- Bookmark
- Share
- CaseIQ
Tahboub v Joint Arab-Irish Chamber of Commerce CLG (Approved)
Factual and Procedural Background
The Plaintiff is a businessman residing in Jordan who was a member of the Board of the Defendant, a company limited by guarantee incorporated in Ireland in 1984 to promote commercial and other relations between Arab countries and Ireland. The Plaintiff was nominated by Jordan as a director and vice-chairman of the Defendant's Board. In June 2022, a nomination communication from the General Union named both the Plaintiff and another individual as nominees from Jordan, which the Defendant contends was invalid due to its Articles permitting only one nominee per Arab country. Subsequently, the Defendant treated the other nominee as valid and asked the Plaintiff to step down, which the Plaintiff disputes, asserting continued service and wrongful removal without notice in October 2022. No representative from Jordan has been on the Board since then.
The Plaintiff issued proceedings in July 2023 seeking reinstatement as director and vice-chairman, and declarations invalidating the Defendant’s decisions since May 2022. The Defendant delivered a Defence in March 2024, denying the claims and challenging the nomination's validity and the Plaintiff’s standing. The Defendant also sought an order for security for costs under Order 29, Rule 1 of the Rules of the Superior Courts, asserting the Plaintiff’s foreign residence and a prima facie defence based on the invalidity of the nomination.
The motion for security for costs was heard in October 2024, with affidavits filed by both parties and their representatives. The Defendant’s evidence was found deficient in demonstrating a prima facie defence, lacking key documentary evidence and affidavits from persons with direct knowledge. The Plaintiff relied on his significant means, ties to Ireland, and alleged delay by the Defendant as special circumstances to refuse the order.
Legal Issues Presented
- Whether the Defendant has demonstrated a prima facie defence to the Plaintiff's claim sufficient to justify an order for security for costs under Order 29, Rule 1.
- Whether any special circumstances exist that would warrant refusal of the security for costs order despite the Defendant's entitlement.
- The appropriate calculation and effect of delay in seeking security for costs in this context.
- The scope of the Defendant’s obligation to disclose evidence and legal grounds when seeking security for costs.
Arguments of the Parties
Defendant's Arguments
- The Plaintiff is resident outside the jurisdiction, satisfying the first criterion for security for costs.
- The nomination of 29 June 2022 was invalid as it named two nominees from Jordan, contrary to the Defendant’s Articles permitting only one nominee per Arab country.
- The Defendant accepted the other nominee as valid and requested the Plaintiff to step down, asserting the Plaintiff retired rather than being removed.
- The Plaintiff failed to produce written confirmation from the Jordan Chamber of Commerce confirming him as the sole nominee after the other nominee’s withdrawal.
- There is a preliminary objection challenging the Plaintiff's standing to seek certain reliefs.
- The Defendant denies any breach of the Plaintiff’s rights as a representative member and has not substantively addressed those claims.
- The Defendant contends there was no culpable delay in seeking security for costs, and any delay was not prejudicial to the Plaintiff.
- The Defendant disputes any obligation akin to full disclosure of all evidence at this stage, distinguishing from ex parte applications.
Plaintiff's Arguments
- The nomination of 29 June 2022 constituted a valid re-confirmation of his position, especially following the withdrawal of the other nominee via an email signed by that nominee as vice-chairman of the Jordan Chamber of Commerce.
- The Defendant failed to put all relevant evidence ("put its cards on the table") to establish a prima facie defence.
- The Plaintiff has significant means and strong ties to Ireland, making it likely he would honour any costs order, constituting special circumstances against security for costs.
- The Defendant delayed unreasonably in seeking security for costs, which should preclude the order.
- The Plaintiff was unlawfully removed without notice and excluded from meetings and communications.
- The Plaintiff asserts the Defendant has not demonstrated a prima facie defence to his claims as a representative member.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Goode Concrete v CRH plc [2012] IEHC 116 | Onus on defendant to demonstrate a bona fide defence on the merits to a prima facie standard. | Affirmed the high threshold for establishing a bona fide defence and that the court should not prejudge the case. |
| Quinn Insurance Ltd v Pricewaterhouse Coopers (a Firm) [2021] 2 IR 70 | Defence must be set out in sufficient detail to enable scrutiny; courts should carefully interrogate the defendant’s claim of bona fide defence. | Emphasized the obligation on defendants to disclose evidence and legal grounds for the defence in security for costs applications. |
| Tribune Newspapers v Associated Newspapers Ireland (Unreported, 2011) | Defendant must objectively demonstrate evidence to support facts relied upon; bare assertions insufficient. | Applied to require evidence supporting the existence of a bona fide defence, not mere assertions. |
| Pagnell Ltd v OCE Ireland Ltd [2015] IECA 40 | It is insufficient for a defendant merely to assert a defence; higher threshold than arguable defence for summary judgment. | Reiterated the evidential threshold and the court’s discretion in assessing security for costs applications. |
| Proetta v Neil [1996] 1 ILRM 457 | Existence of bona fide defence confers only a prima facie right to security for costs; court must exercise discretion. | Supported the exercise of discretion even where a prima facie defence is shown. |
| Bambrick v Cobley [2005] IEHC 43 | Distinction between ex parte applications and security for costs applications regarding disclosure obligations. | Clarified the scope of disclosure required in security for costs motions. |
| Charles Kelly Ltd v Ulster Bank Ireland Limited [2020] IECA 8 | Defence relied on for security for costs must be that pleaded in the defence and replies to particulars. | Applied to reject preliminary objections that do not address the primary relief sought. |
| Atin Investments Limited v Remcoll Capital Limited [2022] IEHC 357 | Security for costs protects defendants from risk of being unable to recover costs despite success. | Reinforced the rationale for security for costs orders. |
| Beauross Limited v Kennedy (unreported, 1995) | Delay in seeking security for costs may disentitle the defendant if it causes prejudice to the plaintiff. | Considered delay and prejudice in deciding whether to grant security for costs. |
| Frank McGrath Construction Ltd v One Pery Square Hotel Ltd [2010] IEHC 524 | Each case on delay must be assessed on its own facts; court exercises discretion. | Confirmed the fact-specific nature of delay assessments. |
| Hidden Ireland Heritage Holidays v Indigo Services Ltd [2005] IESC 38 | Delay may be ground for refusing security for costs; court balances facts and fairness. | Used to support the analysis of delay in security for costs applications. |
| Re Pasrm Limited [2023] IEHC 149 | Timing of security for costs application relevant to court’s discretion; early notice important but delay not necessarily fatal. | Applied to assess delay in the present case and found no disentitling delay. |
| Nobil Food Limited v Campion Insurance Limited [2021] IEHC 664 | Two-step test for delay: culpable delay and whether plaintiff altered position to detriment. | Guided the court’s assessment of delay and prejudice in this motion. |
Court's Reasoning and Analysis
The Court began by confirming the two criteria for an order under Order 29, Rule 1: that the Plaintiff is resident outside the jurisdiction and that the Defendant has a prima facie defence on the merits. The first criterion was undisputed as the Plaintiff resides in Jordan. The focus was on whether the Defendant demonstrated a bona fide defence to the Plaintiff’s claim for reinstatement as director and vice-chairman.
The Defendant relied primarily on the invalidity of the June 2022 nomination, arguing it was void as it named two nominees, breaching the Defendant’s Articles allowing only one nominee per Arab country. The Defendant also claimed the Plaintiff retired rather than being removed. However, the Court found the Defendant’s evidence to be insufficient and lacking in critical documentary proof, such as the nomination itself, minutes or affidavits regarding relevant meetings, or any direct affidavit from a person with knowledge asserting a bona fide defence.
The Defendant’s solicitor’s affidavit merely asserted advice was received that a prima facie defence existed, which the Court found to be a bare assertion insufficient to discharge the evidential burden. The Defendant failed to address the email of 9 October 2022 by the other nominee withdrawing his nomination, which the Plaintiff argued constituted valid notice of the Plaintiff as the sole nominee. The Defendant’s failure to provide contemporaneous documentation or affidavits explaining key decisions created significant evidential gaps.
The Court acknowledged that while the Defendant is not required to disclose all potentially prejudicial information as in ex parte proceedings, it must put forward sufficient evidence and legal grounds to satisfy the threshold of a bona fide defence. The Defendant’s failure to do so meant the Court could not accept that a prima facie defence existed.
Regarding the Plaintiff’s claims as a representative member, the Defendant failed to plead or adduce evidence of a substantive defence to those claims, further supporting the absence of a prima facie defence.
The Court considered the Plaintiff’s submissions about special circumstances, including his significant means and ties to Ireland and alleged delay by the Defendant in seeking security for costs. The Court distinguished the purpose of Order 29 from ability to pay costs, emphasizing the protection of defendants from the risk of non-recovery due to foreign residence. The Plaintiff’s assertions of means and ties did not amount to special circumstances sufficient to refuse the order if the Defendant had met its burden.
On delay, the Court reviewed relevant authorities and found that although there was some delay between issuing proceedings and seeking security for costs, it was not sufficient to disentitle the Defendant to the relief. The Plaintiff did not demonstrate prejudice arising from the delay.
In conclusion, the Court found that the Defendant failed to discharge the onus of demonstrating a prima facie defence, that no special circumstances justified refusal, and that delay did not disentitle the Defendant to the order. The Court therefore refused the order for security for costs.
Holding and Implications
The Court REFUSED the Defendant’s motion seeking an order under Order 29, Rule 1 requiring the Plaintiff to provide security for costs.
This decision means the Plaintiff is not required to furnish security for costs to continue the proceedings. The refusal was based on the Defendant’s failure to demonstrate a prima facie defence and the absence of special circumstances warranting refusal. The decision does not set new precedent but applies established principles regarding security for costs, evidential burdens, and the balancing of interests in such applications. The Defendant was ordered to pay the costs of this motion, subject to any submissions to the contrary.
Alert