Irish Bank Resolution Corporation Ltd -v- Moran

Factual and Procedural Background

The Defendant is a director of two companies, referred to as Company A and Company B, which borrowed substantial sums from the Plaintiff. The Plaintiff alleges that the Defendant personally guaranteed these loans and seeks to recover €19,282,828.31 based on those guarantees. The Plaintiff was refused summary judgment, and the case was ordered to proceed to a plenary hearing with usual directions and pleadings exchanged.

The present application arises from the Defendant’s motion for security for costs pursuant to section 390 of the Companies Acts, alternatively under Order 29 of the Rules of the Superior Courts and/or the inherent jurisdiction of the court. The Plaintiff, formerly known as Anglo Irish Bank Plc, was placed in special liquidation by ministerial order in February 2013, with two joint special liquidators appointed.

The Defendant sought leave to cross examine one of the liquidators on affidavit evidence related to the security for costs application. This judgment addresses the motion for leave to cross examine the liquidator.

Legal Issues Presented

1. Whether the Defendant is entitled to cross examine the liquidator on affidavit evidence in the context of an application for security for costs.
2. Whether the Defendant has demonstrated sufficient conflict in the affidavit evidence to justify cross examination.
3. Whether the Plaintiff will be able to pay the Defendant's costs if successful in defending the claim.

Arguments of the Parties

Defendant's Arguments

• The Defendant contends there are conflicts of evidence in the affidavits exchanged that necessitate cross examination to fairly decide the security for costs application.
• The Defendant questions whether the €50 million retained by the Plaintiff’s liquidators is unencumbered cash and whether it is earmarked solely for litigation costs.
• The Defendant asserts uncertainty about the liquidator’s authority and whether the Minister for Finance has authorised the retention of these funds.
• The Defendant raises concerns about the Plaintiff’s financial position, including the potential impact of multiple ongoing litigations and the priority of costs orders relative to floating charges.
• The Defendant argues cross examination is necessary to clarify these issues and the liquidator’s views on the continuation of proceedings and asset depletion.

Plaintiff's Arguments

• The Plaintiff, through the liquidator, affirms that the €50 million is held in cash, subject to a floating charge, and is earmarked solely for meeting costs arising from all litigation involving the Plaintiff.
• The liquidator states the sum is a minimum fund, to be topped up as necessary, and sufficient to cover any costs orders against the Plaintiff.
• The Plaintiff submits that issues regarding the liquidator’s authority and the priority of costs orders are legal questions to be resolved at the substantive hearing and do not require cross examination.
• The Plaintiff highlights that the liquidator has undertaken to provide 21 days’ notice should circumstances affecting the availability of the retained sum change, protecting the Defendant’s interests.
• The Plaintiff argues that the Defendant’s hypothetical calculations regarding multiple cases are irrelevant in light of the actual evidence of retained funds.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by outlining the discretionary jurisdiction to order cross examination on affidavit evidence in applications such as the present, distinguishing it from summary or special summons where cross examination is a right. The court relied on established authorities confirming that leave to cross examine is granted only when there is a probable conflict of fact relevant to the issue and that cross examination is necessary for just determination.

The Defendant failed to demonstrate any material conflict in the affidavits regarding the security for costs issue. The undisputed facts showed the Plaintiff is insolvent, in special liquidation, and that the liquidators are retaining at least €50 million in cash, earmarked solely for litigation costs, which will be maintained throughout the proceedings.

The Defendant’s contentions regarding the nature and use of the €50 million fund, the liquidator’s authority, the Plaintiff’s financial position, and the impact of other ongoing litigations were addressed by the liquidator’s affidavits and oral undertakings. These matters were either legal questions for the substantive hearing or hypothetical and irrelevant to the application for leave to cross examine.

The court also noted that the liquidator had undertaken to notify the Defendant of any material changes affecting the availability of the retained funds, thereby protecting the Defendant’s interests without the need for cross examination.

Accordingly, the court concluded that the Defendant did not meet the criteria to justify cross examination of the liquidator on affidavit evidence.

Holding and Implications

The court DISMISSED the Defendant’s application for leave to cross examine the liquidator on affidavit evidence in the context of the security for costs application.

The direct effect of this decision is that the security for costs application will proceed without cross examination of the liquidator’s affidavit evidence. No new precedent was established; the decision affirms the discretionary nature of cross examination in such applications and the requirement for a demonstrable conflict of fact and necessity to justify it.