The Court of Appeal dismissed two appeals by Murphy Concrete (Manufacturing) Limited against High Court decisions refusing its applications for security for costs from Newlyn Developments Limited and Marchbury Properties Limited.
The underlying claims concern housing estates in Balbriggan where householders have reported structural defects allegedly linked to pyrite in aggregate infill. Newlyn developed Moylaragh, comprising 559 properties, and Marchbury developed Newhaven, comprising 234 houses and related infrastructure. Both companies seek indemnity from Murphy Concrete for potential liabilities arising from householders’ claims. The Court of Appeal addressed only whether security for costs should be ordered, not whether the alleged defects or liability claims were proved.
Under section 390 of the Companies Act 1963, the company seeking security must show that the plaintiff cannot pay its costs if successful and that it has a prima facie defence. If both are established, the plaintiff must show special circumstances for withholding security. The plaintiffs’ inability to pay was not disputed.
In Newlyn’s case, the High Court had refused security after finding special circumstances, including the scale of the claims and issues extending beyond the parties. The Court of Appeal upheld that decision. It said the litigation raised important questions about liability for pyrite-related damage and the uncertain law on recovery of pure economic loss. Those questions could affect other householders, developers and contractors. The court concluded that ordering security would not serve the interests of justice in the circumstances.
The result differed in Marchbury’s case. The High Court had refused security because Murphy Concrete had not objectively demonstrated a prima facie defence. The Court of Appeal agreed. It said the company’s defence and supporting affidavit largely denied or did not admit Marchbury’s allegations, without providing an evidential basis beyond those denials. The court said that a defence need not be proved at this stage, but a bare traverse did not meet the threshold for security.
The court noted that Marchbury pleaded a contract with the quarry supplier for material allegedly used in the development. It rejected the argument that the pure economic loss point supplied Murphy Concrete with a prima facie defence in that case. The court did not determine the merits of either underlying claim, and the appeals concerned only the security applications.
The President delivered the judgment on 21 December 2015. The court dismissed both appeals, leaving the High Court refusals of security for costs in place.