motion, the defendant seeks pursuant to O. 29 of the Rules of the Superior Courts, an order directing the plaintiff to provide security for costs of the action.

2

2. In the action, the plaintiff, by way of summary summons, seeks to recover from the defendant a sum of €109,638.03 as money which the plaintiff claims is owed by the defendant to the plaintiff on foot of an agreement between the plaintiff and the defendant in respect of work done and professional services rendered by the plaintiff at the defendant's request. The professional services in question were architectural services allegedly provided by the plaintiff to the defendant in respect of properties owned by the defendant in Ireland, specifically a dwelling project for the defendant at Mageragh, Mount Shannon, County Clare, and a property development of the defendant at Rahena Moore, Ogonnelloe, County Clare, and a property at 3, Moynoe, Scariff, County Clare.

3

3. The defendant fully contests the plaintiff's claims and avers that he has a full defence to these claims. The summary proceedings were remitted for plenary hearing and a statement of claim was delivered by the plaintiff on 14 th March 2011, a defence was delivered on 24 th May 2011, and a reply to that defence was delivered on 12 th July 2011.

4

4. Subsequently, by notice of motion dated 7 th June 2011, and returnable for 18 th July 2011, the defendant sought an order for security for costs pursuant to O. 29 of the Rules of the Superior Courts and a further order staying any further steps in the proceedings until that security was provided.

5

5. The affidavits filed in support of and opposing the motion reveal that the plaintiff is a German national and EU citizen, that he resided in Germany since birth, and worked in Germany and Ireland. The plaintiff is now resident in Switzerland and does not have any valuable assets apart from a boat valued at between €5,000 and €8,000, which is situated at Mount Shannon Harbour, County Clare. The plaintiff also has a lease of a residential property at 2, Moyne Marina, Scariff, County Clare. The plaintiff is currently employed by Zurich Insurance Company as a project manager in corporate real estate and facility management and earns €78,000 per annum gross. The leasehold interest which the plaintiff has in the property in County Clare does not appear to have any capital value.

6

6. Order 29, rules 1 to 4 of the Rules of the Superior Courts 1986 make provision for the granting of orders for security for costs as follows:

2

2 "1. When a party shall require security for costs from another party, he shall be at liberty to apply by notice to the party for such security; and in case the latter shall not, within forty-eight hours after service thereof undertake by notice to comply therewith, the party requiring the security shall be at liberty to apply to the Court for an order that the said party do furnish such security.

2

2. A defendant shall not be entitled to an order for security for costs solely on the ground that the plaintiff resides in Northern Ireland.

3

3. No defendant shall be entitled to an order for security for costs by reason of any plaintiff being resident out of the jurisdiction of the Court, unless upon a satisfactory affidavit that such defendant has a defence upon the merits.

4

4. A plaintiff ordinarily resident out of the jurisdiction may be ordered to give security for costs though he may be temporarily resident within the jurisdiction..."

7

7. A curious feature of these Rules, noted by Murphy J. in Proetta v. Neil [1996] 1 I.R. 100, was that the Rules do not expressly set out the basis of an entitlement to an order for security for costs and seem to proceed upon the assumption that foreign residence is the factor which leads to the entitlement.

8

8. Finlay P. as [he then was], in Fares v. Wiley [1994] 2 I.R. 379, said the following concerning the basis of entitlement to an order for security for costs at p.495:

"In general terms, it would appear to me that the principle underlying a defendant's right to security for costs must be that he should not suffer from an inability to recover the costs of successfully defending the claim arising from the fact that the unsuccessful plaintiff resides and has his assets outside the jurisdiction of the court..."

9

9. Thus, it is clear that notwithstanding the absence of express provision in that regard in O. 29, the determinative factor entitling a defendant to seek to an order for security for costs in Irish law is that the plaintiff both resides and has his assets outside of the jurisdiction of the Irish courts, or to put it another way, does not have assets within the jurisdiction.

10

10. In this respect, it is to be noted that the corresponding provisions in the English Rules of Court have been interpreted by the Court of Appeal in Berkeley Administration Inc. v. McClelland [1992] 2 Q.B. 407, as postulating foreign residence as a precondition to the invocation of the jurisdiction created in the Rules rather than the basis of entitlement to an order for security for costs.

11

11. When considering this matter in Proetta v. Neil at p. 104, Murphy J. said the following:

"Under the Irish rule, residence...

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