High Court: Court reiterates utility of orders requiring security for costs against serial litigants

About this case:

• Citation:
  [2024] IEHC 609
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Michael Twomey

Delivering judgment for the High Court, Mr Justice Michael Twomey suggested that “the most effective deterrent against hopeless and vexatious claims is the actual payment, upfront in security for costs, even of a relatively minor amount of money, before they can proceed with the litigation”.

Background

The defendants litigated with Ulster Bank and various other parties over a ten-year period in respect of the repayment of a €22 million loan which they used to purchase a site in Co Wicklow for the purposes of developing a data centre. 

The High Court in 2020, following a five-week trial, granted judgment against the defendants for the payment of that sum — the ‘principal judgment’, which was unsuccessfully appealed to the Court of Appeal and the Supreme Court. 

In 2024, Mr Justice Oisin Quinn in the High Court made an “Isaac Wunder” order against the defendants to prevent them issuing new proceedings concerning the same dispute.

To avoid the effect of the Isaac Wunder order, the defendants issued a motion to set aside the principal judgment on the basis that they had been granted liberty to apply to the court, alleging that they had new evidence which was not before the trial judge.

That motion came before Mr Justice Twomey for hearing.

The High Court

Having regard to the defendants’ contentions, Mr Justice Twomey considered: “As a general proposition, it could be said that every case might reach a different outcome if different evidence was before the trial judge. However, it should be obvious that this is not the basis for a judgment of a trial court, particularly one which has been affirmed on appeal, to be set aside.”

Emphasising that the defendants were effectively asking the High Court to overturn the decisions of the Court of Appeal and Supreme Court by which it is bound, the judge remarked:

Mr Justice Twomey stressed that the High Court has no jurisdiction to reverse an appellate court decision and that the system would be “in chaos” if every dissatisfied litigant, after exhausting all appeals, could simply restart the process.

The court commented that vexatious litigants who do not have the funds to discharge costs orders are “able to make a mockery of the courts system by using it, not to administer justice, but to inflict injustice on their opponents (by inflicting irrecoverable legal costs on them)”, noting: “The fact that these individual litigants do not pay their opponent’s legal costs means that the only effective disincentive to a person taking hopeless or vexatious claims (i.e., the financial detriment of a costs order) is, in fact, absent.”

The judge determined that while Ulster Bank succeeded in dismissing the defendants’ “bizarre and unprecedented” claims, it did not achieve “true justice” as the defendants had yet again succeeded in delaying the enforcement of the judgment granted against them and would likely pursue an appeal against his decision to the Court of Appeal and Supreme Court.

As a potential resolution to this issue, Mr Justice Twomey suggested that the jurisdiction usually reserved for ordering security for costs as against corporate litigants would be extended to require security for costs from individual litigants, particularly serial litigants who pursue hopeless or vexatious cases.

In this regard, the judge stated that security for costs is the only way to prevent further abuse of the courts system by litigants like the defendants and to prevent the infliction of further injustice on innocent parties. 

The court continued to say that “the McDonaghs would be required to put up security for costs before being permitted to pursue an appeal. In this way, Ulster Bank might still suffer one injustice, of a further delay in the enforcement of the judgment until the appeal is dismissed, but at least they would not suffer a second injustice, and so a double injustice, of spending their own money to have, what this Court regards as, a hopeless/vexatious appeal dismissed. Of course, if this Court is wrong and the McDonaghs were successful on the appeal, they would recover the money they paid as security for costs, so they would not be out of pocket.”

Conclusion

The High Court put the case back into its list for mention to deal with final orders and costs.

Ulster Bank DAC & Ors v. McDonagh & Ors [2024] IEHC 609