Sweeney and Another v The Voluntary Health Insurance Board and Others

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 11 October 2023
• Neutral Citation: [2023] IEHC 553
• Court: High Court
• Docket Number: [2015 No. 4210 P]

Between

Shay Sweeney and The Limerick Private Limited

Plaintiffs

and

The Voluntary Health Insurance Board

Defendant

[2023] IEHC 553

[2015 No. 4210 P]

THE HIGH COURT

Security for costs – Impecuniosity – Delay – Defendant seeking security for costs – Whether the plaintiffs had established special circumstances which would tilt the balance of justice against the making of an order for security for costs

Facts: The plaintiffs, Mr Sweeney and The Limerick Private Ltd, instituted proceedings in May 2015 seeking, inter alia, various declaratory reliefs that the defendant, the Voluntary Health Insurance Board (VHI) abused its dominant position in refusing to provide cover to The Limerick Private Ltd together with a declaration that the requirement of substitution constituted a breach of both the Competition Act 2002 and Art. 102 TFEU. The plaintiffs also sought damages for interference with their constitutional right to earn a livelihood. Those claims were denied in full by VHI. By notice of motion dated 28th June 2023, VHI sought the following orders: (1) an order pursuant to s. 52 of the Companies Act 2014 directing that The Limerick Private Ltd furnish security in respect of the costs of VHI in relation to its defence of the claim made against it by Limerick Private Ltd in the proceedings; (2) in the alternative, an order pursuant to s. 52 of the 2014 Act directing that Limerick Private Ltd furnish security in respect of the costs of such steps in the proceedings as seem appropriate to the High Court; (3) an order pursuant to s. 52 of the 2014 Act fixing or determining the amount, timing, manner and/or form of such security and the persons to whom it shall be given; (4) if necessary, an order pursuant to s. 52 of the 2014 Act and/or pursuant to the inherent jurisdiction of the court, staying the proceedings and/or steps in the proceedings until (i) judgment is given on the application for the reliefs aforesaid and/or (ii) in the event that an order is made directing the provision of security for costs, until such security is provided; (5) an order granting VHI liberty to apply to dismiss the proceedings in the event that such security as may be ordered is not furnished in accordance with the court’s order; (6) such further order as seems fit; and (7) the costs of the application. The plaintiffs opposed an order for security for costs on two bases, each of which they contended gave rise to a special circumstance: (a) that the plaintiffs’ impecuniosity had been caused by VHI’s wrongdoing; and/or (b) that VHI had delayed such as to be disentitled to the order sought.

Held by Barrett J that he did not accept that the plaintiffs’ impecuniosity had been caused by VHI’s wrongdoing. He did not see that the passage of time had caused anything by way of significant prejudice to the plaintiffs. He held that any significant prejudice occasioned to the plaintiffs in all that had occurred to date in the proceedings was far outweighed by the degree of prejudice that VHI could suffer if it were not awarded security for costs (in proceedings that, it was undisputed, would be likely to cost VHI €1¾m to run in circumstances where, even if it were to succeed in every respect, its prospects of recovering even a portion of those monies by way of costs order was very low, if indeed there were any such prospects at all). Barrett J did not consider that the plaintiffs had established any special circumstance which would tilt the balance of justice against the making of an order for security for costs.

Barrett J proposed ordering security for costs against The Limerick Private Ltd in the amount of €1,790,500.00. He held that this was not quite full security as the figure was the estimated cost to VHI of defending the proceedings from this point onwards. However, it seemed to Barrett J that ordering just that tranche of secured costs was the fairest way of minimising the risk of injustice to all if and when the proceedings continue. Barrett J also proposed making the orders sought in paras. 4(2) and 5 of the notice of motion. His provisional view was that VHI brought the application, succeeded on the application, and thus an order for the costs of the application should issue in its favour.

Application granted.

JUDGMENT of Mr Justice Max Barrett delivered on 11 ^th October 2023 .

1 . By notice of motion dated 28 ^th June 2023, VHI seeks the following orders:

• (1) an order pursuant to s.52 of the Companies Act 2014 directing that The Limerick Private Ltd furnish security in respect of the costs of VHI in relation to its defence of the claim made against it by Limerick Private Ltd in these proceedings;

• (2) in the alternative, an order pursuant to s.52 of the Companies Act 2014 directing that Limerick Private Ltd furnish security in respect of the costs of such steps in the within proceedings as seem appropriate to the court;

• (3) an order pursuant to s.52 of the Companies Act 2014 fixing or determining the amount, timing, manner and/or form of such security and the persons to whom it shall be given;

• (4) if necessary, an order pursuant to s.52 of the Companies Act 2014 and/or pursuant to the inherent jurisdiction of the court, staying these proceedings and/or steps in the proceedings until (i) judgment is given on the application for the reliefs aforesaid and/or (ii) in the event that an order is made directing the provision of security for costs, until such security is provided;

• (5) an order granting VHI liberty to apply to dismiss these proceedings in the event that such security as may be ordered is not furnished in accordance with the court's order;

• (6) such further order as seems fit;

• (7) the costs of the application.

2 . Mr Sweeney, I understand, is an individual plaintiff within the jurisdiction. So there is no right on the part of VHI to seek security for costs against him. That said, the plaintiffs (correctly) have not sought to resist the present application on the basis that Mr Sweeney is a co-plaintiff.

3 . Section 52 of the Act of 2014 is repeatedly mentioned in the notice of motion. It provides as follows:

“ Where a company is plaintiff in any action or other legal proceedings, 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.”

4 . I will return to the law later below. First, however, I turn to a consideration of the helpful affidavit evidence that is before me in this application. That evidence comprehensively identifies the facts and issues in play before me.

5 . In his grounding affidavit, Mr Keogh, the managing director of VHI, avers, among other matters, as follows:

“ Summary of VHI's position

4. I am advised that what are usually the most costly stages of legal proceedings – namely discovery, trial preparation including engagement with fact and expert witnesses, and the trial itself – are now intended to be pursued by the plaintiffs in the near future, following a period of inactivity on their part. I say that the costs to VHI of defending the present proceedings from this point onwards to trial will be very significant (as confirmed by the report of [the] …legal costs accountants dated 27th June 2023…). The within application seeks security in respect of those costs from [Limerick Private Ltd]….

5. Further, as things stand, the position in these proceedings is that VHI has an order in its favour for the costs (in three courts) of the interlocutory motion regarding expert evidence. VHI also has a further order for costs in its favour in respect of its application to compel replies to particulars from the plaintiffs. These orders have been stayed pending the determination of the substantive proceedings. However, VHI has no security in respect of these costs. The recent statements made on behalf of the plaintiffs on 14 ^th June 2023 increase VHI's apprehension as to whether it will ever recover such costs, much less (in the event that VHI is successful) the costs of the wider proceedings.

6. For reasons set out more fully below, I also say and believe and am advised that VHI has a strong defence to the claims made by the plaintiffs. Further, I say that if VHI is successful in defending the proceedings – which it firmly believes it will be – then [Limerick Private Ltd]… will be unable to pay any of VHI's costs of defending them (which has now been confirmed by counsel for [Limerick Private Ltd]. I also say and believe and am advised that in such circumstances, the onus is on the plaintiffs to establish the existence of special circumstances which would justify the court exercising its discretion by refusing to order [Limerick Private Ltd]… to provide security for VHI's costs and that there are no such special circumstances in this case.

Background to proceedings

7. The plaintiffs instituted these proceedings in May 2015 seeking, inter alia, various declaratory reliefs that [VHI] …abused its dominant position in refusing to provide cover [to Limerick Private Ltd]… together with a declaration that the requirement of substitution constitutes a breach of both the Competition Act 2002 and Art. 102 TFEU. The plaintiffs also seek damages for interference with their constitutional right to earn a livelihood. These claims are denied in full by VHI.

8. After a protracted period in which VHI sought proper particulars of the plaintiff's case lasting over two years – which required a motion from VHI to compel replies, and which replies the plaintiffs ultimately were ordered to provide – VHI delivered its defence on 18 ^th June 2018.

9. By way of notice of motion dated 26 ^th November 2018, VHI applied to exclude the expert economist, Prof. Moore McDowell, who had been retained by...