Factual and Procedural Background
The Plaintiff, Company A, is the owner of a site at 45-47 Cuffe Street, The City, intending to erect a nine-storey commercial office building known as the Greenside Building. Company A engaged a design team including an Architect and an Engineer. Initially, Company A contracted with a contractor to construct the building, who in turn contracted with the Defendant, Company B, to supply ready-mix concrete. There is no contractual relationship between Company A and Company B. Company A claims that Company B owed it a duty of care in supplying the concrete.
Company A alleges that concrete supplied by Company B did not meet specified compressive strength requirements, resulting in defective and understrength concrete used in the basement walls, ground floor columns, and slab. Notices were issued to the original contractor to remove the defective concrete and improve the works programme, but non-compliance led to termination of that contract. Company B was aware of issues through engagement with the original contractor but was not notified of claims until several months later.
Company A subsequently engaged a new contractor to continue the works, who began removing the defective concrete. Company A claims loss and damage exceeding €13 million due to delays and additional costs. Company B has delivered a full defence to these claims.
Company B applied for security for costs pursuant to relevant rules and statutes, seeking an order to secure costs to be incurred in defending the proceedings, a stay of proceedings until security is provided, and directions on the amount and manner of security.
Legal Issues Presented
- Whether Company B has established a prima facie defence to Company A’s claim.
- Whether there is reason to believe that Company A will be unable to pay Company B’s costs if ordered to do so.
- Whether any special circumstances exist to justify refusing an order for security for costs.
- What amount of security for costs should be ordered and whether a stay of proceedings is appropriate pending provision of such security.
Arguments of the Parties
Defendant's Arguments
- Company B denies any legal relationship with Company A, the Architect, or the Engineer, having contracted only with the original contractor.
- All concrete supplied complied with orders placed by the original contractor and met industry standards, including compressive strength requirements.
- The original contractor specified the concrete mixes and ordering; Company B’s role was solely to supply as ordered, without responsibility for adequacy or fitness for purpose beyond those orders.
- Any understrength concrete or defects resulted from acts or omissions of others after delivery, constituting a novus actus interveniens for which Company B is not responsible.
- Company B contests the reliability of testing and other evidence presented by Company A and asserts that Company A has failed to produce evidence that concrete delivered did not conform to orders.
- Company B alleges that Company A has impeded inspection of the relevant concrete, limiting Company B’s ability to gather evidence.
- Company B contends that Company A’s claim is speculative, lacking contractual basis, and that Company A was contributorily negligent.
Plaintiff's Arguments
The opinion does not contain a detailed account of the Plaintiff’s legal arguments beyond the claim of a duty of care owed by Company B and allegations of defective concrete supply.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Quinn Insurance Ltd v. PWC [2021] IESC 15 |
Three-part test for security for costs: (i) prima facie defence, (ii) reason to believe plaintiff unable to pay costs, (iii) special circumstances to refuse security. |
The court applied this test to assess the application, adopting the principle that security for costs is generally appropriate absent special circumstances. |
| Protégé International Group (Cyprus) Ltd v. Irish Distillers Ltd [2021] IESC 16 |
Endorsement of the three-part test for security for costs and guidance on special circumstances. |
The court referenced this case to confirm the burden on the plaintiff to establish special circumstances to avoid security for costs. |
| Greenclean Waste Management Ltd v. Leahy [2015] 1 IR 106 |
Caution against adjudicating the merits beyond the existence of a prima facie defence in security for costs applications. |
The court heeded this caution by limiting its analysis to whether a prima facie defence was established, without prejudging the substantive trial. |
| Bionomica Ltd (in vol. liq.) v. Response Engineering Ltd [2020] IEHC 340 |
Similar caution on the scope of analysis in security for costs applications. |
Reinforced the court’s approach to restrict analysis to the existence of a prima facie defence. |
| IBB Internet Services v. Motorola Ltd [2013] IESC 53 |
Consideration of a company’s equity and assets in assessing ability to pay costs. |
The court applied this principle to evaluate Company A’s financial position and the likelihood of payment of costs. |
| Connaughton Road Construction Ltd v. Laing O'Rourke Ireland Ltd [2009] IEHC 7 |
Consideration of special circumstances in security for costs applications. |
The court used this precedent to assess whether any special circumstances justified refusal of security for costs. |
Court's Reasoning and Analysis
The court applied the established three-part test for security for costs. First, it found that Company B had established a prima facie defence to Company A’s claim, noting the absence of direct contractual relationship, the reliance on orders from the original contractor, and the lack of evidence from Company A that Company B supplied incorrect concrete. The court carefully limited its analysis to the existence of a prima facie defence, avoiding adjudication on the merits, consistent with relevant precedents.
Second, the court found reason to believe that Company A would be unable to pay Company B’s costs if ordered to do so. Company A is a special purpose vehicle (SPV) established for the development project, funded almost entirely by loan finance, with minimal equity investment. The court considered multiple valuation reports on the property asset, preferring those prepared for the lender, which indicated asset value but no significant liquid assets or cash available to meet costs. The court noted concerns expressed in Company A’s earlier accounts about continuing as a going concern and the speculative nature of its ability to pay costs, given market fluctuations and the absence of contractual guarantees from lenders to meet any costs order.
Third, the court examined whether any special circumstances existed to justify refusal of security for costs. It rejected arguments that the alleged wrongdoing of Company B caused Company A’s inability to pay, finding the evidence speculative and insufficiently clear. The court emphasized Company A’s SPV status and its financing structure, which inherently limited its ability to meet a costs order. Counterfactual scenarios proposed by Company A’s evidence did not withstand scrutiny.
Balancing the interests and risk of injustice, the court concluded that not ordering security would impose an unjust burden on Company B, exposing it to irrecoverable costs. The court determined that ordering security for costs and staying the proceedings until such security is provided would minimize injustice between the parties.
Holding and Implications
The court GRANTED the application for security for costs in favour of Company B in the amount of €771,410 (exclusive of VAT). The court also ordered a stay of proceedings against Company B pending the provision of that security within three months of the judgment date.
This decision directly affects the parties by requiring Company A to secure costs before continuing litigation, thereby protecting Company B from the risk of irrecoverable costs. No new legal precedent was established; the ruling applies existing principles on security for costs and reflects the court’s careful balancing of justice between the parties in the context of a corporate plaintiff with limited resources structured as an SPV.