The Supreme Court has overturned an order requiring a company behind a proposed private hospital in Limerick to provide €1.79 million as security for VHI’s legal costs.
Shay Sweeney and The Limerick Private Limited sued the Voluntary Health Insurance Board in 2015 after negotiations to obtain insurance approval for the planned hospital ended without agreement. Their proceedings principally allege that VHI abused a dominant market position in breach of competition law. Those allegations have not yet been determined.
VHI first sought voluntary security for its costs in May 2015. Its solicitors stated in October 2015 that a court application would follow if security was not provided. No such application was issued until 28 June 2023, almost eight years later.
In the meantime, the parties became involved in separate litigation over the appellants’ expert witness. VHI succeeded before the Court of Appeal and Supreme Court in excluding that expert, with costs orders made against the appellants.
The High Court subsequently ordered The Limerick Private Limited to provide €1,790,500 in security or face a stay of its proceedings. The Court of Appeal upheld that decision.
Ms Justice Donnelly, delivering the Supreme Court judgment, held that applications for security for costs should be made as soon as reasonably possible once the necessary information is available. A delay of more than a year, where significantly unexplained, may itself justify refusal unless there is a pressing reason to grant security.
The court described VHI’s delay as extraordinary. It held that VHI had sufficient information to seek security by October 2015 at the latest but gave no explanation for waiting until 2023.
The court also found actual prejudice. The company had incurred adverse costs orders while contesting the expert-witness application without having had the opportunity to decide whether to continue the litigation knowing that a substantial security requirement would later be imposed.
The appeal was allowed and the security order set aside. The Supreme Court also directed that the underlying case return promptly to the High Court for case management.