Twomey J Provides Further Commentary on the Need for Security for Costs Against Individual Plaintiffs

In a new judgment of Twomey J. delivered on 30 October 2024, in the case of Ulster Bank, Paul McCann and Patrick Dillon -v- Brian McDonagh, Kenneth McDonagh and Maurice McDonagh (No.3), he revisits an issue he has already provided commentary on - the problem created by the inability to seek security for costs against individual plaintiffs. You can read about the commentary he provided in an associated case earlier this year here. This judgment was yet another in an ongoing series of cases involving the McDonaghs, who are indebted to Ulster Bank Ireland DAC in the sum of approximately €19 million following over a decade of litigation in respect of this debt.

Overview of the Application

The McDonaghs in this instance had brought an application to set aside a High Court judgment handed down in 2020. This despite that decision having been affirmed on appeal to the Court of Appeal  in 2022.

They brought this application in circumstances where it was not possible for them to issue new proceedings regarding the Kilpedder Site, being the property involved in this long running litigation, as to do so would be a breach of the Isaac Wunder Order granted against the McDonaghs. Instead, as Judge Twomey points out, they effectively asked  the High Court to overturn a Court of Appeal decision. Judge Twomey rejected this application.

Apparent Favouring Of Rights Of An Individual Litigant

From paragraph 10 of his judgment, Judge Twomey highlights that the Irish legal system at present, in balancing rights in administrating justice, currently appears to be giving greater protection to the rights of lay litigants when balanced against the property rights of their (very often bona fide) opponent.

This, as highlighted by Judge Twomey, can be contrasted with the fairer balance achieved in circumstances where there is a corporate plaintiff. This is owing to the fact that with a corporate plaintiff, should the defendant succeed in defending any claim, their property rights can be protected by the ability to have their legal costs paid from security which had been provided.

The Injustice Created

As made clear by Judge Twomey, this imbalance has created a serious issue. Instead of the intended role of the courts to “administer justice,” we have been faced with a situation whereby they are instead being used to “inflict injustice” and therefore “make a mockery of the courts system.” This infliction of injustice is being achieved through the infliction of legal costs on opponents with no hope of them ever being recovered. For instance, in the case at hand, Judge Twomey highlights the fact that there is no reasonable prospect of Ulster Bank ever recovering its costs associated with dismissing the application.

Judge Twomey goes a step further and suggests that this infliction of injustice is “a matter of concern to every person in the State.”  

The Potential Solution

In this judgment, Judge Twomey has used a much stronger tone than in his judgment from earlier this year in Brian McDonagh and Maurice McDonagh v Fane Investments Limited & Ors. While his previous judgment appeared to provide a suggestion of a potential solution to this imbalance, on this occasion he appears to lay out the solution as clear and the problem as more severe. As Judge Twomey points out, - “the pursuit of these hopeless and vexatious claims and the abuse of the courts by individual litigants, like the McDonaghs, would come to a shuddering halt if for once, they had to put up to their own money (to cover even some of the legal costs) to pursue those claims (like corporate litigants have to) instead of having their opponents, in effect, pay for the dismissal of their hopeless and vexatious claims”. As he states in his judgment, in essence, “until it costs the McDonaghs (and other individual litigants like them pursuing hopeless cases or personal agendas) money in reality (i.e., by the actual payment of their own money e.g., by providing security for costs) rather than in theory (i.e., an order for costs or fines against them, which are never paid), why would they not continue to inflict financial pain”.

Conclusion

This judgment of Judge Twomey is yet another instance in the saga of continuous McDonagh litigation whereby corporate defendants are successfully defending applications brought against them, yet facing similar financial burdens as though they were not. This reiterates, and strengthens, the points made in his somewhat softer commentary of earlier this year (access our commentary on this here).

Judge Twomey comments in his judgment that it is a strong likelihood that even this judgment will be appealed, further compounding the financial losses to be faced by Ulster Bank Ireland DAC in respect of the debt owed to them by the McDonaghs.

Until such time as the injustice identified by Judge Twomey is adequately addressed, it is likely that this injustice and imbalance of rights will likely continue within the courts.

Should you wish to obtain further information, please contact Jerry Burke (Partner) or your usual AMOSS contact.