Moorview Developments Ltd v Cunningham

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 05 February 2010
• Neutral Citation: [2010] IEHC 30
• Court: High Court
• Date: 05 February 2010

[2010] IEHC 30

THE HIGH COURT

793$/2005

Moorview Developments Ltd v Cunningham

BETWEEN

MOORVIEW DEVELOPMENTS LIMITED

PLAINTIFF

AND

BRIAN CUNNINGHAM

DEFENDANT

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 6.3.2009 2009 IEHC 214

INTER FINANCE GROUP LTD v KPMG PEAT MARWICK (T/A KPMG MANAGEMENT CONSULTING) UNREP MORRIS 29.6.1998 2000/11/4104

HIDDEN IRELAND HERITAGE HOLIDAYS LTD (T/A THE HIDDEN IRELAND ASSOCIATION) v INDIGO SERVICES LTD & ORS 2005 2 IR 1152005 2 ILRM 498 2005/30/6159 2005 IESC 38

PRACTICE AND PROCEDURE

Costs

Security for costs - Full defence to proceedings - Insolvent plaintiff - Initial onus on party seeking security - Special circumstances - Delay - Context of complex and difficult proceedings - Prejudice - Whether plaintiff in position to pay costs in event of successful defence - Whether prima facie defence - Whether special circumstances established - Whether inordinate and calculated delay - Whether significant prejudice - Inter Finance Ltd v KPMG Peat Marwick [1998] IEHC 217 and Hidden Ireland Heritage Holidays Ltd v Indigo Services Ltd [2005] IESC 38, [2005] 2 IR 115 followed - Application refused (2005/793S - Clarke J - 5/2/2010) [2010] IEHC 30

Moorview Developments Ltd v Cunningham

Facts The substantive proceedings concerned the plaintiff (in receivership) seeking the return of director's loans (as against the defendant). The defendant claimed he had a full defence to the proceedings. In the application before the court the defendant brought a motion for security for costs as against the plaintiff. The plaintiff contended that special circumstances existed which should act as a bar to the granting of the application. It was also contended that there had been an inordinate and calculated delay by the defendant in seeking security for costs.

Held by Clarke J in refusing the application. A defendant was entitled to wait until pleadings were closed before seeking security for costs. If a defence was filed in a timely fashion then the application for security should be in or around this time. In this case there had been a very significant delay from when the pleadings closed. A not insignificant element of prejudice had been caused to the plaintiff in having incurred the expense of making discovery whilst not having been informed that security for costs would be sought.

Reporter: R.F.

1. Introduction

2 2 1.1 These proceedings are one of the proceedings linked to the case of Moorview Development Limited & Ors. v. First Active Plc & Ors. which linked proceedings have already been the subject of a number of judgments including a judgment delivered on the 6 ^th March, 2009 (Moorview Developments & Ors v. First Active Plc & Ors.[2009] IEHC 214, ("the Main Judgment") which disposed of a large number of the issues arising in the linked proceedings.

3 3 1.2 As appears from the main judgment, some of the issues which arose in the linked proceedings were deferred where it was not considered advantageous to try the issues concerned at the same time as the majority of the issues which were the subject of the main judgment. One of the matters left over was a consideration of the issues which arise in these proceedings, which were described a Case K and so included in the relevant Schedule attached to the main judgment.

4 4 1.3 In the substantive proceedings the plaintiff ("Moorview"), which is in receivership, claims against the defendant ("Mr. Cunningham") for director's loans. In substance, Mr. Cunningham seeks to defend these proceedings, in the main, on two bases. Firstly, he says that some of the sums which are alleged to represent director's loans are, when properly analysed, legitimate expenses incurred by Mr. Cunningham in the course of carrying out duties on behalf of Moorview, and, as such, should not be classified as a director's loan. In addition, Mr. Cunningham asserts that certain monies were paid out by him to potential vendors of property (for example, as a deposit) where, it is said, it was acknowledged by Moorview that the relevant contract was for the benefit of Moorview. In consequence, it is said that it was agreed that Mr. Cunningham be recompensed by Moorview for monies so expended. It is said by Mr. Cunningham that the above two matters give him a full defence to these proceedings.

5 5 1.4 Against that background, Mr. Cunningham has brought an application before the court seeking security for costs in these proceedings. I turn to the issues raised on this application.

2. The Issues

2 2 2.1 As is clear from the oft quoted judgment of Morris J. in Inter Finance Group Limited v. KPMG Peat Marwick[1998] IEHC 217, in an application for security for costs as against a corporate plaintiff, an initial onus rests on the party seeking security (normally the defendant) to establish that the corporate plaintiff concerned would not be in a position to pay costs in the event that the claim was successfully defended and that there is a prima facie defence. Where those two matters are established, the onus shifts to the relevant plaintiff to establish some special circumstances which would justify security not being ordered.

3 3 2.2 In this case, it is accepted that Moorview is insolvent. Moorview is in receivership and in substance, though not in form, these proceedings are being maintained by the receiver. It was also quite properly accepted by counsel on behalf of Moorview...