Irish Bacon Slicers Ltd v Weidemark Fleischwaren GmbH & Company

• Jurisdiction: Ireland
• Judge: Mr Justice Michael Peart
• Judgment Date: 30 May 2014
• Neutral Citation: [2014] IEHC 293
• Court: High Court
• Date: 30 May 2014

Irish Bacon Slicers Ltd v Weidemark Fleischwaren GmbH & Co

Between:

Irish Bacon Slicers Limited

Plaintiff

And

Weidemark Fleischwaren GmbH & Co

Defendant

[2014] IEHC 293

Record Number:No. 6297P/2013

THE HIGH COURT

Costs – Interlocutory Injunction – Practice and Procedure – Disputed Debt - Winding Up Petition – Discretion of Court – Company

The issue in this case involved the question of who should bear the costs for an interlocutory injunction. The history of this case stems from a disputed debt, whereby the defendants alleged that the plaintiffs owed them the outstanding sum of €800,000, the plaintiffs rejected this claim and contended no contractual relationship existed between the two parties and therefore the plaintiff was not indebted to the defendant company for the aforementioned sum. Following this the defendant”s counsel wrote to the plaintiff demanding payment or else they would be issuing a Petition to the High Court for the winding up and the appointment of a liquidator to Irish Bacon Slicers Limited. In response, the plaintiff”s counsel issued a letter threatening an injunction unless the defendants made an undertaking to withdraw their ultimatum, no undertaking was given by the defendants so the plaintiff applied for a motion seeking an interlocutory injunction. The issue of costs was brought before Peart J In the High Court.

Peart J. analyzed the case facts and submissions of each of the parties. Counsel for the plaintiff argued that costs should follow the disposal of the plaintiff”s motion by the giving of an undertaking by the defendant on the other hand the defendants argued that the issue of costs should await the outcome of the claim on the debt, and be reserved until that determination. Peart concluded that there is no reference to costs having to follow any event. The Court is required simply to exercise its discretion, and is not constrained by any rule that says that the costs shall follow the event. Peart J continued by stating that the defendant could and should have confirmed that no Petition would be presented to wind up the plaintiff company, and that that claim would be pursued in the ordinary way by way of Summary Summons. Peart J found that in this case the plaintiff was entitled to take seriously the threat of a Petition and it was reasonable that they should institute proceedings in order to seek an interim injunction. Peart J stated that in such circumstances it is obvious that the costs of the Notice of Motion should be awarded to the plaintiff. The motion should never have to have been brought in the first place. The defendant is entitled to seek to resist the motion of but must be prepared to have the costs of doing so awarded against it if the Court decides that justice requires that its discretion as to costs be exercised in favor of the plaintiff, even if the application does not proceed to a hearing and determination.

RSC O.99 r1(4A)

O'DEA v DUBLIN CITY COUNCIL UNREP LAFFOY 4.3.2011 2011/41/11644 2011 IEHC 100

TEKENABLE LTD v MORRISSEY & ORS UNREP LAFFOY 1.10.2012 2012/44/13195 2012 IEHC 391

RSC O.99 r1

RSC O.99 r1(1)

RSC O.99 r1(3)

RSC O.99 r1(4)

RSC O.99 r1(2)

CALLAGY v MIN FOR EDUCATION & ORS UNREP SUPREME 23.5.2003 2003/8/1628 (EX TEMPORE)

1 Mr Justice Michael Peart delivered on the 30th day of May 2014:

2 The Court has to decide whether the plaintiff is entitled to its costs of a motion seeking an interlocutory injunction which it issued (having been granted an interim injunction on 21 ^st June 2013), in circumstances where after a number of affidavits were filed on each side, the matter came before Ms. Justice Laffoy on the 23 ^rd July 2013. On that date the defendant informed the Court through its counsel that it was prepared to give an undertaking not to do that which was sought by the plaintiff to be restrained pending any hearing of the issues between the parties.

3 I should explain the background briefly. By letter dated 14 June 2013 William Fry solicitors for the defendant wrote to the plaintiff company calling upon it to discharge a sum of almost €800,000 by close of business on the 19 ^th June 2013, being a debt which they said was owing to their client. They went on to state that they had been instructed by their client that in the event that this payment was not made within that four day period High Court proceedings would be issued to recover the debt. However, the letter concluded as follows:

"Without prejudice to the foregoing, our client reserves its right to rely on all remedies available to it including issuing a Petition to the High Court for the winding up and the appointment of a liquidator to Irish Bacon Slicers Limited."

4 The plaintiff company believes that it is not indebted to the defendant company in this sum or indeed any sum, and instructed Michael Powell solicitors to respond to that letter and say so. That firm wrote on the 19 ^th June 2013 saying that the plaintiff was completely taken aback by the demand, and that there was no contractual relationship between the plaintiff and the defendant, and called upon William Fry to set out the basis of their client's claim.

5 They went on to note the reservation of rights in relation to presenting a Petition to the High Court to wind up their client, and stated that there were no grounds to justify taking such action given the absence of any contractual relationship between their respective clients, and made the point also that the five day period specified for payment did not meet the requirements of the Companies Act, 1963 for the purposes of presenting a Petition. The letter called for an undertaking to be given by 5.30 pm that same evening that no effort would be made to petition the High Court to wind up the plaintiff company, and concluded by stating that if that undertaking was not received, they would have no option but to apply to the High Court for an injunction to restrain their client from proceeding as they had threatened in their letter. No such undertaking was given in response.

6 In the final paragraph, Michael Powell solicitors stated:

"Should it become necessary for us to make such an application, you should note that we will produce a copy of this letter to the court in support of any application which our clients may be advised to make for the recovery of their legal costs."

7 As I have said, when the matter came before Ms. Justice Laffoy on the 23 ^rd July 2013, Counsel for the defendant stated to the Court that his client was prepared to give the undertaking not to present a Petition to wind up the plaintiff company, and that separate High Court proceedings would be issued by it in order to recover the amount claimed to be due. Counsel for the plaintiff said that the undertaking was acceptable but it sought its costs of the motion which it had brought seeking the interlocutory injunction. That issue was put back and came before me for argument.

8 Andrew Fitzpatrick BL for the plaintiff makes a straightforward submission. He says that costs should follow the event in accordance with Order 99 RSC, that event being the disposal of the plaintiff's motion by the giving of an undertaking by the defendant, indeed the very undertaking which the plaintiff's solicitors had sought in their letter to William Fry dated 19 ^th June 2013. He makes the point also that this undertaking by the defendant did not result from any process of negotiation between the parties. The plaintiff was ready to pursue its injunction on the day, and it was the defendant who unilaterally indicated to the Court that it was prepared to give the undertaking in terms of the injunction sought.

9 Mr Fitzpatrick submits that it was clear from the receipt by the defendant of the plaintiff's solicitors' letter that the claim in respect of the amount referred to in the letter of demand was being contested. It is submitted that once that position was made clear, the defendant could and should have confirmed that no Petition would be presented to wind up the plaintiff company, and that the claim would be pursued in the ordinary way by way of Summary Summons, or indeed by way of Plenary Summons if the defendant so chose, as is now going to happen.

10 Mr Fitzpatrick submits that the plaintiff company was entitled and obliged to take very seriously a threat from William Fry solicitors (on behalf of its client) to present a Petition to wind up the company if the debt was not discharged within the time specified, and to take it even more seriously when it appeared that the requested undertaking was not forthcoming. He points out that a person or party claiming to be creditor of a company may present a Petition in the Central Office without leave, and having done so may then proceed to publish the Petition as required under the relevant procedures in order to notify other possible creditors of the hearing of the Petition to wind up the company in the High Court. The danger inherent in the threat of such a Petition is obvious for any company which denies the validity of the claim being made, and Mr Fitzpatrick submits that in the absence of any indication that the requested undertaking would be given it was entitled to issue proceedings seeking injunctive relief in order to protect its reputation, since it regarded any procedure by way of petition to wind up to be an abuse of process.

11 Ciaran Lewis BL for the defendant resists the application for costs and submits that on the application for the interlocutory injunction the defendant took a pragmatic view that the...