Tom McEvaddy Property Ltd Trading as Nexus Homes ((in Liquidation)) v National Asset Loan Management Dac

CourtHigh Court
JudgeMr. Justice Twomey
Judgment Date25 February 2021
Neutral Citation[2021] IEHC 125
Docket Number[2018 No. 11047 P]
Date25 February 2021
Tom McEvaddy Property Limited Trading as Nexus Homes (In Liquidation)
National Asset Loan Management Dac

[2021] IEHC 125

[2018 No. 11047 P]


Security for costs – Discretion – Special circumstances – Defendant seeking security for its costs in the litigation instituted by the plaintiff – Whether it was open to the High Court to exercise its discretion to refuse the security for costs sought by the defendant

Facts: The plaintiff, Tom McEvaddy Property Ltd trading as Nexus Homes (in liquidation) (the Company), claimed that it paid €228,375.84 to Dun Laoghaire Rathdown County Council on 16th September, 2008 in respect of planning fees in relation to a property development at Robin Hill, Blackthorn Road, Sandyford, Dublin 18 (the Property). The Property was owned by Mr and Ms McEvaddy. The Company was owned and controlled by the McEvaddys. The purchase of the Property had been funded by a loan from Allied Irish Banks plc to the McEvaddys and that loan and the security for that loan was subsequently transferred to the defendant, National Asset Loan Management DAC (NAMA). Thereafter, NAMA sold the loan and security over the Property to Promontoria (Gem) DAC. The Company claimed that the €228,375.84 was paid by the Company to assist with the development of the Property on the basis that the McEvaddys would hold the proceeds of sale of the Property on trust for the Company to the extent of the said sum. The substantive proceedings issued by the Company sought, inter alia, a declaration from the High Court that NAMA holds the sum of €228,375.84 on trust for the benefit of the Company, since the Company asserted that NAMA had no entitlement to realise trust assets. NAMA applied to the Court against the Company for security for NAMA’s costs in the litigation instituted by the Company. The Company claimed that it was open to the Court to exercise its discretion to refuse the security for costs sought by NAMA as there were special circumstances which existed, namely that the impecuniosity of the Company was caused as a direct result of the wrongful actions of NAMA, i.e. its failure to account to the Company for the €228,375.84 in planning fees. Twomey J held that that in this case there were just assertions of an actionable wrong and assertions that the millions in debt owed by the Company were statute-barred, without cogent and credible evidence to support same. Accordingly, the Court could see no basis for making a court order which would result in the somewhat extreme circumstances that the defendant would be required to ‘lose’ (i.e. spend with no prospect of recovering) money in defending the plaintiff’s proposed litigation. Twomey J held that there was no basis for refusing to grant the defendant security for its costs, before allowing the plaintiff to proceed with litigation. The Court would grant the reliefs sought by the defendant in its notice of motion.

Held by Twomey J that, as regards the amount of the security of costs to be provided by the plaintiff, in circumstances where the Company had not established even a prima facie case against NAMA, the security for costs should be for the full amount of those costs, so as to avoid the risk of an ‘injustice’ for NAMA (of having to forgo any of its legal costs, if it won the case brought against it by the Company). Furthermore, since NAMA would not be recovering VAT on those costs, Twomey J held that the security amount should include VAT.

Twomey J held that, as regards what the full amount of those costs were, the Court only had expert evidence from NAMA’s experts regarding the quantum of those full costs. As the Court must exercise caution in considering expert evidence provided by just one party to the litigation and bearing in mind as Cooke J stated in Goode Concrete v CRH plc [2012] IEHC 198 at para. 12, that fixing the amount of security for costs is not ‘an exact science’, the Court proposed to take as the court’s estimate of the full costs in this case a figure which was 80% of the amount suggested (€231,140.50), being a figure of €185,000 (including VAT) and so the security should be in that amount.

Application granted.

(No. 2)

JUDGMENT of Mr. Justice Twomey delivered on the 25th day of February, 2021


The legal costs for the defendant are estimated to cost €231,000 to resolve a dispute with the plaintiff in the High Court over the ownership of a sum of €228,000. Therefore, if the defendant were to win the case but not recover its legal costs (as the plaintiff is impecunious) it would actually have cost it money (€3,000) in order to have the High Court determine that it owns the €228,000.


However, the position is worse when one considers that the €231,000 in legal costs are just those of the defendant. Assuming that the plaintiff is likely to incur a similar level of legal costs, the total legal costs for establishing the ownership of €228,000 in the High Court is likely to be €460,000.


Furthermore, as a significant number of High Court cases are appealed to the Court of Appeal, if the High Court judgment in this dispute were to be appealed, it is possible that the total costs for establishing who owns €228,000 could be over €500,000 (when the costs of the appeal are included), which is well over twice the value of the amount in dispute.


The reason that this disconnect, between the value of the dispute and the cost of resolving that dispute, has come to light is because in Tom McEvaddy Property Ltd v. NAMA [2020] IEHC 593 (the “Principal Judgment”) this Court held that the, plaintiff (the “Company”) should provide security for costs to the defendant (“NAMA”) before proceeding with its litigation about the ownership of this sum. As part of this Court's task to determine how much security the Company should provide, this Court received submissions from the defendant regarding the likely costs of the litigation.


In this case, the defendant is ‘lucky’ that the plaintiff is an impecunious company (and not an impecunious individual), since the courts generally require impecunious companies to put up the estimated legal costs of the defendant as security before being permitted to continue with the ligation. In this way, if the defendant wins it will not be met with a plaintiff that cannot pay the defendant's legal costs, since it will be able to rely on the security.


However, if the plaintiff was an impecunious individual resident in Ireland (or the EU) then, as noted below, the current position appears to be that defendants do not generally look for security for costs against an individual plaintiff. In such a situation, if the defendant won (at first instance and on appeal) it could end up spending €260,000 (€230,000 plus say €30,000 on the appeal) in irrecoverable legal costs in taxpayers' funds in order to establish that it owns the sum of €228,000 and so it would have cost it €32,000 (even taking account of the €228,000) in its pursuit of ‘justice’.


Since legal costs are ‘ an intrinsic part of the administration of justice’ (per Baker J. in Quinn Insurance Ltd v. PricewaterhouseCoopers [2020] IECA 109 at para. 53), it could be argued that justice is denied if a defendant wins his case but cannot recover his costs from an individual plaintiff, particularly where the legal costs exceed the value of the dispute, as in this case, so that to achieve justice such a defendant would be ‘down’ €32,000 even after taking account of the sum in dispute.


Since it is arguably a denial of justice for it to cost €231,000 to establish that one owns €228,000, and bearing in mind that it is the task of this Court to administer justice, reference is made in this judgment to the effect of the high costs of litigation in Ireland on a court's task to administer justice and also to the recent analysis of this issue in the Review of the Administration of Civil Justice (the “Civil Justice Review”) published in October 2020. In the absence of a reduction in legal costs, and in order to seek to ameliorate, even to some degree, this injustice for a defendant, reference is made herein to the option for such a defendant of seeking security for costs orders against individual plaintiffs in certain circumstances.


Although the focus in this judgment is on the position of a defendant (since this case involves an impecunious plaintiff), it is important to remember that high legal costs which are irrecoverable can also affect plaintiffs, since if it was a plaintiff who was suing an impecunious defendant over an asset/cash worth €228,000, that plaintiff would not recover his €260,000 in costs if he wins at first instance and on appeal and so he could end up in the unenviable position of also being ‘down’ €32,000 in achieving the ‘justice’ of an order that he owns the property worth €228,000.


However, as this case involves an impecunious corporate plaintiff, consideration will first be given to the issues that arise for a defendant being sued by such a plaintiff.


Having decided in the Principal Judgment that the Company had to provide NAMA with security for its costs, this Court requested the parties to engage with each other so as to agree all outstanding matters arising from that decision, so that no further court time would be unnecessarily used in dealing with this matter. The matter was also adjourned on a number of occasions to facilitate engagement between the parties regarding the amount of security to be provided. At the hearing of this matter, counsel for NAMA submitted that there had not been ‘ very much engagement’ on the part of the Company with NAMA to seek to reach agreement on the quantum of the security.


In the absence of agreement, it was necessary for this Court to have a hearing regarding the amount of the security to be provided by the Company before it...

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1 cases
  • Fergus Byrne v Revenue Commissioners
    • Ireland
    • High Court
    • 17 June 2021
    ...Court, the Review Group also called for action to deal with the high cost of litigation. As noted in Tom McEvaddy Property Ltd v. NAMA [2021] IEHC 125, the majority view was for the creation of guidelines for the cost of certain listed items, while the minority view called for legislative i......

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