Peppard and Company Ltd v Bogoff

• Jurisdiction: Ireland
• Judgment Date: 01 January 1963
• Date: 01 January 1963
• Court: Supreme Court

Supreme Court.

Peppard and Co. Ltd. v. Bogoff

DERMOT PEPPARD AND COMPANY LIMITED and PATRICK H. SMYTH

Plaintiffs

and

JACOB BOGOFF, AUGUSTUS PERCIVAL REYNOLDS, DERMOT PEPPARD and UNITED STATES HOSIERY CORPORATION

Defendants.

Practice - Security for costs - Limited company registered in Ireland - Company insolvent - Application by one defendant for an order for security for costs in a pending action - Exercise of discretion of Court in special circumstances - Companies (Consolidation) Act, 1908 (8 Edw. 7, c. 69) s. 278 - Rules of the High Court and Supreme Court, 1926, Or. XII, rr. 1 and 2.

Motion on Notice.

The facts appear in the headnote and are more fully stated in the judgment of Kingsmill Moore J., post, at p. 185.

From the above judgment the plaintiffs appealed to the Supreme Court (2).

The plaintiff company, a limited company registered in Ireland, without assets and not carrying on any business, together with the second-named plaintiff, a director of the plaintiff company and a shareholder therein commenced proceedings against the defendants for damages for breach of contract, conspiracy and slander of goods. The second and third-named defendants were directors and shareholders in the plaintiff company up to the 7th July, 1955, and the 5th December, 1955, respectively, and on the application of the third-named defendant, D.P., it was ordered that all further proceedings in the pending suit be stayed until the plaintiff company furnish security for the costs of the said D.P. On appeal by the plaintiffs it was

Held, by the Supreme Court (Kingsmill Moore, O Dálaigh and Maguire JJ.) that the appeal should be allowed.

Per Kingsmill Moore J.:—"I am of opinion that the section" [s. 278 of the Companies (Consolidation) Act, 1908] "does not make it mandatory to order security for costs in every case where the plaintiff company appears to be unable to pay the costs of a successful defendant but that there still remains a discretion in the Court which may be exercised in special circumstances."

Dixon J. :—

I must confess that I do not find this at all an easy matter to decide. This application is in substance made under the provisions of s. 278 of the Companies (Consolidation) Act, 1908, which states, shortly, that if it appears that a limited company which is involved as a plaintiff in litigation will not be able to pay the costs awarded against it if it is unsuccessful, the company may be ordered to give security for costs. This case comes within the section, in as much as it appears that the Company has no assets with which to meet the costs of the action if unsuccessful. Sect. 278 is, in its own terms, unqualified; but I think it has to be read subject to the existing Rules of Court as to applications for security for costs and to the existing practice. So far as the Rules go, the question is still open, in so far as the Supreme Court has given no final ruling as to whether Or. 12 of the Rules of the High Court and Supreme Court, 1926, constitutes a complete code. The nearest approach to a decision of the matter was reached by Hanna J. in Shrimpton v. Ford(1),where he took the view that Or. 12 did constitute a complete code. That decision, however, was arrived at from the technical point of view and was to the effect that noncompliance with the requirements of the Rules of 1905 was no longer a complete bar to relief by way of security for costs. The Court's discretion in the matter, however, remains. The order to be made under s. 278 is a discretionary order, and when considering how to exercise the discretion regard should be had not only to the Rules but also to the previous practice.

One of the requirements of the Rules of 1905 was that an application for security for costs should be made at the earliest possible moment, i.e., once the plaintiff's claim had been formulated, presumably so as to avoid hardship to the person against whom security was sought. This was not done here; the pleadings were closed before the application was made. To some extent, this failure weighs against the defendant, but, being a non-compliance with a technical requirement, it does not weigh conclusively against him. The requirement would appear to have been deliberately omitted in 1926. Another requirement of the Rules of 1905, but one which expressly referred to the case of a plaintiff residing out of the jurisdiction, was the furnishing of an affidavit of merits. This is a requirement which should apply in all cases from the point of view of the exercise of judicial discretion, because security for costs should not be given to a defendant who does not intend to contest the plaintiff's claim. I cannot say that this requirement has not been complied with here; the defendant's affidavit could be more satisfactory, but it does contain averments that the defendant has a good defence to the action and intends to contest it and it refers to his defence. His defence consists of a series of denials of the allegations made in the statement of claim— a conspiracy to divert the delivery of orders to the Company. This claim could be met only by a negative attitude, no positive averments being required. Accordingly, I think that I should take the view that there is an affidavit of merits in

the present case, if such an affidavit is necessary. It is certainly desirable.

I come back to s. 278, itself, and to the most substantial point which has been made against this application, that the second plaintiff is an individual who resides within the jurisdiction. In cases in which applications for security for costs depended on the fact that one or more plaintiffs lived outside the jurisdiction, it has been decided that security...