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1. By orders dated the 2nd day of March, 1992, it was ordered that the Appellants (to whom I shall refer to as “Homes”) should furnish security for the costs in this action of the first named Defendant (the “Bank”) and for the secondly named Defendants ( “Deloitte”) and the orders went on to provide that the security to be furnished should be determined by the Master of the High Court. Those orders were made pursuant to the judgment delivered by Keane J (as he then was) on the 2nd day of March, 1992, and reported at [1992] IR 57. The issues in the case and the circumstances giving rise to it were fully explored in an application which continued over four days.

2. As appears from the title to the report of the judgment, the action by Homes was closely related to another action by Lismore Builders Limited (in receivership), to whom I shall refer as “Builders”, against the same Defendants. The involvement of both Homes and Builders and the background to the proceedings brought by them as it appeared in 1992 was explained in the opening paragraphs of the judgment of Keane J which, with adaptations to facilitate changes in nomenclature, I would quote as follows:

3. In strongly contested proceedings there was at least agreement on two issues: one of fact and the other of law. As a matter of fact it was agreed that neither Homes nor Builders would be able to meet an order for costs in the event of any of the Defendants successfully defending the relevant action and, as a matter of law it was agreed that while the Court had a discretionas to whether an order should be made under s.390 aforesaid the onus was on the Plaintiff in each case to show the existence of special circumstances as to why the Court’s discretion should be exercised in its favour by refusing the application. In Peppard & Co Ltd .v. Bogoff [1962] IR 180 the former Supreme Court, construing the corresponding section of the Companies (Consolidation) Act 1908, had drawn attention to the burden falling on the plaintiff to show the existence of such special circumstances and explored and upheld the argument of the plaintiff therein that his financial position was due, or would have been due, to the very actions of the defendants for which they were being sued if the plaintiff succeeded in the proceedings. The principle enunciated in Peppard & Co Ltd .v. Bogoff was applied and followed more recently in O’Toole (Jack) Ltd .v. McKeown Kelly Associates [1986] IR 277; SEE Co Ltd .v. Public Lighting Serviced Ltd [1987] ILRM 255; Bula Ltd .v. Tara Mines Ltd (no 3) [1987] IR 494 and Irish Commercial Society Ltd .v. Plunkett [1988] IR 1.

4. Whilst it does appear that the primary argument made by Homes (and indeed Builders) to Keane J was the contention that the then financial position of the two companies was due to or caused by the wrong doings alleged against the Defendants in those proceedings, a variety of arguments were put before the Court. It was pointed out that the applications for security for costs, if successful, would have the effect of stifling the proceedings. It was submitted that the Defendants were guilty of delay in bringing the application for security. It was urged that account should be taken of the possibility of Homes and Builders or one or other of them succeeding in one action and thus being in a position to meet the costs of the other. All of these arguments were rejected. The reasons for their rejection is not material at this stage. What is important is that the Court was invited to explore in detail the impact of an order of security for costs on the Plaintiffs and, notwithstanding those arguments, directed that security should be given. The amount of the security was not determined by the Master of theHigh Court as directed by the order of Keane J dated 2nd March, 1982, but was, apparently by agreement between the parties, listed before Mr Justice McCracken in the High Court. The delay in bringing the application was explained in part by the fact that Builders - but not Homes - appealed the order of Mr Justice Keane directing security to be furnished by them in respect of the costs of the Defendants other than the receiver. In their decision delivered on the 11th February, 1998, (and reported at [1999] 1 IR 501) the Supreme Court allowed the appeal of Builders as against the Bank and Deloitte on the grounds that the Court was satisfied that Builders had made out a prima facie case that the actions complained of in those proceedings - so far as the first two Defendants were concerned - wereor would have been the cause of its inability to pay the costs of the Defendants in the event that they were successful in the proceedings. Whilst the appeal by Builders has no bearing on the present proceedings it is significant - and perhaps alarming - to note that an interlocutory matter relating to the issue as to whether or not security should be furnished was argued over a period of seven days.

5. The evidence before Mr Justice McCracken included, as might be expected, the advises of distinguished legal cost accountants. Messrs Connolly Lowe, who were retained by Homes, estimated the total costs of the Bank in defending the proceedings at £98,753. That assessment was made on their assumption and belief that the proceedings would be disposed of in eight days and they provided for an instruction fee of £57,000. The brief fee for senior counsel (on the basis of only one senior retained) was allowed at £5,250 and refreshers for senior at £2,100. The estimate made by Messrs Behan & Associates was a figure between £792,999.74 and£797,999.74. The reasons for the wide disparity between the estimates made by the two firms of experts can be readily identified though not easily explained. Messrs Behan & Associates anticipated that the trial would last for 40 days. He allowed for an instruction fee of £250,000 and brief fees for each of two senior counsel at £45,000. He took the refresher fee of senior counsel at £2,500.

6. In the case of Deloitte the figures estimated by Messrs Connolly Lowe for their costs are again £95,077.50 whilst Messrs Behan & Associates estimated a figure of £808,000. The increase over the estimate in the Bank’s cost being explained partly by the need to retain certain experts.

7. In dealing with those figures Mr Justice McCracken held that a considerable amount of expert evidence by economists, accountants, quantity surveyors and valuers would be required. He took the view that the case would take a considerable time. In particular he said:-

8. He had no doubt that two senior counsel would be allowed on taxation for each of the Defendants and likewise he was satisfied that there would be very substantial brief fees and instruction fees for the solicitors concerned. He summarised his conclusion by saying:-

9. The learned Judge then ordered the Plaintiff to furnish security for costs to the Bank and Deloitte in a sum of £200,000 in respect of each of them. The figure of £200,00, that is to say one half of the minimum estimate made by the learned trial Judge as the costs of the respective Defendants, was stated by him to have been taken on the basis that the parties had agreed that the amount to be allowed should be fifty percent of the total. It was disputed in this Court whether any such agreement was made. However, whether it was made or not it seems reasonable that the learned Judge should make allowance - as he was seeking to do - for the fact that two actions would be proceeding together, one by Homes in which they were required to give security and the other by Builders who did not have the same obligations in that respect.

10. Both sides appealed the judgment of McCracken J: Homes on the basis that the amount fixed was excessive and the Bank and Deloitte on the grounds that it was inadequate. However the issue with which the hearing before Mr Justice McCracken was primarily concerned and the main grounds of appeal from the judgment related to the construction of s.390 aforesaid. Indeed it may be convenient to set out the grounds of appeal which are as follows:-

11. Whilst Mr Justice Dixon was dealing with the case of individuals resident abroad he expressed the very firm view that the amount of the security should be fixed in the same manner whether the plaintiff is a non resident or an insolvent company.

12. The decision in Gibson .v. Coleman was reviewed by the former Supreme Court in Thalle .v. Soares [1957] IR 182. In that case the plaintiff (Thalle) claimed that he was entitled to a one half share in the successful sweepstakes ticket held by the first named defendant (Soares). The other defendants were the trustees of the Hospital Trust (1940) Limited. Both Thalle and Soares were resident outside the jurisdiction. Soares sought and obtained an order for security for costs which was measured by the Master of the High Court in the sum of£2,500. On appeal to the High Court that figure was affirmed by O’Daly J applying the principles enunciated in Gibson .v. Coleman . Once again the ancient history of security for costs was reviewed this time in the learned Judgment of Kingsmill Moore J. The Supreme Court rejected the views of the Dixon J in the Gibson Case in two crucial respects. First, the Court decided that security for costs fixed under Rules of Court was not required to meet the full amount of the party and party costs of a successful defendant and, secondly, that a distinction was required to be drawn between security fixed under the Rules and security determined for the purposes of the Companies Acts. As to the regulatory provision Kingsmill Moore J said (at page 193):

13. The different jurisdictions had been contrasted at page 192 in the following terms:-

14. Homes are entitled to say that the observations of Kingsmill Moore J insofar as they are related to the construction of s.278 of the Companies Act 1908 (now s.390 of the Companies Act 1963) were obiter. This is undoubtedly so in as much as the case before the Court concerned the individual Plaintiff and Defendant both of whom were resident outside the jurisdiction. Homes then rely on a series of cases decided in the UK on the construction and application of s.726 of the UK Companies Act 1985 which is identical in its terms to s.390 of the relevant Irish Act. The UK cases relied on are Innovare Displays Plc .v. Corporate Broking Services Ltd [1991] BCC 174; Roburn Construction Ltd .v. William Irwin (South) & Co Ltd [1991] BCC 726; Unisoft Group Ltd (No 2) [1993] BCLC 532 and Keary Developments Ltd .v. Tarmac Construction Ltd [1995] 2 BCLC 400.

15. In relation to that argument the learned Judge expressed the following opinion:-

16. Again, the decision of the Court of Appeal in England in Keary Developments .v. Tarmac Construction Ltd supports the argument presented to this Court on behalf of Homes. That too is a case in which the Court had under consideration the security to be provided by an insolvent company under s.726 of their Act of 1985.

17. Peter Gibson LJ in delivering his judgment said (at page 401):-

18. In fact the amount of the security ordered to be furnished in that case was a sum of £100,000 notwithstanding the fact that legal fees already incurred amounted to £115,000 and the future costs were estimated at between £170,000 and £225,000 plus Value Added Tax.

19. Counsel for the Bank and Deloitte made certain criticisms of those and other UK decisions. It was pointed out that in the Innovare and Roburn cases the attention of the Court did not appear to have been directed to earlier and important decisions. Again, in relation to Roburn it was suggested that the reliance placed on the decision of the Court in Appeal in Sir Lindsay Parkinson & Co Ltd .v. Triplan [1973] QP 609 was mistaken. In particular it was urged that the UK authorities did not - perhaps because of a difference in procedures - draw an adequate distinction between the decision to direct security to be given and the principles on which the amount of that securityis to be assessed. I would not be competent to make any such analysis nor do I believe that it would be appropriate for me to attempt it. Homes are entitled to say that there are numerous decisions of the Court of Appeal in England, which are of high persuasive authority in this jurisdiction, supporting their contention that in fixing the amount of the security, as well as in determining whether security should be required at all, the Court possesses, and should exercise, a wide discretion.

20. I find myself in disagreement with the line of authorities which has grown up in the neighbouring jurisdiction in relation to the proper interpretation and application of what is a statutory provision identical to our own. No matter what argument is made in relation to justice or fairness in the UK or the constitutional right of access to the Courts in this jurisdiction I think that the plain meaning of the words is clear. If the Court is satisfied that a limited company which is a plaintiff in an action will be unable to pay the costs of thedefendant if successful in his defence the Court may in its discretion require security to be given. If it so decides then the security to be given is defined in the Act as “sufficient security to be given for those costs”.

21. If it transpired that the party and party costs of a successful defendant amounted to £100,000 could it be suggested that a sum of £50,000 was sufficient security for those costs? The word “sufficient” in its plain meaning signifies adequate or enough and it is directly related in the section to the defendants costs. The section does not provide - as it might have - a sufficient sum “to meet the justice of the case” or some such phrase as would give a general discretion to the Court. Harsh though it may be, I am convinced that “sufficient security” involves making a reasonable estimate or assessment of the actual costs which it is anticipated that the defendant will have to meet. Much of the injustice which may be anticipated by the operation of the section can be avoided by the application of the established principles in granting or withholding the order for security. Insofar as the quantum of the security may be oppressive in a case where security is in fact ordered this must be seen in the context in which it arises. It applies only to limited liability companies who are shown to be insolvent. Legislation has conferred many benefits on limited liability companies including, in particular, that very limitation and it is not surprising to find that some burdens are likewise cast by the Legislature on corporators who enjoy those advantages. It is with hesitation that I disagree with the conclusions reached by the Court of Appeal in England but I am greatly comforted to find myself in full agreement with the views expressed by Kingsmill Moore J in Thalle .v. Soares so many years ago.

22. As to the quantum: there is difficulty enough in taxing costs which have been incurred. It is well nigh impossible to estimate the costs of the hearing of an action which has been ten years in gestation and shows all the signs that a further ten years will elapse before a trial sees the light of day. The comments made by McCracken J on the figures are brief but full of wisdom. His assessment of what has happened and what may happen and what the probable costs will be seems to me as close as one could come to a reasonable estimate of the party and party costs involved. It was argued on behalf of Deloitte that the learned trial Judge having said that the case would take at least twenty days should have allowed more than twenty refreshers. I think that argument is seeking to impose a degree of precision on an exercise which does not admit of it. I think that the figure found by the learned trial Judge is as realistic an assessment as could be made. I would dismiss the appeal on all grounds and I would likewise dismiss the cross-appeal.