P. Shiels Plant Hire Ltd v Meath County Council
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 09 February 2016 |
| Neutral Citation | [2016] IEHC 71 |
| Docket Number | RECORD NO. 3747/2011P |
| Court | High Court |
| Date | 09 February 2016 |
[2016] IEHC 71
THE HIGH COURT
Barrett J.
RECORD NO. 3747/2011P
Contract – Breach of contract – The Companies Act 2014 – Reg. 3 of the Companies Act 2014 (Commencement) Order 2015 – Security for costs
Facts: Following the initiation of the proceedings by the plaintiff against the defendant for breach of contract and unlawful interference in the plaintiff's commercial and economic interests, the defendant had now filed the present application seeking an order for security of costs. The defendant alleged that the plaintiff did not have sufficient resources to pay the costs incurred by the defendant in defending the said proceedings, in case the defendant succeeded. The plaintiff contended that since there was delay in filing the present application, the desired relief should not be granted.
Mr. Justice Max Barrett granted an order for security of costs to the defendant. The Court observed that s. 52 of the Companies Act 2014 conferred the discretion on the Court to require the plaintiff to give security or stay the proceedings if no such assurance for security was given. The Court found that in the present case, since the plaintiff had failed to give any meaningful financial information about its affairs, it would be absurd to burden the taxpayer to bear the expenses in case the defendant was successful in its defence. The Court held that in granting relief in cases of delay, the Court should have regard to the conduct of both parties.
The plaintiff is suing Meath County Council for an alleged breach of contract and unlawful interference in the plaintiff's commercial and/or economic interests arising out of the operation of an online quotation and/or tendering system in which Meath County Council has participated. (The precise legal character of the system is one of the issues in dispute). The Council comes now to court seeking an order for security for costs. This is because the Council is concerned that if it triumphs in the overall dispute between the parties and the plaintiff company is ordered to pay the Council's costs of defending the dispute, it (the company) does not have sufficient resources to meet those costs. This would have the result that the Council, and ultimately the taxpayer, would be left seriously “out of pocket' despite having succeeded in its defence of the claim, a prima facie defence having been furnished to this Court on affidavit as part of the within application. In short, the cost of coming represented to the High Court is now of such a formidable scale that even a local authority, with access to resources beyond those available to most individual citizens, balks at the thought of having to meet them.
At the time when the notice of motion for the within application issued, the relevant provision of statute was s.390 of the Companies Act 1963. By virtue of s.5 and Sch.6, item 8(1) of the Companies Act, 2014, the application falls now to be decided pursuant to s.52 of the Act of 2014. This is because item 8(1) provides that:
‘Any thing commenced under a provision of the prior Companies Acts, before the repeal, by this Act of that provision, and not completed before that repeal, may be continued and completed under the corresponding provisions of this Act.’
There is no reason to believe that this general provision does not apply to an application under the old s.390. Section 390 was repealed on 1st June, 2015, through a combination of s.4 and Sch.2, Pt.1 of the Act of 2014, and reg. 3 of the Companies Act 2014 (Commencement) Order 2015. Section 52 of the Act of 2014 provides as follows:
‘Where a 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 defendant if successful in his or her defence, require security to be given for those costs and may stay all proceedings until the security is given.’
Apart from a change in reference from a ‘ limited company’ to a ‘ company’ and the inclusion of the genders ‘ his or her’ in lieu of ‘ his’, s.52 replicates the text of the old s.390. This has the effect that the case-law relating to s.390 applies directly and in toto to applications under s.52.
Perhaps the most significant aspect of s.52 is the extent to which the court is afforded discretion and is not subject to obligation: ‘ any judge…may…require security to be given…and may stay all proceedings’. [Emphasis added]. Indeed, the level of discretion conferred upon the court is such that it is possible – though it would seem generally unlikely in practice, absent immediate provision of required security –that the court could require that security be given but not order a stay on proceedings pending the provision of such security.
The evidence before the court indicates that there is good reason to believe that the plaintiff company in this case will be unable to pay the costs of Meath County Council, if the Council is successful in its defence.
Unavailability of financial information
The plaintiff company was incorporated in 1996 but has filed no annual returns (including accounts) with the Companies Registration Office since the end of 2007. It maintains that this is because of a fraud that has been perpetrated on the company and a letter from the company's accountants has been tendered as evidence of the company'sgood faith in this regard. For its part, the court has some difficulty in accepting this line of argument. It is, for example, a sorry reality of life that practically all financial institutions in the country have likely suffered some level of financial fraud at some stage in their respective histories, yet they still manage always to produce and file annual accounts. Moreover, there seems no reason why suitable provision cannot be made and appropriate annotation included in such accounts as would be prepared. And it defies belief that a company could function properly without ever preparing ad hoc monthly or quarterly management accounts. Yet none of this information is available publicly or has been offered privately to the County Council.
Chequered history?
The company has a somewhat chequered history in terms of compliance with its legal obligations. It appeared on the tax defaulter's list in 2003. The following year it was fined by the Director of Corporate Enforcement for failing to keep proper books of account. It has had a judgment registered against it by a company in the ESB group of companies. And, somewhat unusually for a company of its size, it has been a defendant in multiple law-suits, including one brought by a financial institution. Taxes should be paid, proper books of account should be maintained, and most persons avoid becoming defendants to multiple law-suits. None of these by themselves are necessarily “mortal sins' when...
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Sweeney and Another v The Voluntary Health Insurance Board and Others
...costs (see Delany & McGrath, §13.111). That said, there is no “ 'delay and be damned rule” ( P. Shiels Plant Hire Ltd v. Meath Co. Co. [2016] IEHC 71, §13). Nor is it the case that delay necessarily entitles a party to an order for security for costs ( ibid., §14). Delay of “ an undue and s......