Kenna v Coughlan
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 21 December 2017 |
| Neutral Citation | [2017] IEHC 778 |
| Docket Number | 2016 No. 11479P |
| Court | High Court |
| Date | 21 December 2017 |
AND
[2017] IEHC 778
2016 No. 11479P
THE HIGH COURT
Contract - Specific performance - Practice & Procedures - O. 29 of the Rules of the Superior Courts - Security for costs - Impecunious nominee plaintiff - Delay
Facts: The plaintiff sought a decree of specific performance of an alleged agreement executed between the plaintiff and the defendants for the sale of a hotel. The defendants subsequently executed an agreement for sale of that hotel with the co-defendants. The co-defendants now sought an order for security for costs from the plaintiff alleging that the plaintiff was a nominee plaintiff.
Mr. Justice Max Barrett refused to grant an order for the security for costs. The Court held that there was no basis to allege that the plaintiff was a nominee plaintiff. The Court held that there was no evidence to prove that the plaintiff would not able to pay the costs of the co-defendants in the present proceedings. The Court held that the plaintiff was a true person in whom, the beneficial interest in her cause of action lay.
Is Ms Keena a nominee plaintiff? The co-defendants maintain that she is. This being so, they have come to court seeking an order requiring that Ms Keena furnish security for the costs of the co-defendants in the within proceedings.
(i). Introduction.
The leading case on the issuing of orders for security for costs against impecunious nominal plaintiffs is the relatively recent decision of the Supreme Court in Mavior v. Zerko Ltd [2013] 3 I.R. 268. In that case, the Supreme Court, inter alia, confirmed that by way of long-established exception to the general rule that an order for security for costs pursuant to O.29 of the Rules of the Superior Courts (1986), as amended, will not be made against a natural plaintiff who is resident in Ireland or the European Union, security for costs can be ordered against a nominal plaintiff who is a natural person. Thus, per Clarke J., at 279-280:
'The jurisdiction to order security against an impecunious nominal plaintiff, even though that plaintiff be resident in the jurisdiction, is…well established….[Clarke J. moves on to refer to certain recent Irish case-law and then continues as follows.] The comments in those cases which refer to the limitations on the jurisdiction to direct security against plaintiffs who are [Ireland-/European Union-] resident natural persons must, therefore, be read as referring to such plaintiffs who sue in their own right and not to such plaintiffs who can be shown to be acting as a nominee in accordance with the existing jurisprudence.'
The court turns to consider the substance of the judgment of Clarke J. in greater detail later below. However, it is useful, before proceeding with a consideration of Mavior, to consider a number of much older cases which receive the imprimatur of Clarke J. in his judgment in Mavior. These are considered hereafter in chronological order.
(ii). Sykes.
In Sykes v. Sykes (1869) L.R. 4 C.P. 645, the underlying proceedings comprised an action by the executors of the late Ms Sykes against the sheriff of Yorkshire and one other for seizing and selling certain goods belonging to Ms Sykes as testatrix. An application by the defendants for security for costs was initially successful, but the order so obtained was subsequently rescinded by the Court of Common Pleas (which court was later incorporated into the High Court by the Supreme Court of Judicature Act 1873). In his judgment, Bovill C.J. refers to that notion of being "beneficially interested in the result of the action" which, as will be seen hereafter, also informs the much later judgment of Clarke J. in Mavior. Thus, per Bovill C.J., at 647-8:
'By the law of this country a party is not precluded from enforcing his rights in a Court of law by reason of his poverty. In many cases, no doubt, the inability of an unsuccessful litigant to pay costs to his successful adversary works hardship; but it is for the legislature to provide a remedy, not for us…. To entitle a defendant to security, he must shew not only that the plaintiff is insolvent, but also that he is suing as a nominal plaintiff, in the sense of another person being beneficially interested in the result of the action….. That doctrine, however, has never been applied to the case of an executor or the assignee of a bankrupt. The distinction is manifest; for, though there may be legatees or creditors, it does not follow that they will receive their legacies or a dividend on their debts; and so there is no person interested to give, or who would be willing to give, security for costs. No authority has been or could be produced in which security for costs has been ordered to be given by a plaintiff suing as executor or as assignee, simply on the ground that he is not in a position to pay costs. On the contrary, where an application was made for security in an action brought by an executor, he was treated as being in the position of an ordinary plaintiff, and, being resident abroad, he was ordered to give security…'.
In a separate judgment, Brett J., then but one year into an illustrious judicial career, joined his fellow judges in reversing the order for security for costs that he himself had originally granted in chambers, observing, inter alia, as follows, at 650:
'Insolvency alone is not a ground for compelling security. But an exception has been engrafted on that rule, where the plaintiff is merely lending his name for the benefit of another person, and is therefore not the real plaintiff in the action; as where he has assigned his interest in the debt to another. There is no authority, however, for extending that exception to the case of an executor or assignee of a bankrupt. They are not within the same principle; they do not lend their names for the benefit of third persons in this sense.'
The court notes the informative references by Bovill C.J. and Brett J., respectively, to the concept of a plaintiff being nominal ' in the sense of another person being beneficially interested in the result of the action' and, per Brett J., to such a plaintiff being a plaintiff who
'is merely lending his name for the benefit of another person, and is therefore not the real plaintiff in the action'. These are statements which foreshadow the assertion of Clarke J., in Mavior, at 281, that '[T] he key question is…whether the plaintiff is the true person in whom, as a matter of substance, the beneficial interest in the cause of action lies.' And all of these statements, it seems to the court, point to its being a not un-challenging proposition for a defendant to come before a court with an application such as that now presenting, and establish, on the balance of probabilities, by reference to Mavior, and the longstanding case-law by which it is informed, that the plaintiff in a given set of proceedings, is a "nominal plaintiff" in the sense in which that term has come to be understood.
(iii) Cowell.
In Cowell v. Taylor (1885) 31 Ch.D. 34, a Mr Holt, in April, 1875, entered into possession of certain premises in Lancashire, under an agreement with Mr Taylor for the purchase of the property. By another agreement, of September 1875, a power of re-entry was given to Mr Taylor in certain circumstances. In August 1876, Mr Taylor re-entered and remained in possession. In September 1876, Mr Holt's creditors passed a resolution for liquidation of his affairs by arrangement. Mr Cowell was subsequently appointed trustee in the liquidation and, in 1882, initiated proceedings in the Court of Bankruptcy to recover the property. Mr Taylor sought that Mr Cowell be ordered to give security for costs. The Court of Appeal decided that no order for security for costs should be made, Bowen L.J. observing, inter alia, as follows, at 38-40:
'[T] he line we ought to take is clear. The general rule is that poverty is no bar to a litigant, that, from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts, but only prevented, if he cannot find security, from dragging his opponent from one Court to another. There is also an exception introduced in order to prevent abuse, that if an insolvent sues as nominal plaintiff for the benefit of somebody else, he must give security. In that case the nominal plaintiff is a mere shadow. The two most familiar classes of cases of this kind are cases where a person has divested himself of his interest and handed it over to someone else that the transferee may sue for him, and cases where a person who has commenced a suit divests himself of his interest during the course of the suit in order that another person may carry it on for his benefit. Those are the common cases, I do not say that there may not be others…. In the present case we have to determine whether security is to be required in the case of a plaintiff who is himself insolvent and sues as the trustee in bankruptcy of an insolvent estate. Are the doors of the Court to be closed against such a plaintiff till he gives security? It seems to me that such a case does not come within the principle on which the exception from the general rule is based, nor within the definition of that exception, so far as a definition can be extracted from the language of the Courts. It cannot be said that a trustee in bankruptcy...
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