The Supreme Court dismissed Zerko Limited’s appeal and affirmed the High Court’s refusal to order Mavior to provide security for costs. The ruling concerns the security application only; it does not decide the underlying dispute over payment for building works at storm-damaged Dublin hotels.
Mavior, an Irish registered unlimited company, claims money from Zerko under an alleged contract or, alternatively, on a quantum meruit basis for work said to have been carried out on Zerko’s request and with its knowledge. Zerko disputes having a contractual or legal relationship with Mavior. It also disputes the alleged arrangements and says some of the work was substandard. Zerko argued that insurance payments and sums already paid left no net amount due.
Zerko sought security under section 390 of the Companies Act 1963 or Order 29 of the Rules of the Superior Courts. It did not pursue the section 390 application because that provision applies to limited companies. The High Court refused the application under Order 29, finding that Mavior was not a nominal plaintiff. Zerko appealed that refusal.
Delivering judgment on 13 March 2013, Mr Justice Clarke said an Irish resident unlimited company should be treated like a natural person for the relevant security-for-costs principles. The established exception allowing security against an impecunious resident nominal plaintiff applied only where another party had the beneficial interest in the cause of action itself. A third party’s possible indirect benefit as a shareholder or creditor was not enough.
Zerko relied on matters including Mavior’s alleged lack of assets, its company structure and the asserted involvement of people connected with its ownership. The Court held that even if those matters were established, they did not show that someone other than Mavior beneficially owned the claim. The claim, if any, under the alleged contract or on a quantum meruit basis belonged to Mavior.
The Supreme Court therefore held that the High Court had correctly found Mavior was not a nominal plaintiff and correctly refused security for costs. It dismissed the appeal and affirmed the High Court order. The Court did not determine whether Zerko owes Mavior money, whether the alleged contract existed, or the parties’ disputes about the quality and value of the works.