The Court of Appeal has allowed an appeal by CMC Medical Operations Limited, in liquidation, and dismissed the Voluntary Health Insurance Board’s application for security for costs. The court did not determine whether VHI unlawfully refused to approve the company’s Cork hospital or whether that refusal caused its collapse.
CMC opened a private hospital at Citygate, Mahon Point, Cork, in September 2010. It closed less than a year later amid financial difficulties, and a liquidator was appointed on 11 May 2011. CMC alleges that VHI’s refusal to extend insurance cover to its services deprived the hospital of access to a substantial share of privately insured patients and led to its failure. VHI denies responsibility, saying the collapse arose from other financial problems and that CMC opened without securing approval or an indication it would be granted. No defence had yet been delivered.
The appeal concerned a High Court order made on 12 June 2012 under section 390 of the Companies Act 1963, requiring CMC to provide security for VHI’s costs. The amount had not yet been fixed. The parties accepted that CMC was insolvent and unable to meet an award of costs, and that VHI had a prima facie defence. CMC therefore had to show special circumstances to resist the order, including a prima facie case that actionable wrongdoing caused loss sufficient to explain its inability to pay.
The Court of Appeal said the question of VHI’s market dominance remained for a full hearing. For this application only, it was reasonable to proceed on the possibility that VHI held a dominant position and that refusing approval could amount to abuse of that position. The court also found a prima facie causal connection between the alleged wrongdoing and the hospital’s rapid financial decline. It noted that the extent of any connection would require a full hearing and that the underlying loss would be recoverable only if the relevant claims were later established.
The court considered that the High Court had gone too far into issues better resolved at trial, particularly given the complexity of the financial questions. It allowed CMC’s appeal and dismissed VHI’s application for security for costs. The judgment does not resolve the substantive competition dispute or establish liability.