Anonymised Summary of Judgment

Judge: Judge Nolan

Factual and Procedural Background

The dispute concerns a property (the Property) on The Street in The City. In 1991 the Plaintiff purchased the Property from the Defendant under a Contract for Sale and a Deed of Transfer; the purchase price was paid, but the Plaintiff did not register its interest at the Land Registry. As a result, legal title remained on the register in the Defendant's name while the Plaintiff held an equitable beneficial interest.

Many years later, in 2017, the Defendant executed a second Deed of Transfer, selling the same Property to Company A. The sale proceeds were substantially higher than the original purchase price. The Plaintiff became aware of the subsequent disposals around 2022, registered a caution against the Folio and corresponded with the Defendant, which produced limited cooperation. Proceedings were commenced by the Plaintiff in July 2024. The Defendant brought an interlocutory application for security for costs.

Legal Issues Presented

1. Whether, for limitation purposes, the plaintiff's cause of action in respect of the Defendant's sale of the Property is governed by Sections 43 and 44 of the Statute of Limitations 1957 (i.e. whether a limitation period of six years applies or whether exclusion under s.44 arises).
2. Whether the Defendant has a prima facie defence to the Plaintiff's claim (sufficient to justify an order for security for costs).
3. If a prima facie defence exists, whether the Plaintiff is unable to meet an adverse costs order and whether there are "special circumstances" such that security for costs should be refused.
4. Whether any alternative defences pleaded by the Defendant (including reliance on the Civil Liability Act for contributory fault) meet the prima facie threshold.

Arguments of the Parties

Defendant's Arguments (Attorney O'Neill)

• The Defendant contends that upon completion of the 1991 sale the Defendant became a trustee (a bare trustee or trustee by implication) for the Plaintiff; but Section 2(2)(a)(i) of the Statute of Limitations 1957 excludes trustees whose fiduciary relationship arises merely by construction or implication of law from the statutory definition of "trustee". Accordingly, Sections 43 and 44 do not apply and the ordinary limitation rules or other equitable doctrines apply.
• The cause of action accrued no later than 2 November 2017 (date of the second Deed of Transfer), and the present proceedings (July 2024) are therefore statute-barred under a six-year limitation period.
• Alternatively, the Defendant relies on equitable defences (such as laches) or on the Civil Liability Act, arguing the Plaintiff's loss arose in part from its previous solicitor's failure to register title and that contributory fault may operate.
• The Defendant asserts it has a prima facie defence sufficient to justify an order for security for costs and that the Plaintiff has not shown that security would stifle the litigation.

Plaintiff's Arguments (Attorney Lyons)

• The Plaintiff accepts a trust relationship arose, but contends it was a bare or constructive trust arising by implication of law and that, as a result, Sections 43 and 44 do not apply and there is no statutory limitation period applicable to the claim (unless s.44 exclusions applied, which would remove limitation periods in cases of fraud or retained trust property).
• The Plaintiff argues the Defendant was not entitled to re-sell the Property and has retained sale proceeds in breach of trust; therefore there is actionable wrongdoing.
• On the security-for-costs point, the Plaintiff says it lacks sufficient assets to provide security and that its impecuniosity is caused by the Defendant's alleged wrongdoing (its only asset was the Property). The Plaintiff relies on the test in Connaughton Road and subsequent authorities to show "special circumstances" on a prima facie basis so as to avoid an order for security for costs.

Table of Precedents Cited

Court's Reasoning and Analysis

The court's analysis proceeded in structured stages:

1. Trust formation: The court was satisfied, on the material before it, that a trust relationship arose upon the 1991 Contract for Sale and Deed of Transfer. The Property was held in equity for the Plaintiff while legal title remained in the Defendant.
2. Nature of the trust: The court found that the trust was one that arose by implication of law — either a bare trust or a constructive trust. The parties agreed that there was no express trust; the trust arose by operation of law.
3. Statutory construction: Section 2(2)(a)(i) of the Statute of Limitations 1957 excludes from the definition of "trustee" a person whose fiduciary relationship arises merely by construction or implication of law. On that basis, Sections 43 and 44 (which impose a six‑year limitation and exclude limitation in cases of fraud or retained trust property) do not, strictly speaking, apply to such trustees.
4. Prima facie defence on limitation: Despite the statutory point, the court concluded that, on the face of it and at the prima facie threshold required for a security for costs application, the Defendant had shown a reasonably arguable defence that limitation could bar the claim (i.e. that the cause of action accrued no later than the 2017 re‑sale). The court described the proposition that bare or constructive trustees would be entirely outside any limitation regime in ordinary non‑fraudulent cases as novel and unlikely on public policy grounds, and thus found a prima facie defence existed.
5. Other defences: The court noted the Defendant's alternative pleading under the Civil Liability Act (contributory fault arising from the Plaintiff's former solicitor). The judge observed that this defence alone might not reach the prima facie threshold, but because a limitation defence had been made out on a prima facie basis, it was not necessary to decide the Civil Liability Act point conclusively at this interlocutory stage.
6. Security for costs threshold: Having found a prima facie defence, the court moved to the second threshold — whether the Plaintiff could satisfy an adverse costs order. The Plaintiff's affidavit stated it lacked sufficient assets to provide full security (estimated defence costs ~€400,000 including VAT).
7. Special circumstances inquiry: Applying the Connaughton Road / Quinn framework, the court assessed whether the Plaintiff had shown on a prima facie basis that its impecuniosity resulted from actionable wrongdoing by the Defendant and that such loss was sufficient to prevent it from meeting costs. The judge accepted the Plaintiff's submission on the four limbs (actionable wrongdoing; causal connection; quantifiable loss; loss sufficient to cause inability to pay). The 2017 sale price (€2,507,500) was accepted as a readily capitalisable and significant measure of loss, exceeding estimated defence costs.
8. Stifling issue: The court considered whether ordering security would likely stifle the litigation. While the Defendant argued that no evidence showed stifling, the judge held that if the Connaughton Road criteria were satisfied on a prima facie basis, the court need not undertake an extended separate inquiry into stifling; the balance tipped in the Plaintiff's favour on the material before the court.
9. Overall conclusion: Balancing the prima facie existence of a statutory/limitation defence against the Plaintiff's demonstrated inability to pay (arguably caused entirely by the Defendant's alleged wrongdoing), the court concluded that "special circumstances" had been shown on a prima facie basis and that the interests of justice weighed against ordering security for costs.

Holding and Implications

Core Ruling: The application for security for costs was refused. The court ordered that the Plaintiff need not provide security for costs.

Direct consequences:

• The Plaintiff will be permitted to continue prosecuting its claim without being required to post security for the Defendant's costs.
• The Defendant retains its pleaded defences (including limitation and contributory fault) to be determined at trial; the court did not decide those issues finally.

Broader implications:

• The judgment does not purport to set a new binding precedent on the substantive question of whether bare or constructive trustees falling outside the statutory definition are nonetheless subject to ordinary limitation principles; the court made a prima facie assessment only and emphasized that ultimate determination of limitation and trust status is a matter for trial.
• The decision illustrates the court's approach to security for costs applications: a two‑stage assessment (prima facie defence; capacity to pay) followed by consideration of special circumstances on a prima facie basis under Connaughton Road and related authorities.

Note: This summary is strictly confined to the material contained in the provided judgment and has been anonymised in accordance with the instructions provided.