The High Court struck out Rayan Restaurant Limited’s negligence action against solicitors Gerald Kean and Francis McGagh, following further evidence and hearings after an earlier judgment in January 2012. The company had alleged negligence in the conduct of proceedings arising from a dispute over a restaurant lease and a later application for security for costs.
Mr Justice Michael White said the action concerning the Circuit Court proceedings had the hallmarks of a collateral attack on the earlier judgment. The Circuit Court had heard evidence from Djemal Mennad and Claudia Puscas, whose accounts conflicted, and found in favour of Puscas. The High Court judge said the defendants were instructed about a month after the landlord’s re-entry to the premises, after significant court orders had already been made. He also found the delay before the substantive Circuit Court hearing was not attributable to the defendants and said the pleadings were proper.
The judge said there was an important public interest in ensuring that decisions of courts with jurisdiction were not undermined. He found the defendants’ application to strike out the negligence claim insofar as it concerned the Circuit Court proceedings was well founded.
The company also argued it should not have to provide security for costs in the earlier High Court proceedings because its financial difficulties resulted from the alleged negligence. The judge said the company bore the burden of establishing special circumstances to avoid security for costs. It had not produced primary accounts, tax or VAT returns, audited accounts or bank statements. Accountant Nick Linnane’s financial analysis was based on information supplied by the directors and lacked primary books of account or bank statements. The judge found accountant John Harding’s critique credible and concluded that Rayan Restaurant Limited had been in a perilous financial position by May or June 2003 and could not have met a substantial costs order.
The judge found the negligence allegation against McGagh concerning advice on resisting security for costs to be vexatious and frivolous. As to Kean, he said there was a stateable but tenuous claim that available financial information could have been put before the earlier High Court. However, even with that information, the company was unlikely to have resisted security for costs. Given the company’s insolvency and continuation solely for litigation, the judge exercised the court’s inherent jurisdiction to strike out the action in its entirety against Kean as well.