Oltech (Systems) Ltd v Olivetti UK Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Charleton
• Judgment Date: 30 November 2012
• Neutral Citation: [2012] IEHC 512
• Court: High Court
• Docket Number: [2012 No. 6910 P],Record number 6910P/2012
• Date: 30 November 2012

Oltech (Systems) Ltd v Olivetti UK Ltd

Commercial

Between

Oltech (Systems) Limited

Plaintiff

And

Olivetti UK Limited

Defendant

[2012] IEHC 512

Record number 6910P/2012

THE HIGH COURT

PRACTICE AND PROCEDURE

Security for costs

Limited company - Counterclaim - Test to be applied - Special factors - Whether appropriate to make order for security for costs - Anglo Petroleum Ltd v TFB (Mortgages) Ltd.[2004] EWHC 1177 (Ch), (Unrep, High Court of England and Wales, Park J, 7/4/2004); Barry v Buckley [1981] IR 306; BJ Crabtree (Insulation) Ltd v GPT Communication Systems Ltd (1990) 59 BLR 43; Collins v Doyle [1982] ILRM 495; Comhlucht Páipéar Riomhaireachta Teo v Údarás na Gaeltachta [1987] IR 684; Connaughton Road Construction Ltd v Laing O'Rourke Ireland Ltd [2009] IEHC 7, (Unrep, Clarke J, 16/1/2009); Dome Telecom Ltd v Eircom Ltd [2007] IESC 59, [2008] 2 IR 726; Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm), [2010] NLJR 1532; Framus Ltd v CRH plc [2004] IESC 25, [2004] 2 IR 20; Goode Concrete v CRH plc [2012] IEHC 116, (Unrep, Cooke J, 21/3/2012); Hutchinson Telephone (UK) Ltd v Ultimate Response Ltd [1993] BCLC 307; Inter Finance Group Ltd v KPMG Peat Marwick (Unrep, Morris P, 29/6/1998); Irish Commercial Society Ltd v Plunkett [1988] IR 1; Irish Conservation and Cleaning Ltd v. International Cleaners Ltd (Unrep, SC, 19/7/2001); Kenny v An Bord Pleanála [2010] IEHC 321, (Unrep, Cooke J, 23/7/2010); Lancefort Ltd v An Bord Pleanála [1998] 2 IR 511; Lismore Homes Ltd (in receivership) v Bank of Ireland Finance Ltd [1992] 2 IR 57; Lismore Homes Ltd (in receivership) v Bank of Ireland Finance Ltd (No 2) [1999] 1 IR 501; Lismore Homes Ltd v Bank of Ireland Finance Ltd (No 3) [2001] 3 IR 536; Macauley v Minister for Posts and Telegraphs [1966] IR 345; Millstream Recycling Ltd v Tierney [2010] IEHC 55, (Unrep, Charleton J, 9/3/2010); Moorview Developments Ltd v First Active plc [2012] IESC 22, (Unrep, SC, 23/2/2012); Newman v Wenden Properties Ltd [2007] EWHC 336 (TCC), 144 Con LR 95; O'B v W [1982] ILRM 234; Peppard & Co Ltd v Bogoff [1962] IR 180; SEE Co Ltd v Public Lighting Services Ltd [1987] ILRM 255; Shaw-Lloyd v ASM Shipping [2006] EWHC 1958 (QB), (Unrep, High Court of England and Wales, Gloster J, 6/2/2006); Thalle v Soares and Others [1957] IR 182; Usk District Residents Association Ltd v Environmental Protection Agency [2006] IESC 1, [2006] 1 ILRM 363 and West Donegal Land League Ltd v Údarás na Gaeltachta [2006] IESC 29, (Unrep, SC, 15/5/2006) considered - Rules of the Superior Courts 1986 (SI 15/1986), O 29 - Companies Act 1963 (No 33), s 390 - Application refused (2012/6910P - Charleton J - 30/11/2012) [2012] IEHC 512

Oltech (Systems) Ltd v Olivetti UK Ltd

Facts: The defendant applied for a motion for security of costs in respect of a claim for the defective performance of 707 printers. The substantive defence raised by the defendant was that the printers performed to specification, or would have so performed if properly used. The defendant also raised a counterclaim demanding the cost of the printers ordered and the toner cartridges the printers required.

It was held that the two basic requirements for the discretion of the court for an order of costs to be invoked had been met by the defendant. A reasonably sustainable defence had been demonstrated through the acknowledgement of debt they had suffered due to the plaintiff. They also demonstrated that should the case proceed it was unlikely the plaintiff would to be able to pay the resulting legal costs.

Charleton J however went on to consider special factors which enabled a court to decline to grant security for costs. One factor was pertinent to the case; the plaintiffs defence identified the same issues that the plaintiff company sought to plead against the defendant as establishing an entitlement to damages. This could lead to an undesirable situation in which the plaintiff would find himself defending the counterclaim with no entitlement to damages as his case had been stayed.BJ Cabtree v CPT Communication Systems [1990] 59 BLR 43, Anglo v Petroleum v TFB [2004] EWHC 1177 (Ch) and Ali Burak Dumrul v Standard Charter Bank [2010] EWHC 2625 (Comm) considered.

The court refused to make an order for security of costs. It held it would be constitutionally unfair to stay the plaintiff's claim as no analysis would take place as to the performance of the printers.

CONNAUGHTON ROAD CONSTRUCTION LTD v LAING O'ROURKE IRL LTD UNREP CLARKE 16.1.2009 2009/9/2055 2009 IEHC 7

COMPANIES ACT 1963 S390

LISMORE HOMES LTD (IN RECEIVERSHIP) & ANOR v BANK OF IRELAND FINANCE LTD & ORS 1992 2 IR 571992 ILRM 798 1992/3/687

TRIBUNE NEWSPAPERS (IN RECEIVERSHIP) v ASSOCIATED NEWSPAPERS IRL UNREP FINLAY GEOGHEGAN 25.3.2011 (EX TEMPORE)

USK DISTRICTS RESIDENTS ASSOCIATION LTD v ENVIRONMENTAL PROTECTION AGENCY & GREENSTAR RECYCLING HOLDINGS LTD 2006 1 ILRM 363 2006/56/12022 2006 IESC 1

LISMORE HOMES LTD v BANK OF IRELAND FINANCE LTD & ORS (NO 3) 2001 3 IR 5362002 1 ILRM 541 2001/14/3907

IRISH COMMERCIAL SOCIETY LTD (IN LIQUIDATION) & ORS v PLUNKETT & ORS 1988 IR 1 1989 ILRM 461 1988/8/2405

LISMORE HOMES LTD (IN LIQUIDATION) v BANK OF IRELAND FINANCE LTD & ORS 1999 1 IR 501 1998/23/9074

WEST DONEGAL LAND LEAGUE LTD v UDARAS NA GAELTACHTA & ORS 2007 ILRM 1 2006/57/12198 2006 IESC 29

THALLE v SOARES & ORS 1957 IR 182

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

FRAMUS LTD & ORS v CRH PLC & ORS 2004 2 IR 202004 2 ILRM 439 2004/18/4116 2004 IESC 25

SEE CO LTD T/A SOUTH EAST ELECTRIC CO v PUBLIC LIGHTING SERVICES LTD & PETIT JEAN (UK) LTD 1987 ILRM 255 1986/4/1452

LANCEFORT LTD v BORD PLEANALA & ORS 1998 2 IR 511 1998/8/2345

DERMOT PEPPARD & CO LTD & SMYTH v BOGOFF & ORS 1962 IR 1801963 97 ILTR 12

RSC O.29 r1

RSC O.58 r17

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP SUPREME 23.2.2012 2012 IESC 22

GOODE CONCRETE v CRH PLC & ORS UNREP COOKE 21.3.2012 2012 IEHC 116

MILLSTREAM RECYCLING LTD v TIERNEY & NEWTOWN LODGE LTD UNREP CHARLETON 9.3.2010 2010/34/8547 2010 IEHC 55

BJ CRABTREE (INSULATION) LTD v GPT COMMUNICATION SYSTEMS LTD 59 BLR 43

ANGLO PETROLEUM LTD v TFB (MORTGAGES) LTD 2004 AER (D) 134 (APR) 2004 EWHC 1177 (CH)

DUMRUL v STANDARD CHARTERED BANK 2010 2 CLC 6612010 EWHC 2625 COMM

COLLINS v DOYLE 1982 ILRM 495 1982/10/1849

COMHLUCHT PAIPEAR RIOMHAIRE TEO v UDARAS NA GAELTACHTA & ORS 1987 IR 684 1987/1/202

1 Mr Justice Charleton delivered on the 30th day of November 2012

2 1. This is a motion for security for costs. As in many of these motions, numerous authorities have been referenced. This application took three hours. Other such applications have taken several days. Since success in this application will often mean the end of any litigation, this perhaps explains the lush profusion of authorities that has grown up. It is therefore intended herein to summarise many of the usual points made and the case law that support same.

3 2. For 20 years the plaintiff company was the distributor in Ireland of the well- known Olivetti office equipment produced in Italy by the parent company of the defendant. The plaintiff claims that in 2009 it placed an order with the defendant for 707 printers capable of monotone and colour reproduction. According to the specification for these printers, it is alleged by the plaintiff, a certain number of pages would be produced before the toner cartridge would need replacing. After negotiating a commercial agreement, the plaintiff supplied 381 of these printers to a gambling firm called Paddy Power Ltd. Under that contract, the plaintiff was to replace toner cartridges as an integral part of the consideration paid to it by that firm. Having made a calculation on the basis of the specification for the printer, a price was set by the plaintiff. This did not prove profitable. The plaintiff claims to have lost money. It is claimed that many more toner cartridge replacements were needed than what the manual accompanying the printers, and what the representations made by the defendant to the plaintiff, would warrant. In consequence, the plaintiff claims to have lost business in the marketplace; claims to have lost the value of these printers; and claims to have had to order and pay for many more toner cartridges than would have been anticipated. The plaintiff, having ordered the printers and thousands of extra toner cartridges from the defendant, refused to pay and, consequently, ran up a large debt of some €2.3 million to the defendant.

4 3. In these proceedings, the defendant is claiming against the plaintiff for that amount by way of counterclaim. In the statement of claim, the plaintiff is claiming against the defendant for €2.8 million in extra costs that it asserts were occasioned by this breach of contract. In addition, because the plaintiff would not pay what it ostensibly owed the defendant, its distribution agreement with the defendant was terminated. The plaintiff, therefore, also claims against the defendant for damages equivalent to wrongful dismissal; the damage whereof is to be calculated, the plaintiff argues, by reference to the length of time that the relationship persisted for and by reference to the importance of the position held. This, the plaintiff calculates at one year's profits from the arrangement, amounting to about €200,000.

Approach

5 4. It is no part of the task of a court on an application for security for costs to take a view as to who ought to win at trail. In Connaughton Road Construction Ltd. v. Laing O'Rourke Ireland Ltd.[2009] I.E.H.C. 7 (Unreported, High Court, 16 ^th January, 2009) this principle was emphasised at para. 3.3 by Clarke J. thus:

6 I am mindful of the fact that all of the authorities make clear that...