Pasrm Ltd v Companies Acts 2014 (Approved)

Factual and Procedural Background

This opinion concerns an application for security for costs brought by the respondents against the applicant in proceedings under the Companies Acts. The respondents had applied for a direction requiring the applicant to provide security for their costs, relying on the applicant’s residence outside the jurisdiction and the existence of a prima facie defence. The court had previously refused the respondents’ application for security for costs in a judgment delivered on 22 March 2023. Following that judgment, the court invited submissions on the issue of costs related to the security for costs application. Both parties provided written submissions in response.

Legal Issues Presented

1. Whether the respondents should be ordered to pay the applicant’s costs of the security for costs application.
2. Whether the costs of the security for costs application should be costs in the cause or follow the event.
3. The application and interpretation of section 169(1) of the Legal Services Regulation Act 2015 in relation to costs orders.
4. The reasonableness of bringing and contesting the security for costs application given the circumstances.

Arguments of the Parties

Respondents' Arguments

• The costs of the security for costs application should be costs in the cause rather than costs following the event.
• It was reasonable to bring and contest the application given the requirements to show the applicant resided outside the jurisdiction, establish a prima facie defence, and the absence of special circumstances.
• The respondents succeeded on the first two elements but lost on the issue of special circumstances, which was decisive.
• The respondents relied on precedents where costs were made costs in the cause in interlocutory applications.

Applicant's Arguments

• The applicant contended that the respondents’ application for security for costs was unsuccessful and that the respondents should bear the costs of the application.
• The applicant highlighted that the respondents contributed to the applicant’s departure from the jurisdiction through inaccurate legal statements, which enabled the respondents to meet one of the application’s key elements.
• The applicant sought costs on a legal practitioner and client basis, but the court was invited to consider party and party costs.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Paddy Burke (Builders) Limited (In liquidation and in receivership) v Tullyvaraga Management Company Limited & Ors [2020] IEHC 170	Costs in interlocutory injunction applications where a serious issue to be tried is not established but the matter may be revisited at trial	The court found this precedent inapplicable as the present case related to a security for costs application with fundamentally different circumstances, especially regarding the prevention of the applicant from proceeding.
Hafeez v CPM Consulting Limited [2020] IEHC 583	Followed the approach in Paddy Burke regarding costs in interlocutory injunction applications	The court held that this case similarly did not assist the respondents for reasons analogous to those in Paddy Burke.

Court's Reasoning and Analysis

The court analyzed the three key elements required for a security for costs order: the applicant’s residence outside the jurisdiction, the existence of a prima facie defence by the respondents, and the absence of special circumstances. While the respondents succeeded on the first two elements, the decisive factor was the presence of special circumstances which led the court to refuse the security for costs order. The court emphasized that the respondents contributed to the applicant’s departure from the jurisdiction through inaccurate legal advice, which enabled the respondents to satisfy the residence element. The court noted that security for costs applications are discrete and not revisited at trial, and that defendants should not have a "consequence-free" opportunity to seek such orders without bearing risk of costs if unsuccessful. The court rejected the respondents’ reliance on precedents relating to interlocutory injunctions, finding those cases materially different. The court concluded that the respondents must bear the costs of the unsuccessful security for costs application and ordered those costs to be stayed pending the trial. The applicant’s request for costs on a legal practitioner and client basis was declined, with costs awarded on a party and party basis instead.

Holding and Implications

The court’s final decision was to ORDER the respondents to pay the applicant’s costs of the security for costs application, with those costs to be adjudicated in default of agreement and stayed pending the determination of the substantive proceedings. The court declined to award enhanced costs. The direct effect of this decision is that the respondents bear the financial burden of the unsuccessful application, and the applicant is permitted to continue with the proceedings without the imposition of security for costs. No new precedent was established, and the ruling is specific to the facts of this case.