Effect of Brexit on Security for Costs Applications in Irish Courts

A recent High Court decision, delivered by Ms Justice Bolger, in Henderson v Dublin Airport Authority T/A DAA Public Ltd Company & Anor (Approved) [2024] IEHC 29, has strongly suggested that Brexit may have a material effect on the position of a UK Plaintiff before the Irish Courts where a Defendant seeks an order for security for costs against them.

What is Security for Costs?

Security for costs arises where a Defendant in a case has a concern that the Plaintiff who is suing it, should that Plaintiff be unsuccessful in its proceedings, will not be in a position to make good on any award of costs ultimately made against it. Accordingly, by making such application, the Defendant seeks that the Plaintiff should have to put up security for any potential future costs Order that might be made against it, before that Plaintiff is permitted to continue with its claim.

An application for security for costs can be made by a Defendant pursuant to Order 29 of the Superior Court Rules.

Order 29 has been the subject of substantial case law and (in the case of companies, legislation) which has clarified and refined in what circumstances security for costs can be sought. Essentially the present position appears to be that:-

• Security for costs can be sought against
  • a limited company, or
  • a company or individual based out of the jurisdiction;
• Where the Defendant seeking the Order can show
  • it has a bona fide defence if the case runs; and
  • There is a real risk that it would not be able to recoup costs against the Plaintiff even if it successfully defends the case and gets an Order for costs in its favour; and
  • That the Plaintiff’s inability to meet any cost award is not itself caused by the wrong complained of in the proceedings.

As stated, the Superior Court Rules have long provided that a Defendant can seek security for costs by reason of the Plaintiff being resident outside of the jurisdiction of the Court [1]. Traditionally though, only the financial means of the Plaintiff, irrespective of where they were based, were looked at. However in more recent years the Irish Courts have expanded out this principle and found that, irrespective of the Plaintiff’s means, the Court can look, in considering whether to order security for costs, at whether there would be a greater difficulty or expense in enforcing a costs order against a particular Plaintiff as compared to enforcing such an order against a person resident in Ireland or another country[2]. The rationale for this is that, even if the Plaintiff might have the resources to meet any cost Order made against it, that there would still be greater difficulty and expense in enforcing such costs order against the Plaintiff due to it and its assets being based outside of the jurisdiction.

Such considerations only really arise where a Plaintiff resided in a jurisdiction not party to international treaties governing enforcement and recognition of international treaties. Certainly, such considerations would never apply to a Plaintiff resident in an EU country or a country such as (to use the example in the aforementioned Ditt case) Switzerland.

The Henderson decision however suggests that, by virtue of Brexit, the UK is now in a different bracket in terms of the assessment of security for costs applications against its residents.

The present Henderson Case

The present decision arose on foot of an application brought by the first named defendant, daa plc, for security for costs against the UK based Plaintiff. The Plaintiff in this case claims that she had suffered injuries in Dublin Airport. daa plc is fully defending the claim.

Discussion:

Ms Justice Bolger, in her decision, first stated that daa plc had satisfied the pre-requisites for a Defendant seeking security by demonstrating that the Plaintiff lives outside the jurisdiction and, further, that daa plc had a bona fide defence if the case ran.

The Plaintiff, for her part, showed however that she did have the resources to meet an award of costs made against her at the conclusion of the proceedings.

This therefore just left the issue of whether security for costs could nonetheless be ordered due to a greater difficulty or expense in enforcing the costs order against the Plaintiff, as a result of her living in the UK.

Decision:

Ms. Justice Bolger did order that the Plaintiff had to put up security for costs before proceeding with her claim.

In her decision she accepted that the Plaintiff had satisfactorily demonstrated her ability to pay any costs Order made against her, but nonetheless the enforcement of any such Order would be sufficiently more difficult and expensive for daa plc to undertake as a result of it having to be made in the UK, a non-EU jurisdiction, such that security for costs should be ordered. In this regard she specifically stated:-

“…Whilst the plaintiff avers at para. 9 of her affidavit, that the UK is “the neighbouring jurisdiction with the same legal system and language being used” it is, very significantly, no longer part of the EU and therefore not within the Brussels Convention on the Enforcement of Judgments. A plaintiff residing, or registered, within the EU was a fact considered relevant by Clarke C.J. in Quinn Insurance Ltd (Under Administration) v. Pricewaterhousecoopers [2021] IESC 15 which was relied on by O’Moore J. in Be-Spoke Capital AG v. Altum Capital Management LLC [2022] IEHC 524. Conclusions 9.

The first defendant is, in principle, entitled to an order for security for its costs against the plaintiff pursuant to O. 29 as it has established the plaintiff resides outside the jurisdiction and that it has a bona fide defence. The plaintiff has confirmed her ability to pay any costs order that may be made against her but the enforcement of any such order will be more difficult and expensive for the first defendant as it will have to be made in the UK, a non-EU jurisdiction. 4 10. The first defendant is entitled to an order for security for a proportion of their cost….”.

Conclusion/Remarks

This is yet another reminder of the many, unintended and uncontemplated, side effects of Brexit. Given the extent of commerce, and indeed travel, between the UK and Ireland, there are always going to be a significant number of UK based litigants pursuing claims in the Irish Courts at any given time. It now appears such UK based litigants can expect to be asked to put up security for costs in many such cases on foot of this decision.

[1] 0. 29 of the Rules of the Superior Courts, Rule 3

[2] as per O’Neill J. in Ditt v. Krohne [2012] 3 IR 120