Irish Press Plc v Warburg Pincus Company International Ltd
| Jurisdiction | Ireland |
| Judge | Mrs. Justice McGuinness |
| Judgment Date | 12 March 1997 |
| Neutral Citation | [1997] IEHC 49 |
| Court | High Court |
| Docket Number | No. 1686P/1993 |
| Date | 12 March 1997 |
[1997] IEHC 49
THE HIGH COURT
BETWEEN
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BETWEEN
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Citations:
COMPANIES ACT 1963 S390
BULA LTD (IN RECEIVERSHIP) V TARA MINES LTD 1987 IR 494
PEPPARD & CO LTD V BOGOFF 1962 IR 180
JACK O'TOOLE LTD V MACEOIN KELLY ASSOCIATES 1986 IR 277
SEE CO LTD V PUBLIC LIGHTING SERVICES LTD 1987 ILRM 255
COMHLUCHT PAIPEAR RIOMHAIREACHTA TEO V UDARAS NA GAELTACHTA 1987 IR 684 1990 1 IR 320
FALLON V BORD PLEANALA 1992 2 IR 380
LISMORE HOMES LTD (IN RECEIVERSHIP) V BANK OF IRELAND FINANCE LTD 1992 2 IR 57
IRISH PRESS PLC V INGERSOLL IRISH PUBLICATIONS LTD 1995 1 ILRM 117
TREVOR IVORY LTD V ANDERSON 1992 2 NZLR 517
CAMPBELL SEAFOODS LTD & ANOR V BRODRENE GRAM A/S UNREP COSTELLO 21.7.94 1994/8/2243
BEAUCROSS LTD V KENNEDY UNREP MORRIS 18.10.95 1995/15/3854
PERRY V STRAITHAM 1928 IR 580
Synopsis:
Practice & Procedure
S.390 Companies Act 1963; security for costs; whether funds available to meet costs if payable Held: Application refused. (High Court: McGuinness J 12/03/1997)
Irish Press plc v. E.M. Warburg Pincus & Co., IPL Ltd & ors.
[1997] 2 ILRM 263
Judgment of Mrs. Justice McGuinness delivered the 12th day of March 1997
This is an Application by the Defendants in the above entitled actions, which have earlier been consolidated by Orders of this Court, for an Order pursuant to Section 390 of the Companies Act, 1963that the Plaintiff, Irish Press Plc, do provide security for the costs of the Applicant Defendants and for an Order staying all proceedings by the Plaintiff until such security is given. The Notice of Motion has been issued under the title of the first two sets of proceedings and presumably on behalf of the Defendants in these two actions, which were consolidated by Order of this Court made the 22nd day of May, 1995. Counsel for the Applicant Defendants informed the Court that it had been intended to include as an Applicants Manfrey who is a defendant in the third action and wished to amend the Notice of Motion accordingly. It appears to me that there is no real difficulty in so amending the pleadings and Counsel for the Plaintiff did not specifically oppose such amendment. The issues which fall to be decided on the hearing of the Notice of Motion are not substantially altered by the addition of the individual Defendants in the third action as Applicants and I will, therefore, amend the Notice of Motion accordingly.
Section 390 of the Companies Act, 1963provides as follows:-
"Where a limited 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 Defendants if successful in his defence, requires sufficient security to be given for those costs and may stay all proceedings until the security is given."
The law in regard to Section 390 has been clearly set out in the judgment of the learned Murphy J. in the case of Bula Limited (In receivership) -v- Tara Mines Limited [1987] I.R. 494 at 496:-
"That Section and the corresponding Section in the Companies (Consolidation) Act, 1908 and the comparable Sections in the U.K. Companies Acts from time to time have been considered in numerous decided cases......"
It is clear beyond debate that Section 390 aforesaid may impose a serious handicap on an impecunious limited liability company where lack of funds would not create the same problem for an individual litigant. Again it is clear, even without recourse to the helpful authorities, that the power requiring security to be given is discretionary. This follows from the use of the word "may" in the third line of the Section. However, the manner in which the discretion should be exercised and the way in which the burden of proof is distributed between the parties has been authoritatively laid down in this country by the Supreme Court in the Judgment of the Chief Justice in Jack O'Toole Limited -v- MacEoin Kelly Associates[1986] L.R. 277 at p. 283 as follows:-
"It is clear that the making of an Order under Section 390 is a matter of discretion to be exercised having regard to all the relevant circumstances of the case, and the appropriate approach has recently been laid down by this Court in the Judgment of McCarthy J. in S.E.E. Company Limited -v- Public Lighting Services Limited ( Unreported 12th May, 1986) and it is unnecessary for me to repeat it here.
It is clear that there is no presumption; either in favour of the making of an Order for security for costs nor against it, but I am satisfied that where it is established or conceded, as arises in this case, that a limited liability company who is the plaintiff would be unable to meet the costs of a successful defendant, but if the plaintiff company seeks to avoid an Order for security for costs that it must, as a matter of onus of proof, establish to the satisfaction of the Judge the special circumstances which would justify the refusal of an Order".
The Chief Justice went on (at the top of page 284) to indicate what would not be sufficient to discharge the onus of proof in so far as it lay on the plaintiff resisting the application for an Order for security:-
"Having regard to these circumstances, it does not seem to me as sufficient discharge of the onus of proof which I deemed to be on the company against whom an application is made under Section 390, to make a mere bald statement of the fact that the insolvency of the company has been caused by the wrong subject matter of the claim"."
As was said by the learned Murphy J. the application of Section 390 has been considered in a large number of cases. In the present application I was referred in particular to Peppard & Company Limited -v- Bogoff [1962] I.R. 180, Jack O'Toole Limited -v- MacEoin Kelly Associates [1986] I.R. 277, S.E.E. Company Limited -v- Public Lighting Services Limited [1987] I.L.R.M. 255, Bula Limited (In Receivership) -v- Tara Mines Limited [1987] I.R. 494, Comhlucht P??#x3B2??ipar Riomhaireachta Teo -v- Udar??#x3B2??s Na Gaeltachta [1987] I.R. 684 and [1990] 1 I.R. 320, Fallon -v- An Bord Pleanala [1992] 2 I.R. 380, Lismore Homes Limited (In Receivership) -v- Bank of Ireland Finance Limited [1992] 2 I.R. 57, Irish Press Plc. -v- Ingersoll Irish Publications Limited [1995] 1 I.L.R.M. 117, Trevor Ivory Limited -v- Anderson [1992] 2 N.Z.L.R. 517 (New Zealand Court of Appeal), Campbell Seafoods Limited & Another -v- Brodrene Gram A/S (Unreported) Costello J. 21st July, 1994 and In the Matter of Blakeston Limited: Beauross Limited -v- Paul Kennedy(Unreported) Morris J. 18th October, 1995.
In connection with the history of the factual background to the proceedings I was also referred to the judgment of Barron J. delivered on the 15th December, 1993 (Unreported) which dealt with the substantive issues in the prolonged litigation between Irish Press Public Limited Company and Messrs. Ingersoll Irish Publication Limited.
In the present Application both Counsel referred at some length to the nature of the Plaintiff's claim and the strength or otherwise of the defence, about which they not unexpectedly took diametrically opposing views. It does not appear to me, however, that it is any part of my function to assess the weight of either side's case in any detail. As was said by Murphy J. in Bula Limited -v- Tara Mines Limited(Supra) at p. 501:-
"...it is no part of my function, as I see it, to forecast the outcome of the litigation or to prejudge the facts or express an interim view on the questions of law involved. On behalf of the defendants it was argued that the weakness of the plaintiff's case is a factor to which regard should be had. Whilst it must be established that the plaintiffs do have an arguable case it does not seem to me that it is either necessary or proper to evaluate the prospects of success. Indeed in Jack O'Toole Limited -v- MacEoin and Kelly Associates [1986] I.R. 277 it is noticeable that McCarthy J. recognised that on the facts before the Court in that case it was not possible to assess the prospects of success and in S.E.E. Company Limited -v- Public Lighting Services Limited [1987] I.L.R.M. 255 he was content to find that the appellants could make out an arguable case based on inferences drawn by the Court of first instance even though the appellant could not, of course, reopen the findings of fact."
In Comhlucht P??#x3B2??ipar Riomhaireachta Teo -v- Udar??#x3B2??s Na Gaeltachta [1987] I.R. 684 the Supreme Court was critical of the "elaborate examination of the strength of the case for the plaintiff company" carried out by the learned trial Judge in the High Court. At p.311 of the report, the learned McCarthy J. said:-
"Save in so far as such examination is necessary on another line of approach - the strength or otherwise of the defendant's case - in my Judgment it is not an appropriate consideration on an application for security for costs. If on an application of this kind it can be demonstrated that the defendant had no real defence, then an otherwise potentially successful application for security should...
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