Protégé International Group (Cyprus) Ltd and Avalon International Management Inc. v Irish Distillers Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 22 March 2021
• Neutral Citation: [2021] IESC 16
• Court: Supreme Court
• Docket Number: [Appeal No: 76/2020],[S.C. No. 76 of 2020]
• Date: 22 March 2021

Between:

Protégé International Group (Cyprus) Limited and Avalon International Management Inc.

Plaintiffs/Appellants

and

Irish Distillers Limited

Defendant/Respondent

[2021] IESC 16

Clarke C.J.

O'Donnell J.

MacMenamin J.

Dunne J.

O'Malley J.

[Appeal No: 76/2020]

THE SUPREME COURT

Security for costs – Special circumstances – Jurisprudence – Respondent seeking security for costs – Whether the appellants had demonstrated that special circumstances existed such as ought to lead the Court to decline to order security

Facts: The plaintiffs/appellants, Protégé International Group (Cyprus) Ltd and Avalon International Management Inc., alleged abuse of a dominant position against the defendant/respondent, Irish Distillers Ltd. Irish Distillers brought an application before the High Court seeking security for costs on the usual basis that it was alleged that Irish Distillers had a bona fide defence to the proceedings and that Protégé and Avalon would be unable to pay the costs of the proceedings should they be unsuccessful and costs be awarded in favour of Irish Distillers. Protégé and Avalon accepted that Irish Distillers had discharged the onus of proof on it to demonstrate that both of those factors were present. At all times the issue between the parties concerned the question of whether Protégé and Avalon had demonstrated that special circumstances, in accordance with the established jurisprudence, existed such as ought to lead the Court to decline to order security. Both the High Court ([2019] IEHC 322) and the Court of Appeal ([2020] IECA 80) held in favour of Irish Distillers and directed security. It was against the order of the Court of Appeal that Protégé and Avalon sought and obtained leave to appeal to the Supreme Court. By determination dated the 17th September 2020 ([2020] IESCDET 106), the Supreme Court set out the basis on which leave to appeal was granted: “There is ... in the Court’s view an issue of general public importance as to whether the existing jurisprudence of both the High Court and the Court of Appeal on the question of security for costs may need to be considered, and possibly adjusted, in the light of the rights based arguments sought to be put forward by Protégé.” While granting Protégé and Avalon leave to appeal, the Supreme Court also directed that Irish Distillers should be free to argue, either at a preliminary hearing or at the substantive hearing of the appeal, that some or all of the grounds sought to be advanced by Protégé and Avalon should not be considered by the Court on the basis of Irish Distillers’ contention that those grounds were not advanced in the courts below.

Held by Clarke CJ that both the High Court and the Court of Appeal were correct to hold that Protégé and Avalon had not established, on a prima facie basis, that their impecuniosity was due to the wrongdoing alleged against Irish Distillers in the proceedings. He held that, in light of the analysis contained in Quinn Insurance Ltd (Under Administration) v PricewaterhouseCoopers (A Firm) [2021] IESC 15, it was necessary to consider whether it was likely that the proceedings might be stifled in the event that security was ordered. He concluded that Protégé and Avalon had failed to demonstrate that there was a likelihood of the proceedings being stifled. He held that the “impecuniosity due to alleged wrongdoing” special circumstance was not established. He was not satisfied that the public interest special circumstance had been made out, in particular because any public interest in proceedings going ahead will not be interfered with unless it is demonstrated that it is likely that the proceedings would be stifled. He was not satisfied that any impairment of the right to an effective remedy which may result from the making of an order for security for costs, in accordance with the principles identified in Quinn, fails to respect the essence of the right. He was satisfied that Irish security for costs law pursues a legitimate objective and in particular is designed to enhance the rights of defence and discourage unmeritorious claims. He was satisfied that there is an appropriate proportionality between any impairment of the right to an effective remedy and securing the legitimate objectives identified. He was of the view that Irish security for costs law meets the requirements of the jurisprudence of the CJEU and does not require either to be adjusted or disapplied in cases involving an assertion of breach of European Union law rights.

Clarke CJ dismissed the appeal and upheld the order of the Court of Appeal.

Appeal dismissed.

Judgment of Mr. Justice Clarke, Chief Justice, delivered the 22 ^nd of March, 2021.

1. Introduction

1.1 This is the second judgment delivered today in respect of separate appeals brought against orders requiring a corporate plaintiff to provide security for costs. While the specific issues of detail which arise in the respective proceedings are different, there are underlying issues in both cases which concern the proper operation of the regime whereby impecunious corporate plaintiffs may be required to provide such security. For those reasons the appeals were considered by the same panel of the Court and in close proximity one to the other.

1.2 As will appear later in this judgment, the proper general approach to determining questions concerning the provision of corporate security for costs is addressed in some detail in the judgment delivered in the other proceedings being Quinn Insurance Ltd. (Under Administration) v. PricewaterhouseCoopers (A Firm) [2021] IESC 15 (“ Quinn”). Those general observations are of equal potential relevance to this appeal. However, the application of those principles to the particular facts and issues which arise on this appeal is very much specific to the circumstances of this case.

1.3 In these underlying proceedings the plaintiffs/appellants (“Protégé”, save where it is necessary to make a distinction between the first named plaintiff/appellant and the second named plaintiff/appellant – “Avalon”), allege abuse of a dominant position against the defendant/respondent (“Irish Distillers”). Irish Distillers brought an application before the High Court seeking security for costs on the usual basis that it was alleged that Irish Distillers had a bona fide defence to the proceedings and that Protégé would be unable to pay the costs of the proceedings should they be unsuccessful and costs be awarded in favour of Irish Distillers. Protégé have accepted that Irish Distillers have discharged the onus of proof on it to demonstrate that both of those factors were present. At all times, therefore, the issue between the parties concerned the question of whether Protégé had demonstrated that special circumstances, in accordance with the established jurisprudence, existed such as ought lead the Court to decline to order security. Both the High Court (see, Protégé International Group (Cyprus) Ltd. & anor v. Irish Distillers Ltd. [2019] IEHC 322) and the Court of Appeal (see, Protégé International Group (Cyprus) Ltd & Anor v. Irish Distillers Ltd. [2020] IECA 80) held in favour of Irish Distillers and directed security. It is against the order of the Court of Appeal that Protégé sought and obtained leave to appeal to this Court.

2. The Grant of Leave to Appeal

2.1 By determination dated the 17th September 2020 (see, Protégé International Group (Cyprus) Ltd. & Anor v. Irish Distillers Ltd. [2020] IESCDET 106), this Court set out the basis on which leave to appeal was granted, which can be summarised as follows:-

“8. … There is … in the Court's view an issue of general public importance as to whether the existing jurisprudence of both the High Court and the Court of Appeal on the question of security for costs may need to be considered, and possibly adjusted, in the light of the rights based arguments sought to be put forward by Protégé.”

2.2 It should be noted that a dispute arose between the parties as to the permitted scope of this appeal. Irish Distillers argued that leave should not be granted on the basis that much of the argument advanced by Protégé in their application for leave to appeal had not been canvassed before the High Court or the Court of Appeal. For its part, Protégé did not accept that the issues it sought to raise before this Court differed significantly to those raised in the courts below. The determination of this Court concluded that there might be a legitimate issue between the parties as to the scope of the arguments which Protégé should be permitted to make on appeal to this Court, in light of the way in which this application was run in the High Court and the Court of Appeal. While granting Protégé leave to appeal, this Court also directed that Irish Distillers should be free to argue, either at a preliminary hearing or at the substantive hearing of the appeal, that some or all of the grounds now sought to be advanced by Protégé should not be considered by the Court on the basis of Irish Distillers' contention that these grounds were not advanced in the courts below.

2.3 The determination of this Court also noted the potential overlap of certain issues between the security for costs applications in respectively these proceedings and in Quinn. The Court therefore put in place arrangements in its determination to ensure that the respective parties would be familiar with the issues being raised in both cases, on the basis that it was likely that the Court would be required to form at least some overarching views on the precise application of the jurisprudence in this area which might potentially impact on both appeals.

2.4 It is next necessary to briefly set out an account of the underlying issues and the facts insofar as they are relevant to the application for security for costs.

3. Issues and Facts

3.1 The security for costs application to which this appeal...