Protégé International Group (Cyprus) Ltd v Irish Distillers Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 02 April 2020
• Neutral Citation: [2020] IECA 80
• Docket Number: Record Number: 2019/323
• Court: Court of Appeal (Ireland)
• Date: 02 April 2020

BETWEEN/

PROTÉGÉ INTERNATIONAL GROUP (CYPRUS) LIMITED

- AND -

AVALON INTERNATIONAL MANAGEMENT INC.

PLAINTIFFS/APPELLANTS

- AND -

IRISH DISTILLERS LIMITED

DEFENDANT/RESPONDENT

[2020] IECA 80

Costello J.

Haughton J.

Ní Raifeartaigh J.

Record Number: 2019/323

THE COURT OF APPEAL

Security for costs – Stay – Point of law – Appellants seeking to appeal against the judgment and order of the High Court ordering the appellants to provide security for costs and, in default of providing the security, staying the proceedings – Whether the trial judge erred in concluding that the proceedings raised no point of law or issues of exceptional public importance

Facts: The appellants, Protégé International Group (Cyprus) Ltd and Avalon International Management Inc., appealed to the Court of Appeal against the judgment and order of Barrett J in the High Court ordering the appellants to provide security for costs, fixing the security in the discounted amount of €1 million and, in default of providing the security, staying the proceedings. He set out his reasons for the order in his judgment of 17 May 2019 ([2019] IEHC 322]). The substantive proceedings involved a claim by the appellants that the respondent, Irish Distillers Ltd, was abusing a dominant position in the Irish whiskey market. The appeal was brought on four issues. The appellants said the trial judge erred: (i) in concluding that the appellants had adduced “no evidence” that satisfied the “Connaughton” test for impecuniosity; (ii) in concluding that the proceedings raised no point of law or issues of exceptional public importance; (iii) in fixing the amount of security to be provided without hearing submissions on the matter; and (iv) in fixing security at €1 million.

Held by Costello J that the respondent was entitled to an order for security for costs on the basis that it was accepted that, for the purposes of the motion, it had established on a prima facie basis a defence to the claim of the appellants and secondly, that the appellants were not in a position to meet any order for costs which might be made in favour of the respondent if it successfully defended the claim. Costello J noted that the appellants contended that two special circumstances arose which ought to lead the court to decline to award security for costs. Costello J held that the appellants had not shown on a prima facie basis that their alleged inability to pay the costs of the respondent was attributable to the wrongdoing of the respondent, the subject matter of the proceedings; secondly, they had not established that the proceedings involved a point of law or issue of exceptional public importance such as would justify refusing the order sought. Costello J noted that there was a conflict regarding the hearing in the High Court which did not allow the Court of Appeal to conclude that the trial judge had not afforded the appellants the opportunity to make submissions in relation to the quantum of any security to be awarded. Costello J noted that, in their notice of appeal, the appellants requested that the Court of Appeal determine the quantum of security, in the event that they were unsuccessful in their appeal against the order for security for costs. On that basis, the Court of Appeal proceeded to assess the level of security de novo, having regard to the materials, evidence and submissions advanced by the parties on the appeal and fixed the security for costs to be provided by the appellants at €1 million.

Costello J held that, pending the provision of the security, the proceedings should remain stayed.

Proceedings stayed.

JUDGMENT of Ms. Justice Costello delivered on the 2nd day of April 2020

Introduction

1 This is an appeal by the plaintiffs (hereinafter “the appellants”) against the judgment and order of Barrett J. in the High Court ordering the appellants to provide security for costs, fixing the security in the discounted amount of €1 million and, in default of providing the security, staying the proceedings. He set out his reasons for the order in his judgment of 17 May 2019 ( [2019] IEHC 322). The substantive proceedings involve a claim by the appellants that the defendant (“the respondent” herein) is abusing a dominant position in the Irish whiskey market.

Background

2 In 1999, Protégé International UK was established in England as a private limited company. Protégé International Group (Cyprus) Limited (“Protégé”) was incorporated in Cyprus in 2011. It is pleaded that Protégé International UK assigned to Protégé all of the rights relevant to these proceedings.

3 It is pleaded that Avalon International Management Inc. (“Avalon”) is a company limited by shares, incorporated in Panama. It is pleaded that in 2016, Avalon Group Inc. BVI assigned to Avalon all of the rights relevant to these proceedings. It is pleaded that Protégé is the exclusive sales agent in the European Union for Avalon.

4 Protégé designs and markets international spirits drinks brands and one beer. Several of these have won international awards. One such is “The Wild Geese” Irish whiskey, which is a premium Irish whiskey. Protégé does not distil whiskey. It obtains supplies of the relevant spirits from producers which it then bottles, brands and distributes.

5 Irish Distillers Limited (“IDL”) is the largest producer and supplier of Irish whiskey on the island of Ireland. It is a subsidiary of Pernod Ricard S.A., which is a French company with a major worldwide presence in the spirit market and, in particular, the Irish whiskey section of that market. It produces whiskey which it sells through its own brands, of which Jameson is the leader, and other brands, and it sells whiskey to other producers.

6 If a whiskey is to be designated as Irish whiskey it must satisfy strict legal requirements. It must be distilled on the island of Ireland from a mash of cereals and then matured in wooden casks in a warehouse in the State, or Northern Ireland, for a period of no less than three years. If an undertaking wishes to bottle and sell Irish whiskey, they must either distil it themselves, or obtain it from those undertakings which distil and mature Irish whiskey on the island of Ireland.

7 The appellants plead that IDL enjoys the dominant position in the relevant market of the supply of Irish whiskey. They say IDL has abused its dominant position contrary to s.5 of the Competition Act 2002, and/or Art. 102 TFEU, by refusing to supply Irish whiskey to the appellants without objective justification, and by wrongfully discriminating against the appellants by applying dissimilar conditions to equivalent transactions with other trading parties. In these proceedings, they seek various reliefs including damages and injunctive relief.

The High Court proceedings

8 The appellants issued the plenary summons in these proceedings on 5 July 2018. The statement of claim was delivered on 20 July 2018 and the proceedings were admitted into the Competition List of the High Court on 16 October 2018, with directions given in relation to a motion for security for costs. A notice for particulars was raised and replied to, and the motion for security for costs issued on 8 February 2019. The motion sought the following relief:-

“ (1) An Order pursuant to Order 29, rule 1 of the Rules of the Superior Courts 1986 (as amended) and/or s.52 of the Companies Act 2014 directing the Plaintiffs to provide security for the costs of the Defendant;

(2) An Order fixing the amount of security for costs;

(3) An Order stipulating the time within which the security fixed by this Honourable Court is to be provided by the Plaintiffs;

(4) An Order staying these proceedings pending the furnishing of security for costs of the Defendant by the Plaintiffs;

(5) Any further or other Order;

(6) The cost of this application;”.

9 Six affidavits were sworn by the parties in support of, or in opposition to, the relief sought. Mr. Colm Maguire, of IDL, swore the grounding affidavit on 6 February 2019 and a replying affidavit on 25 March 2019. Mr. Patrick Dillon, a chartered accountant and partner with Grant Thornton, swore an affidavit to exhibit an expert report relating to the ability of the appellants to meet the estimated costs of IDL in defending the proceedings. Mr. Andre Levy, the owner, chairman and Chief Executive Officer of Protégé, swore three affidavits on behalf of Protégé and Avalon on 8 March 2019, 4 April 2019 and 3 May 2019, opposing the application. The motion was heard by the Judge in charge of the Competition List on 8 May 2019, and he delivered judgment on 17 May 2019.

Decision of the High Court

10 The trial judge accepted that the appellants had a prima facie case against IDL and noted that it was conceded by the appellants, for the purposes of the motion, that IDL had a prima facie defence to their claims. He held that Protégé would not be able to fully meet the likely costs of IDL if it succeeded in its defence. There was no evidence at all as to the financial position of Avalon. He held that, as a company established outside the EU, there was a presumption that IDL was entitled to the requested order against Avalon. In light of these findings and concessions, he held that the onus shifted to the appellants to establish that the requested order should not be made. The appellants sought to do so on three grounds:

(i) any inability on their part to provide security is attributable to the wrongful acts of IDL;

(ii) the case raises one or more points of law or issues of exceptional public importance; and

(iii) there is a European context to the case that should weigh against granting the requested order as, to make same, it is claimed, would deny the plaintiff effective redress.

11 The trial judge rejected all three grounds. In relation to the first, he said that the appellants had adduced no evidence that satisfied the test for causation of impecuniosity identified by...