Superwood Holdings Plc and Others v Sun Alliance & London Insurance Plc T/A Sun Alliance Insurance Group and Others

 
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[2003] IEHC 36

THE HIGH COURT

No. 7315P/1989
SUPERWOOD HOLDINGS PLC & ORS v. SUN ALLIANCE & LONDON INSURANCE PLC T/A SUN ALLIANCE INSURANCE GROUP & ORS

Between:

Superwood Holdings Plc, Superwood Limited, Superwood Exports Limited, Superchip Limited, Superwood International Limited, And Superwood (U.K.) Limited.
Plaintiffs

And

Sun Alliance and London Insurance Plc Trading as Sun Alliance Insurance Group, Prudential Assurance Company Limited, Church and General Insurance Company Limited, and Raymond P. McGovern as Lloyds Underwriters Sole General Representative Republic of Ireland.
Defendants

Citations:

CIVIL LIABILITY ACT 1961 S17(2)

COMPANIES ACT 1963 S390

LISMORE HOMES LTD V BANK OF IRELAND FINANCE LTD & ORS 2001 3 IR 536

Synopsis:

PRACTICE AND PROCEDURE

Security for costs

Litigation - Assessment - Definition of sufficient security - Whether sufficient means actual costs - Companies Act, 1963 section 390 (1989/7315P - Peart J - 26/03/2003)

Superwood Holdings Plc v Sun Alliance

Both parties were engaged in expensive ongoing litigation arising out of a fire which occurred at the plaintiffs’ premises and as a results the plaintiffs sought to recover from their insurers (the defendants). The case had already been in the High Court and then on appeal to the Supreme Court where it was remitted to the High Court. The case was on appeal again to the Supreme Court who had directed the plaintiffs to furnish security for costs. The Master of the High Court had directed that approximately 1.6 million be furnished as security. The plaintiffs disputed this amount and appealed to the High Court.

Held by Peart J in upholding the order of the Master of the High Court. The term ‘sufficient’ as set out in section 390 of the Companies Act, 1963 involved making an assessment of the actual costs that a defendant would occur. The case would be assessed as lasting twenty days in the High Court and the estimate of costs put forward by the defendants and ordered by the Master of the High Court would be accepted. The plaintiffs would be directed to lodge such a sum within twenty one days of the perfection of the order.

1

Mr Justice Michael Peart delivered the 26th day of March 2003:

2

By order dated the 12 th April 2002, the Supreme Court ordered that the plaintiffs in these proceedings do provide security for costs in relation to their pending appeal to the Supreme Court, the amount of such security to be fixed by the Master of the High Court. The appeal is stayed pending the lodgement of such security.

3

Efforts were made by the defendants, by correspondence with the plaintiffs” solicitors, to agree an amount of such security but these efforts were unsuccessful.

4

In due course, the defendants” solicitors issued a Notice of Motion on the 20 th June 2002 in order to bring the matter of assessment of security for costs before the Master of the High Court. The motion was grounded on an affidavit of Mr Ivan Durcan, solicitor, sworn the 19 th June 2002 and its exhibits, and came before the Master first on the 23 rd of July 2002. A Replying Affidavit was sworn by the Plaintiffs” solicitor on the 22 nd July 2002 to which there are exhibits A, B and C. Mr. Burke swore an additional replying affidavit on the 23 rdOctober 2002.

5

The Master, having considered the affidavits filed and oral evidence given by the defendants” Legal Costs Accountant, Mr Brendan Cooke, and made an order on 30 th October 2002 in which he fixed the amount of security for costs in the sum of €1,592,102.56, and made the usual order in respect of the lodgement of this sum, or in the alternative, the provision of a bond in the said sum with an approved guarantee surety. I should just note at this stage that no evidence, oral or otherwise was proferred to the Master on behalf of the plaintiffs besides the affidavits of Mr Burke already mentioned.

6

It is against this order that the plaintiffs have appealed to this court. In addition to the abovementioned affidavits, the plaintiffs have filed one further affidavit, namely an affidavit of Mr Burke sworn the 12 th November 2002.

7

This Court, in addition to these affidavits, has had the benefit of the oral testimony of the plaintiffs” Legal Costs Accountant, Mr Stephen Daly, and the defendants” Legal Costs Accountant, Mr Brendan Cooke. They are in disagreement in a number of respects regarding the likely costs of the appeal in question, but, as I shall come to, there are reasons which explain that.

Background:
8

It is unnecessary for me for present purposes to set out in every detail the nature and history of these proceedings. But they arise out of a fire that occurred at the factory premises of the plaintiffs in 1987, now almost 16 years ago. Following this fire the plaintiffs sought to recover their losses, including arising from the interruption of the plaintiffs” business, under policies of insurance held with the defendants.

9

These proceedings were commenced in 1989 at a time when the plaintiffs” claim was in the order of about £2 million pounds. The trial commenced in June 1989, by which time, according to the affidavit of Mr Ivan Durcan, the claim had risen in value to £5 million pounds. The trial lasted some 116 days, and by the time the trial had concluded in July 1990, this amount had again risen to a figure of £8 million.

10

By High Court Order dated 12 th November 1991, the plaintiffs” claims were dismissed.

11

The plaintiffs appealed to the Supreme Court. The appeal was heard over a period of 16 days, and by order dated the 27 th June 1995, the Supreme Court allowed the plaintiffs” appeal and the matter was remitted to the High Court for an assessment of the plaintiffs” losses, as well as "such other matters as are relevant and in issue".

12

The matter came back to the High Court for assessment, towards the end of 1996. It is averred by Mr Durcan in his affidavit that by this time the plaintiffs” claim had again increased from the figure of £8 million pounds to a sum of £92 million pounds.

13

This hearing in turn lasted 281 days over a period of about 5 years, and according to the affidavit of Mr Durcan, generated about 41,000 pages of transcript. Judgment given by Mr Justice Smyth took 4 days to read and comprises 872 pages, together with a book of annexed exhibits comprising 1525 documents. There were also about 170 files of discovered documents.

14

By Order dated 7 th April 2001, the High Court assessed damages in the sum of £314,940.00, but reduced the award to nil having regard to the provisions of Section 17(2) of the Civil Liability Act 1961since the defendants were entitled to the credit of the lodgement of £1,600,000 made by the fourth named defendant which the plaintiff received in settlement of their claims against the fourth defendant. Other of the plaintiffs” claims were also dismissed and the costs of the proceedings were awarded to the first, second and third named defendants.

15

Against the said order of Mr Justice Smyth, the plaintiffs have lodged a Notice of Appeal dated 14 th May 2001. This Notice runs to 80 pages and comprises some 336 grounds of appeal. It is in respect of the hearing of this appeal that the Supreme Court has directed security for costs, and which the Master has assessed in the sum of €1,592,102.56.

16

I have set out these facts and statistics in some detail, as it puts in some sort of context, the level of professional fees for Counsel and solicitor, said by the defendants to be the appropriate sum to be assessed for security for costs, and which was assessed by the Master of the High Court. Without this context, the sums involved appear extraordinary, and verging on the unbelievable. The fact of the matter is that this case, both in terms of the value of the claim as made by the plaintiffs (£92,000,000), and in terms of length of trial to date (397 days in the High Court, and 16 days in the Supreme Court), is the largest piece of litigation to come before the courts here in the history of the State.

The law:
17

It is appropriate that before summarising the evidence which I heard, I deal with the law relating to the appropriate basis for the assessment of security for costs in an application being brought under Section 390 of the Companies Act, 1963. That section provides as follows:

"Where a limited 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 defence, require sufficient security to be given for those costs and may stay all proceedings until the security is given." (my emphasis)

18

The Supreme Court in its judgment dated 12 th April 2002 whereby it ordered that security be provided, expressed itself as satisfied that the plaintiffs will not be in a position to meet in full the defendants” costs of defending this appeal. That being the case, Section 390 requires that "sufficient security be given for those costs". In her judgment on the application for security for costs, which she delivered on the 12 th April 2002, Mrs Justice Denham states on page 8 of the unreported judgment:

"In the final analysis the reality of this matter is that the plaintiffs are limited liability companies who are pursuing - as they are entitled to pursue — expensive litigation which exposes...

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