The Court of Appeal set aside High Court orders requiring Paulson Investments Limited and Albert Enterprises Limited to provide security for the costs of Jons Civil Engineering Limited and P.J. Edwards & Company Limited. It did so after the plaintiffs lodged €500,000 with their solicitors to meet any costs orders made against them after the substantive trial.
In a judgment dated 8 June 2016, Ms Justice Finlay Geoghegan concluded that the lodgement, considered with the stage reached in the proceedings, established special circumstances making it just to allow the appeal. The court did not determine the underlying claims or the parties’ ultimate liability. It also did not treat the €500,000 as a final costs award or decide what costs would be recovered.
The proceedings concern construction and piling work for a development on a site at Dyer Street, Drogheda, beside the River Boyne. Paulson owned the site, and the development was to proceed through Albert. The companies claim damages of about €25 million. Their claims against Jons are in contract and negligence; the claim against Edwards is in negligence. Work began without written contractual documents. The judgment describes disputes about responsibility for the works, whether a pile wall formed part of temporary or permanent works, and site conditions. The defendants maintained that they had prima facie defences, a threshold for the security application rather than a decision on the merits at trial.
The High Court had ordered security under section 390 of the Companies Act 1963 after finding that each defendant had shown a prima facie defence and that the plaintiffs would be unable to meet an adverse costs order. The plaintiffs argued that delay and Jons’s discovery failures were special circumstances. The High Court rejected those grounds and refused to strike out Jons’s defence. Those findings were part of the procedural history; the appeal judgment concerned the security orders.
On appeal, the court found no basis to disturb the High Court’s overall conclusion that Jons had established a prima facie defence, although it identified a possible error concerning an unpleaded contention that Jons had contracted with Mr Smyth personally. The court said that issue did not change its overall conclusion. It also noted that the parties agreed the High Court’s specified security amounts would have to be vacated and any amount reconsidered by reference to costs incurred after the respective security applications.
The Court of Appeal allowed the appeal and vacated the security orders. Because the court learned of the €500,000 lodgement after the appeal hearing, it directed that the parties be heard on any undertakings or acknowledgements needed to ensure the money remained exclusively available for relevant costs orders following the High Court proceedings.