Kavanagh and Anor v O'Neill and Anor (Approved)

Factual and Procedural Background

This opinion concerns an application by the receiver of the second defendant company for security for costs against the second corporate plaintiff and for an order vacating a lis pendens registered over the property after proceedings were issued on 18 January 2024. [1]

The second defendant owns the property. The first defendant lent approximately €2 million to the company in 2013 and 2014, secured by a charge over the property. The company was restored to the register in 2020, but outstanding annual returns had not been delivered. [2][3]

After the first defendant appointed a receiver in 2022, the parties entered into a settlement agreement under which the first plaintiff was to make three payments and the property was to be sold to the second plaintiff. The agreement was not complied with, and subsequent proceedings and a revised settlement agreement followed. A dispute then arose concerning VAT, leading to the present proceedings seeking, among other relief, specific performance and a declaration concerning the sale price. The plaintiffs registered a lis pendens over the property. [4]

The second defendant’s application was issued in October 2025. The plaintiffs filed a statement of claim in February 2026, approximately 25 months after the proceedings began. [5]

Legal Issues Presented

1. Whether the court should vacate the lis pendens because of unreasonable delay in prosecuting the proceedings under section 123(b)(ii) of the Land and Conveyancing Law Reform Act 2009. [6][7]
2. Whether the second plaintiff should provide security for costs under section 52 of the Companies Act 2014. [8]

Arguments of the Parties

Second Defendant's Arguments

• The plaintiffs had delayed approximately 25 months in filing their statement of claim, despite repeated requests from the second defendant’s solicitors. [5][9]
• The second defendant argued that the requirements for security for costs were satisfied, including the existence of a prima facie defence and the second plaintiff’s inability to pay costs if unsuccessful. [10]
• The second defendant relied on Beakonford Ltd v Stokes & Wilding, arguing for a similar order. [10]
• The second defendant relied on the second plaintiff’s failure to file company accounts as evidence relevant to its ability to discharge costs. [11]

Plaintiffs' Arguments

• The plaintiffs accepted that there had been delay but argued that it was justified by engagement between the parties concerning the VAT issue. [5]
• The plaintiffs attributed some delay to the defendants’ litigation strategy, including an earlier summary judgment application. [12][13]
• The plaintiffs argued that the court’s discretion under section 123, indicated by the word “may”, should be exercised in their favour. [14]
• The plaintiffs relied on evidence that the first plaintiff could fund the second plaintiff’s costs and argued that this evidence had not been challenged. [15][11]
• The plaintiffs argued that the presence of an individual co-plaintiff constituted a special circumstance against ordering security for costs. [16]

Table of Precedents Cited

Court's Reasoning and Analysis

Section 123(b) permits the court to vacate a lis pendens where the action has been determined or discontinued, or where there has been unreasonable delay in prosecuting it or it is not being prosecuted bona fide. [6][7]

The court held that registration of a lis pendens creates a special obligation to prosecute the underlying action with greater expedition and vigour than would ordinarily be required. The relevant period is the period after commencement of the proceedings, rather than any pre-commencement delay. [18][22]

The court identified repeated requests for the statement of claim, much of which the plaintiffs ignored; only limited and brief engagement between the parties; the contractual provision that time was of the essence; the age of the underlying debts; and the continuing expenses associated with the deteriorating property. These matters heightened the plaintiffs’ obligation to progress the litigation. [23][9][24][25][26][12]

Although the defendants contributed to some delay by taking approximately four months to enter an appearance, responsibility for most of the delay rested with the plaintiffs. The court considered the delay unexplained or inadequately justified by the short periods of engagement and rejected reliance on the defendants’ litigation strategy as sufficient justification. [12][13]

The court therefore declined to exercise its discretion in the plaintiffs’ favour and vacated the lis pendens. [14][27]

For security for costs, the court was satisfied that the second defendant had established a bona fide defence, noting that this was a low threshold. However, it was not clear that the second plaintiff’s inability to pay costs had been established because the first plaintiff gave evidence that he could fund the second plaintiff and referred to available loan monies and exhibited bank-account screenshots. [15]

The first plaintiff’s evidence was not challenged in the second defendant’s affidavit, and no notice of intention to cross-examine had been served. The court therefore treated the evidence as more than a bare averment. [11]

Alternatively, the court found special circumstances because an individual plaintiff remained in the proceedings alongside the corporate plaintiff. It relied on the distinction between the position of a personal litigant and that of a company. [16]

Holding and Implications

The application to vacate the lis pendens was allowed. [27]

The application for security for costs was refused. [28]

The second defendant was considered entitled to the costs of the lis pendens application, subject to a stay on execution pending resolution of the proceedings. The second plaintiff was considered entitled to the costs of the security-for-costs application, also subject to a stay. Final orders were listed for mention on 6 October 2026. [29][30][31]

The opinion states no broader implications beyond these direct procedural and costs consequences.