Genuine claimants have ‘nothing to fear’ from costs award against company director

The High Court’s decision to hold a company director liable for the costs of a failed legal action by his company should not discourage legitimate claims, a leading litigation lawyer has said.

Owen O’Sullivan, head of the litigation department at William Fry and chair of the Commercial Litigation Association of Ireland (CLAI), spoke to Irish Legal News following an unusual costs ruling on Friday.

Mr Justice Seamus Noonan ruled that William Loughnane, principal director of WL Construction Ltd, should be liable for costs arising from the company’s dismissed case against Charlie Chawke and Edward Joseph Bohan, owners of the Lord Lucan pub in Lucan.

The Irish Times has reported concerns from unnamed legal sources that the ruling could have a “chilling” effect on litigation by companies.

But Mr O’Sullivan told ILN that companies or their directors who are pursuing genuine claims have “nothing to fear” from the ruling.

Mr O’Sullivan explained: “In this case, the judge found not only that the litigation had been orchestrated by a particular individual director, but that it was tainted by fraud and illegality.

“The company which was party to the litigation had no assets to meet a costs award, so not to have used the mechanism available to the court would have left the innocent defendant here without any effective remedy for being wrongfully sued.

“The facts found in this case, which may yet be appealed, were fairly extreme, and the decision will only chill a type of action that should not be brought in the first place.”

He added: “There are very few cases that are brought on that basis, and the people who bring them can expect to be dealt with harshly.”