The High Court has refused an application for security for costs against Marlan Homes Limited in its professional negligence case against the administrator of the estate of its former solicitor, Owen O’Brien. The court found that the defendant had delayed in bringing the application and that requiring security would probably end the proceedings. It did not decide whether O’Brien was negligent.
Marlan Homes alleges that O’Brien failed to protect a claim it had brought against its former solicitor, Ciaran Callan. The company says it paid €4.925 million for development land at Kilmore Road, Artane, but could not develop it after Dublin City Council refused consent to a transfer. It alleges Callan’s negligence caused that loss and that O’Brien failed to issue proceedings in time to secure recovery under Callan’s professional indemnity cover.
Callan’s run-off cover ended on 30 November 2008. O’Brien sent a letter of claim on 10 December that year, issued proceedings against Callan in May 2010 and was informed in July 2010 that Callan had no cover. Marlan Homes says it learned of the insurance problem only after O’Brien died in 2014 and new solicitors took over in 2015. The company then sued O’Brien’s estate. These are allegations about the underlying case, not findings on liability.
The application was made under section 52 of the Companies Act 2014. The company’s inability to meet an adverse costs order was undisputed, and Marlan Homes accepted for this motion that the defendant had a bona fide defence. The judge said those circumstances would ordinarily support security unless special circumstances justified refusing it.
The judge rejected the company’s public policy argument and found that O’Brien’s alleged conduct could not account for all of the company’s financial shortfall. But she found that the defendant had information to assess a prima facie defence by September 2018 and should have applied by the end of that year. The application followed in August 2020. The judge accepted that the delay disadvantaged the company through legal work and the continued burden of the proceedings.
The court also found that the company and any likely third-party funders were highly unlikely to raise the security sought. The defendant estimated its defence costs at €559,246.50. Weighing the risk of an unrecoverable costs bill against the risk of shutting out the claim, the judge concluded that the greater injustice would be to grant security. She refused the application. The parties were directed to arrange a date with the registrar for oral submissions on costs. The underlying negligence case was not determined by this ruling.