Comcost International Holdings Incorporated & ors v Minister for Public Enterprise & ors

Factual and Procedural Background

This opinion concerns an application by the fourth defendant seeking security for costs from two corporate plaintiffs, both companies incorporated outside the jurisdiction and alleged to be impecunious. The third plaintiff company has been dormant and was dissolved and later restored. The underlying dispute arises from a tender process in 1995 for the award of the State’s second GSM mobile telephone licence, which was ultimately awarded to a company in which the fourth defendant had a significant financial interest. The plaintiffs, participants in a consortium bidding for the licence, claim the tender process was corrupted by the Minister and the fourth defendant, alleging breaches of contract, duty, statutory duty, and the Prevention of Corruption Act 1906, seeking declarations that certain decisions were null and void and damages.

Two sets of proceedings were initiated in 2001. After delays and a period of dormancy pending the Moriarty Tribunal report, the proceedings were struck out for delay by this Court but reinstated on appeal by the Supreme Court in 2012. The fourth defendant now applies for security for costs against the two corporate plaintiffs, arguing their lack of assets and inability to meet costs orders.

Legal Issues Presented

1. Whether the fourth defendant has satisfied the requirements under Order 29 of the Rules of the Superior Courts to obtain security for costs from the corporate plaintiffs who are outside the jurisdiction and allegedly impecunious.
2. Whether the fourth defendant has demonstrated a satisfactory affidavit showing a defence on the merits as required by Order 29, rule 3.
3. Whether any special circumstances exist that should displace the usual entitlement to security for costs, including allegations that the plaintiffs’ inability to pay is caused by the defendants’ wrongful acts, delay by the applicant, the presence of a personal co-plaintiff who can satisfy costs, the public interest in the litigation, and the existence of a counterclaim by the fourth defendant.

Arguments of the Parties

Applicant's Arguments (Fourth Defendant)

• The two corporate plaintiffs are incorporated outside the jurisdiction, have minimal or no assets, and are unlikely to be able to meet any costs order against them.
• The first plaintiff is a nominal company with no apparent activity or assets, part of a larger corporate group, but with no undertaking to provide funds for costs liabilities.
• The third plaintiff is dormant, dissolved, and restored, with no trading activity and in financial difficulty.
• As such, the fourth defendant is prima facie entitled to security for costs under Order 29.
• The fourth defendant asserts he has a good defence on the merits, as set out in the Defence and Counterclaim, and that the plaintiffs’ allegations are denied.

Respondents' Arguments (Plaintiffs)

• The applicant has failed to provide a satisfactory affidavit demonstrating a defence on the merits, as required by Order 29, rule 3.
• The defence is essentially a traverse of the allegations, and the applicant relies on a bald assertion of defence without sufficient evidential foundation.
• The plaintiffs assert special circumstances that should preclude security for costs, including:
• The first plaintiff’s impecuniosity results from the alleged wrongful acts of the defendants.
• The applicant delayed in making the application for security for costs.
• The presence of the individual co-plaintiff, who is resident in the jurisdiction and able to meet any costs order.
• The public interest in having the issues of alleged corruption resolved in court.
• The plaintiffs also point to the existence of a counterclaim by the fourth defendant, arguing that ordering security could be unfair and leave them defenceless.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Collins v. Doyle [1982] I.L.R.M. 495	Prima facie right to security for costs where plaintiff is outside jurisdiction and defendant has a prima facie defence; discretion to refuse in special circumstances.	Confirmed the defendant’s prima facie entitlement to security for costs but acknowledged discretion where plaintiff’s impecuniosity is caused by defendant’s wrongdoing.
Mavior v. Zerko Limited [2013] IESC 15	Default presumption against ordering security for costs to avoid shutting out impecunious parties.	Reinforced that the balance of justice generally disfavors security orders absent significant countervailing factors.
Oltech (Systems) Limited v. Olivetti UK Limited [2012] IEHC 512	Security for costs not mandatory even if plaintiff company appears unable to pay; counterclaims may affect fairness of ordering security.	Referenced in relation to counterclaim and fairness in ordering security for costs.
Goode Concrete v. CRH Plc [2012] IEHC 116	Defendant must demonstrate a stateable or prima facie defence with evidence, not mere assertion.	Applied to assess adequacy of the applicant’s affidavit demonstrating a defence on the merits.
Power v. Irish Civil Service (Permanent Building Society) [1968] I.R. 158	What constitutes a satisfactory affidavit of defence depends on case circumstances and claim nature.	Used to frame the standard for affidavits supporting security for costs applications.
Connaughton Road Construction Ltd v. Laing O’Rourke Ireland Ltd [2009] IEHC 7	Requirements for plaintiffs to show their inability to pay costs is caused by defendant’s wrongdoing on a prima facie basis.	Applied to reject plaintiffs’ claim that their impecuniosity was caused by defendants’ alleged wrongs.
Bula Ltd & Ors v. Tara Mines Ltd & Ors [1987] IR 494	Presence of a personal co-plaintiff who can pay costs may preclude ordering security against corporate co-plaintiffs.	Applied to find that the personal co-plaintiff’s ability to pay defeats the security for costs application.
Re Goods of Mooney [1938] IR 354	Security for costs generally not ordered against foreign plaintiffs joined with bona fide plaintiffs resident in jurisdiction.	Supported the principle that a personal plaintiff protects corporate co-plaintiffs from security orders.
Harlequin Property (SVG) Ltd v. O’Halloran [2012] IEHC 13	Confirmed that a personal co-plaintiff able to pay costs can justify refusal of security for costs against corporate co-plaintiffs.	Reinforced the balancing approach regarding co-plaintiffs’ financial positions.
Millstream Recycling Limited v. Gerard Tierney and Newtown Lodge Limited [2010] IEHC 55	Public importance of litigation issues may justify refusal of security for costs.	Supported refusal of security where issues are of exceptional public interest.
Comcast International Holdings Incorporated v. Minister for Public Enterprise [2012] IESC 50	Recognized the public interest in resolving claims of corruption in high office.	Referred to in support of public interest argument against security for costs.
Moorview Developments Ltd v. Cunningham [2010] IEHC 30	Delay in seeking security for costs may disentitle applicant, especially if plaintiff incurred costs unaware of security application.	Considered but found inapplicable due to unique case history and public inquiry delay.

Court's Reasoning and Analysis

The Court began by confirming that the two corporate plaintiffs are unlikely to be able to satisfy any costs order, thus prima facie justifying security for costs. The first plaintiff is a nominal company with no assets or commercial activity, dependent on related entities for financing litigation, but with no undertaking to fund costs liabilities. The third plaintiff has been dormant and financially distressed for years.

Regarding the requirement under Order 29, rule 3, the Court examined whether the fourth defendant provided a satisfactory affidavit demonstrating a defence on the merits. The Court acknowledged that the affidavit was somewhat bald and delayed but concluded that in the unusual factual and procedural context, including the long public inquiry and the nature of the allegations, the requirement was met. The defence is essentially a denial and traverse of the plaintiffs’ allegations, which is the core dispute to be resolved at trial, and such a conflict of fact cannot be resolved on affidavit alone.

The Court then considered the plaintiffs’ claim that their inability to pay costs was caused by the defendants’ alleged wrongdoing. Applying established principles, the Court found that the plaintiffs failed to establish a prima facie causal connection sufficient to displace the entitlement to security for costs. The plaintiffs’ inability to pay was not shown to be largely caused by the defendants’ alleged corrupt acts but rather reflected the normal risk of losing a competitive tender.

Delay by the fourth defendant in seeking security for costs was addressed, but the Court found that the unique circumstances, including the Moriarty Tribunal’s timing and the plaintiffs’ conduct, mitigated against denying security on this ground.

The presence of the individual co-plaintiff, who is resident in the jurisdiction and asserts ability to meet any costs order, was decisive. Established authority holds that security for costs will generally not be ordered against impecunious corporate plaintiffs if there is a co-plaintiff able to satisfy costs. The Court accepted that the individual co-plaintiff is a “mark for costs” and that this protected the corporate plaintiffs in this case.

The Court also considered the public interest in resolving allegations of corruption in high office, as emphasized by the Supreme Court in related judgments. This factor weighed against ordering security for costs, as interlocutory measures should not unduly burden litigation on matters of significant public concern.

Finally, the Court noted the existence of a counterclaim by the fourth defendant. It recognized that ordering security for costs could be unfair if it would leave the plaintiffs unable to defend the counterclaim, particularly where the claims and counterclaims arise from the same facts. This consideration further supported refusal of the application.

Holding and Implications

The Court REFUSED the fourth defendant’s application for security for costs against the two corporate plaintiffs.

The direct effect of this decision is that the litigation may proceed without the corporate plaintiffs being required to furnish security for costs at this stage. The presence of the individual co-plaintiff capable of meeting costs removes the risk that a successful defendant would be unable to recover costs, which is the primary justification for security orders. The Court’s refusal does not establish new precedent but applies settled principles balancing the interests of parties, the public interest, and procedural fairness in complex, high-profile litigation.