I.E.G.P. Management Company Ltd by Guarantee v Joseph Cosgrave, Peter Cosgrave, Michael Cosgrave, Cosgrave Developments Unlimited Company, Cosgrave Property Developments Ltd, O'Connor Sutton Cronin and Associates Ltd, Pat Dunphy, Keane Murphy Duff Ltd Trading as KMD Architecture, Gary O'Hare and OLM Surveying Ltd Trading as OLM Consultancy

JurisdictionIreland
JudgeMs. Justice Nuala Butler
Judgment Date24 March 2022
Neutral Citation[2022] IEHC 175
CourtHigh Court
Docket Number[2018 7009 P]
Between
I.E.G.P. Management Company Limited by Guarantee
Plaintiff
and
Joseph Cosgrave, Peter Cosgrave, Michael Cosgrave, Cosgrave Developments Unlimited Company, Cosgrave Property Developments Limited, O'Connor Sutton Cronin and Associates Limited, Pat Dunphy, Keane Murphy Duff Limited Trading as KMD Architecture, Gary O'Hare and OLM Surveying Limited Trading as OLM Consultancy
Defendants

[2022] IEHC 175

[2018 7009 P]

THE HIGH COURT

Security for costs – Mediation – Liability – Defendants seeking security for costs – Whether the plaintiff could establish special circumstances

Facts: The sixth defendant, O’Connor Sutton Cronin and Associates Limited, and the eighth and ninth defendants, Keane Murphy Duff Limited and Mr O’Hare (the architect defendants), brought two motions for security for costs. The plaintiff, I.E.G.P. Management Company Limited By Guarantee, brought a motion against the eighth and ninth defendants seeking an order under O.56A of the Rules of the Superior Courts and s. 16 (1) of the Mediation Act 2017 inviting those defendants to consider mediation as a means of attempting to resolve the dispute the subject matter of the proceedings. The underlying dispute in the case concerned liability for alleged fire safety defects in the construction of a development comprising five apartment blocks and some commercial units known as the Ivy Exchange at Parnell Street in Dublin. At the time of the hearing, the plaintiff was of the view that all of the defendants consented to mediation, although this was disputed by the eighth and ninth defendants on the basis, inter alia, that such consents were heavily conditional and the conditions were not satisfied. Those defendants, being the moving parties in the application for security, accepted that they bore the onus of proving the existence of a prima facie defence and that the plaintiff would not be able to pay their costs in the event that the proceedings were successfully defended by them. The plaintiff accepted that it bore the onus of establishing special circumstances. The main dispute between the parties was to whether it had been established that the plaintiff would not be able to pay the costs if the proceedings were successfully defended and whether the plaintiff could establish special circumstances.

Held by the High Court (Butler J) that those defendants had satisfied the two threshold requirements for security for costs: (a) a prima facie defence to the plaintiff's claim; and (b) the inability of the plaintiff to pay those defendants’ costs should they succeed in defending the claim. Having considered all of the grounds raised as regards the threshold tests and the existence of special circumstances and the evidence adduced in respect of those issues, Butler J was satisfied that there was nothing truly exceptional about the case which would warrant a refusal of security. She held that there were no particular factors which would justify the court in ordering that security be provided at a level materially different to and less than the costs which were likely to be incurred by those defendants. Consequently, she proposed making an order that the plaintiff provide security in an amount of €530,500 in respect of each of those defendants. She concluded that the overall circumstances of the case and the interests of justice as between the parties made it appropriate that security for costs be ordered on a phased basis. She proposed directing that the plaintiff lodge 50% of the total amount of security in respect of each defendant (i.e. 50% of €530,500 for each defendant being €530,500 in total); that amount was intended to provide security for those defendants at least in respect of any contested application for discovery, the making the analysing of discovery and any mediation that may occur. She held that if the plaintiff did not discontinue the proceedings against either of those defendants subsequent to discovery and/or if the proceedings did not settle at mediation, then the plaintiff would be required to lodge the balance bringing the amount lodged up to the full amount of the security before any other preliminary application was made or a notice of trial was served by the plaintiff.

Butler J did not consider that the stance taken by the architect defendants was unreasonable and, by extension she did not think that it would be appropriate to make an order inviting the eighth and ninth defendants to consider mediation. She refused the plaintiff’s motion.

Defendants’ motions granted. Plaintiff’s motion refused.

JUDGMENT of Ms. Justice Nuala Butler delivered on the 24th day of March, 2022

Introduction
1

The underlying dispute in this case concerns liability for alleged fire safety defects in the construction of a development comprising five apartment blocks and some commercial units known as the Ivy Exchange at Parnell Street in Dublin (“the development” or “the complex”). In total there are 198 apartments and 11 commercial units in the development. The buildings were built on foot of three grants of planning permission dated between February 2004 and January 2005 and construction was substantially complete by late 2006. The events which led to the discovery of the alleged defects have not been pleaded. It seems that as a result of some unspecified complaint, the plaintiff caused investigations to be carried out in 2018 which indicated the existence of such defects. Initial correspondence suggested that the cost of remedying the defects would be circa €7 million. However, as a result of continued and more detailed investigations, the estimate of the cost of the repairs by the time this application was heard by the court was in excess of €9 million.

2

Ten defendants have been sued. The first three defendants are businessmen and property developers and are the principals of the fourth and fifth defendants, corporate entities who were the developer and main contractor in the construction of the complex (collectively referred to as “the Cosgrave defendants”). The sixth defendant is a firm of consultant civil and structural engineers engaged by the Cosgrave defendants for the purposes of the construction project. The seventh defendant is a consultant mechanical and electrical engineer similarly engaged for the purposes of the project. The current whereabouts of the seventh defendant is unknown and the proceedings have not yet been served on him. The eighth defendant is a firm of architects of which the ninth defendant is a director (referred to collectively as “the architect defendants”). The eighth defendant was engaged by the Cosgrave defendants to provide architectural services in respect of the project, principally between 2002 and 2004. The ninth defendant provided a certificate of compliance with the Building Regulations in respect of unit no. 171 in July 2006. The tenth defendant is a firm of consultant fire engineers, apparently incorporating or including the firm of McBains Cooper, both of which were engaged for the purposes of the project. The tenth defendant made applications to Dublin City Council for fire safety certificates at various stages of the development and also provided PSDS/PSCS services (Project Supervisor Design Process and Project Supervisor Construction Stage) which were a legal requirement under the Safety, Health and Welfare at Work (Construction) Regulations, 2013. As the applications before the court were brought by the sixth, eighth and ninth defendants, the terms of their engagement and the scope of their responsibilities are relevant to the issue of whether they have a prima facia defence to the plaintiff's case and will be addressed further below.

3

The plaintiff is a company limited by guarantee and is an owner's management company within the definition contained in s. 1 of the Multi-Unit Development Act, 2011. The common areas of the development were transferred by the first to third defendants inclusive to the plaintiff on 30th January, 2012. In the initial exchanges of correspondence between the parties the plaintiff's solicitors described the plaintiff as representing the individual apartment owners. In the first replying affidavit to the eighth and ninth defendants' motion, the plaintiff's solicitor states that the plaintiff “is representing consumer apartment owners”. However, at the hearing of these motions the plaintiff's counsel was adamant that the plaintiff's proceedings had been brought on its own behalf as the defects identified were in the common areas of the development of which the plaintiff is the owner. It is of some significance that the plaintiff is not a trading company and does not carry on any business. Instead, it carries out the statutory role ascribed to it under the 2011 Act. Again, I will return to this issue in due course.

4

There are three applications currently before the court. Firstly, there are two motions for security for costs brought by the sixth, and the eighth and ninth defendants respectively. Secondly there is a motion brought by the plaintiff against the eighth and ninth defendants seeking an order under O.56A of the Rules of the Superior Courts and s.16 (1) of the Mediation Act, 2017 inviting those defendants to consider mediation as a means of attempting to resolve the dispute the subject matter of these proceedings. At the time of the hearing, the plaintiff was of the view that all of the defendants consented to mediation, although this was disputed by the eighth and ninth defendants on the basis, inter alia, that such consents were heavily conditional and the conditions were not satisfied. Although the mediation motion was issued first in time, logically the security for costs motions fall to be considered and determined first as if the moving parties in those motions are awarded security for costs, then they would be entitled to have that security in place before proceeding to mediation.

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