Court Of Appeal Considers Rules Governing The Granting Of Security For Costs


On the 15th of December 2017, Mr. Justice Gerard Hogan delivered the long-awaited Court of Appeal decision in the case of Used Car Importers of Ireland Limited v Minister for Finance, Revenue Commissioners, Ireland and the Attorney General. The decision offers clarity on when an order for security of costs pursuant to Order 86 Rule 9 of the Rules of the Superior Courts ("RSC") will be awarded and what the level of those costs should be.


The plaintiff company, Used Car Importers of Ireland Limited ("UCII"), specialised in the importation of used cars from other right-hand car markets where vehicle taxes tended to be lower. UCII challenged the system of vehicle registration in Ireland and contended that the method of valuing imported cars utilised by the Revenue Commissioners was "artificial and non-transparent" resulting in the inflation of the true value of imported vehicles. UCII argued that the system was operating ultra vires the parent legislation as well as contending that the legislation was unconstitutional and violated Article 78 of the Sixth VAT Directive. The High Court proceedings were determined in 2012 following a 33 day hearing and the UCII's action was dismissed with an order for costs made against it. UCII lodged an appeal with the Supreme Court which was subsequently transferred to the Court of Appeal pursuant to Article 64 of the Constitution.

Jurisdiction to Order Security for Costs

Justice Hogan considered the jurisdiction of the Court to order for security for costs. The basis for the security application by the State was expressed to be under s. 390 of the Companies Act 1963 (the "1963 Act") or s. 52 of the Companies Act 2014 (the "2014 Act") or Order 86 Rule 9 of the Rules of the Superior Court (the "Rule"). The Court noted the importance of the jurisdictional issue on which the State sought to rely due to the differences between the various statutory provisions and rules.

Justice Hogan noted that while the State's application post-dated the repeal of s. 390 of the 1963 Act it was arguable that it applied in circumstances where s. 390 was in force when the proceedings were commenced and on the date of the issuing of the original appeal to the Supreme Court. In this regard the Court acknowledged the difference between s. 390 of the 1963 Act and s. 52 of the 2014 Act and the argument that the full quantum requirements of s. 390, as set out in Lismore Homes Ltd v Bank of Ireland (Finance) Ltd...

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