Judgment: 2015-05-08 · Court archive

Court of Appeal allows solicitor’s appeal in security for costs dispute

The court held that the insolvent company’s conditional after-the-event insurance policy did not justify refusing an order for security for costs.

Court of Appeal · 2014 857

Who, what, where, when and why

Who
  • Greenclean Waste Management Limited (Plaintiff)
  • Maurice Leahy
  • Kelly J.
What

The court held that the insolvent company’s conditional after-the-event insurance policy did not justify refusing an order for security for costs.

Where

No place detail is included in this summary.

When

Judgment:

Why

Reasons reported in the judgment

The High Court had found that Greenclean was insolvent and that Leahy had demonstrated a prima facie defence. The Court of Appeal agreed on both points, while stressing that the preliminary assessment was not a prediction of who would succeed at trial. It said an application for security should not become a mini-trial.

The Court of Appeal has allowed an appeal by solicitor Maurice Leahy in a dispute over security for costs in a professional negligence action brought by Greenclean Waste Management Limited, a company in liquidation.

The judgment, delivered by Kelly J. on 8 May 2015, concerned the company’s claim against its former solicitor. The company alleges that advice about a lease’s repair obligations led to losses, and that Leahy later failed to advise it about a possible claim against the solicitor who originally acted on the lease. Those allegations remain disputed. The appeal concerned security for costs, not the underlying negligence claim.

The High Court had found that Greenclean was insolvent and that Leahy had demonstrated a prima facie defence. The Court of Appeal agreed on both points, while stressing that the preliminary assessment was not a prediction of who would succeed at trial. It said an application for security should not become a mini-trial.

The company relied on an after-the-event insurance policy with a stated indemnity limit of €210,000. The policy was conditional, including on a no-win no-fee agreement between the company and its solicitors. That agreement was not produced to either court. Leahy’s side also raised concerns about circumstances in which cover could end or fail to apply; the company filed no affidavit responding to those criticisms.

The High Court had adjourned the application to allow the insurer to consider the claim’s prospects. The insurer later confirmed it would not invoke the policy’s prospects clause in this case, and the High Court refused security. The Court of Appeal said that assurance addressed only one of several concerns.

Kelly J. held that the insurance policy was not relevant to whether the insolvent company itself could pay costs, because the policy proceeds would not form part of its assets. The policy could still be considered when the court exercised its discretion. But, on the evidence provided, it did not offer sufficient security to justify refusing an order. The missing agreement meant the court could not establish that an effective policy was in force, and the policy’s other conditions left the defendant exposed to risks outside his control.

The Court of Appeal therefore allowed Leahy’s appeal. The judgment does not decide the professional negligence claim or specify the amount or terms of security to be provided.

Read the original court judgment

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