A Supreme Court judge has suggested that courts could consider making security for costs orders in stages in substantial cases, so they can assess the issue with more evidence after discovery.
In a concurring judgment dated 22 March 2021, Mr Justice John MacMenamin said he agreed with the judgment delivered by the Chief Justice, applying the law as it presently stands. He reserved further consideration of the principles for a future case. The judgment does not state the appeal’s overall outcome or set out any order on security for costs.
Justice MacMenamin said security for costs applications require courts to balance litigants’ constitutional access to the courts against defendants’ protection from plaintiffs who may be unable to meet a costs award if their claims fail. He said there may be more room in future for proportionality when striking that balance.
He referred to guidelines from Connaughton Road: a plaintiff should establish actionable wrongdoing, a causal link between that wrongdoing and the consequences for the plaintiff, specific and identifiable loss, and loss sufficient to affect the plaintiff’s ability to meet a defendant’s costs if the defence succeeds.
Justice MacMenamin said substantial cases can present a difficulty because security applications may be heard early, before discovery, when information about the merits and potential costs is limited. He agreed with the Chief Justice that calculating security is largely a mathematical exercise, but said the result depends on the quality and completeness of the evidence available.
He proposed that, before discovery, a court might make an interim order based on the potential range of discovery costs. Once discovery is complete, a defendant could apply for further security in light of the potential hearing costs. Any later hearing should be focused and based on affidavit evidence and particular documents or categories of discovery, he said, to prevent satellite litigation.
The judgment referred to the appellant’s case that costs could reach €30 million. Justice MacMenamin said courts may have to make decisions without documentary evidence held by the parties but unavailable to the other side or the court, and may be left to consider a “worst case scenario”. He reserved further consideration of the principles for a future case.
He also reserved comment on a submission concerning possible third-party funding for the appellants’ claim and whether that source might be beyond an adverse costs order.