Supreme Court Sets New Rules On Delay In Security For Costs Applications

Introduction

In the most significant ruling on security for costs in many years, the Supreme Court has delivered a judgment clarifying the operation of security for costs and providing important guidance for litigants and practitioners.

Where a plaintiff company is unlikely to be able to meet a costs award, a defendant may apply for security for costs under section 52 of the Companies Act 2014. Courts retain a discretion to refuse such an order where "special circumstances" exist, one of which is undue delay on the part of the applicant.

In Sweeney & The Limerick Private Ltd v VHI, the Court has, for the first time, set out a clear, graduated framework for assessing delay as a "special circumstance". The judgment explains when delay begins to run, what level of prejudice must be shown, and when delay alone may justify refusing security. Anyone involved in, or contemplating, a security for costs application should take careful note of these principles.