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Stay put on proceedings until security for costs is provided

By: James Cross BL

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High Court, having determined that the Defendant is entitled to security for costs in the proceedings, in determining whether the plaintiff should give security for the full amount of the defendant’s estimate or a fraction or percentage, orders the plaintiff to provide security for costs, by way of cash or bond, in the sum of €417,642 by no later than 5th January, 2022 on the basis that the plaintiff is now, and until the end of 2021 will be, unable to put up security from its own resources, but is entitled to time to provide security; and the court stays all further proceedings in the action until that security is provided.

Security for costs – High Court previously held that the defendant had established that there was reason to believe that the plaintiff would be unable to pay the costs of the action if it were to fail; and that the plaintiff had failed to establish on a prima facie basis that the cause of the apprehended inability to pay costs was actionable wrongdoing on the part of the defendant - parties had agreed to leave over any issue as to the amount of the costs which should be secured - defendant put forward an estimate of its party and party costs of €394,700 - plaintiff an estimate of €252,000 – court preferred the defendant’s estimate - what remained to be decided was whether the plaintiff should give security for the full amount of the defendant’s estimate or a fraction or percentage – security of costs application was more lengthy and complex than envisioned – took three days and involved multiple affidavits - defendant sought to make the case that the previous estimate of the costs of the security for costs application of €35,400 should be revised to € 205,664.55, and the initial overall estimate of €394,700 should be increased to €688,214.55 - plaintiff commissioned a revised estimate on more or less the same basis – overall estimate increased by €162,779.04 - taken aback by the level of fees proposed for the motion for security for costs – only issue before the court was the fraction or percentage of the estimate which the court had previously preferred - if what the plaintiff offers is good security for more than the higher estimate, and the plaintiff is willing to provide that security, it is not necessary to get tied up in nice questions of law – plaintiff’s proposal is that the defendant should have security in the nature of a first priority fixed charge over a specific bank account into which the funds will be paid - proposed security would for all practical purposes be no security at all – plaintiff’s projections as to profits for the years 2019 to 2021 were plainly wrong because they made no provision for the payment of the plaintiff’s costs - court has a full discretion as to the amount of security for costs which is to be provided - court is required to strike a balance, in a proportionate way, between the risk of injustice to both parties - party and party costs litigation routinely tax at significantly less than the costs actually incurred - evidence is that at present and for the next two years the plaintiff will be unable to provide any security at all from its own direct resources - no evidence in this case that an order for security for costs, whether full or limited, would or might stifle the claim - unjust to contemplate that whoever it is willing to finance the litigation should be able to finance the plaintiff’s costs on an ongoing basis but expose the defendant to an even greater risk that it should have to bear the costs of defending a claim that the court might ultimately find to be unmeritorious than is necessarily inherent in the system of adjudication of costs - evidence is that the plaintiff is now, and until the end of 2021 will be, unable to put up security from its own resources, but the plaintiff is nevertheless entitled to time to provide security - period of nearly two years is at the very outside of any time that might reasonably be allowed for the provision of security - less than ideal to put the action on hold for a substantial period of time - order that the plaintiff is to provide security for costs, by way of cash or bond, in the sum of €417,642 by no later than 5th January, 2022, which is three business days after 31st December, 2021 - Court stays all further proceedings in the action until that security is provided

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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