Security For Costs: Further Developments

• Published date: 12 January 2021
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law
• Law Firm: William Fry
• Author: Mr Richard Breen and Lisa Carty

Order 86 rule 9 of the Rules of the Superior Courts (RSC) provides that the Court of Appeal (CoA) can under special circumstances make an order for security for the costs of any appeal. There is an onus on the applicant to prove such special circumstances exist. Where a corporate entity is involved, section 52 of the Companies Act 2014 (2014 Act) may be relevant as it provides for security for costs against corporate plaintiffs. In the recent decision of O'Donnell v Saltan Properties Ltd and others [2020] IECA 226, the CoA considered the scope of the rules around both of these provisions.

The proceedings

The plaintiff was the owner of an apartment situated in a development which was constructed in or around 2003/2004. The first named defendant was the developer of the development. A number of structural and other defects presented in the development, out of which these proceedings arose. Twenty six sets of proceedings were issued against the defendants, three of which, including the plaintiff's claim, were being pursued as "master claims" pursuant to case management direction of the High Court. Discovery applications were issued before the judge who was actively case managing the proceedings in the High Court. The first named defendant was largely unsuccessful in its application. The plaintiff was successful in her application for discovery. The first named defendant appealed both decisions to the CoA (appeal).

The plaintiff applied to the CoA for an order requiring the first named defendant to provide security for the costs of its appeal. The application was brought pursuant to section 52 of the 2014 Act and Order 86 rule 9 RSC on the basis that the first named defendant was insolvent, and would be unable to pay the plaintiff's costs of the appeal if a costs order was made against it.

Order 86 rule 9

The CoA noted that Order 86 rule 9 applies to all types of litigation and all parties; irrespective of whether the appellant is the plaintiff or the defendant in the proceedings. While a plaintiff may not seek security for costs from a defendant at first instance, a successful plaintiff may obtain an order for security for the cost of an appeal from an unsuccessful defendant/appellant. A number of preconditions must be satisfied:

• Impecuniosity
  Impecuniosity of an appellant and an inability to meet any award of costs must be established. The first named defendant conceded that it would be unable to meet a costs award made against it, and so this...