THE SUPREME COURT
73/2000

KEANE C.J.
McGUINNESS J.
GEOGHEGAN J.

HOT RADIO CO. LTD. t/a PULSE FM

.v.

IRTC and NP

EX TEMPORE RULING delivered by Keane C.J. on the 14th day of April 2000 

There are two appeals before the court this morning, both arising out of a decision by the first named respondent in the two sets of proceedings, that is the Independent Radio and Television Commission, to grant licences in purported pursuance of the functions of that body under the relevant legislation. The decision of the IRTC in each case has been challenged by one of the disappointed applicants, if I can so call them, and those proceedings are listed for hearing in the early part of next term. In the first of them the High Court (Mr. Justice Kearns) ordered the applicant company, the disappointed applicant in that case, and the applicant for judicial review, who it should be said has

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been given leave to seek judicial review, to provide security for costs. It is clear that the High Court has concluded that the applicant has an arguable case and it is proceeding as I have said, next term.

The application before Mr. Justice Kearns was for an order for security for costs pursuant to the relevant provision in the Companies Act 1963 and in the first case with which I am dealing, which I shall call the Hot Radio Company Ltd. case, he concluded that the respondents (IRTC) and the notice party were entitled to an order for security for costs and he measured the costs at what broadly speaking represented the full estimated amount of the costs with certain refinements into which it is not necessary to go into at this stage. It is clear that for the purpose of this judgment it may be taken that he effectively measured the costs at what would be the estimated costs of the proceedings. That decision has been appealed to this court and I would propose to deal with that case first.

There is of course no doubt as to the jurisdiction of the court to order security for costs in a case of this nature. It derives from s. 390 of the Companies Acts, 1963 which provides that where a limited company is a plaintiff in any action or other legal proceeding any judge having jurisdiction in the matter may, if it appears by credible testimony that there is reason to

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believe that the company will be unable to pay the costs of the defendant if successful in his defence require sufficient security to be given for those costs and may stay all proceedings until the security is given. It is not in dispute in this case that the applicant company is what sometimes is called a shelf company, that is to say, that it has no significant assets and it follows therefore that, undoubtedly, if the applicant is unsuccessful in its claim before the High Court, it will be unable to pay the costs of the defendant and it therefore appears to be clearly within the jurisdiction of the High Court to make the order for security for costs that it did.

Mr. Clarke, on behalf of the applicants, however, argues that the learned trial judge in arriving at that judgment took into account certain matters which he should not have taken account of and the matter to which I think he really takes exception and is really at the heart of this debate this morning is the finding by the learned trial judge that, while the company itself has no assets the persons who are associated with the company and who are effectively, although not in legal theory, of course, the applicants, have assets. The trial judge considered that that was unjust.

It is clear from other decisions of this court and of the High Court that the judge to whom such an application is made has a discretion, as is clearly

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indicated by the wording of the section which uses the expression “may”. The court is not obliged to grant security for costs: it is a matter for judicial discretion but it is a discretion which must be exercised in accordance with principles which have been frequently considered by the courts.

One consideration which the court has had regard to in a number of cases, but I did not understand Mr. Clarke pressed in this case, was that where the insolvency of the company in question is the result of the conduct alleged against the defendant, then indeed the defendant may not obtain security for costs which would have the effect, it may be, of stifling the very action to remedy the injustice which he himself has brought about. That clearly does not arise in this case. The applicant was already a shelf company at the time the application was made, and it is not suggested for a moment that that is the responsibility of the IRTC. If the applicant company is successful in these proceedings and the decision of the IRTC is set aside, it is not suggested that the applicant would then and there be entitled to the licence which they wish to obtain. They will not, because there will have to be then a competition and it may or may not be that they will get a licence. This is not a case in any sense analogous to the cases where the conduct of the defendant has caused the very impecuniosity which has led to the company concerned instituting the proceedings. The position in this case really comes to this: that the persons

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associated with the applicant have assets which would enable them to meet an order for security for costs. There is no suggestion that the action would automatically come to an end once the order for security for costs is made, but Mr. Clarke seeks to draw assistance from cases in which this court has considered the position of persons without resources who seek to challenge decisions of bodies such as An Bord Pleanála.

Now in cases involving planning considerations, it is undoubtedly the case that this court has on more than one occasion indicated that the court would be concerned that in the case of decisions of public importance concerning planning and development and the environment, affecting the interests of the public in many ways, bodies who are formed solely for the purpose of protecting the public interest, voluntary associations, should not be unduly and unfairly impeded in bringing challenges to the decisions of bodies such as An Bord Pleanála or planning authorities before the courts. That may also arise in other branches of the law but this is plainly not such a case because, while undoubtedly the public have a considerable interest in seeing that the provisions of this type of legislation are operated in a fair, and as people like to say nowadays, in a transparent manner and which it is very right and no one would question, I think, that it is anything but appropriate that persons in the position of the disappointed applicants in this case should, if they

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have an arguable case, be in a position to bring it before the court, the fact remains at the end of the day that there are commercial interests at stake in this case. There are, of course, questions of law to be addressed but the applicant is a business enterprise. There is nothing wrong with that. They are doing it in their own interest and there is nothing wrong with that. But they are not to be equated with the sort of applicants who have been looked on somewhat benevolently by the courts in other areas of the law, who are doing a public service by litigating matters which would otherwise not be litigated and who have simply not the financial resources to meet orders for costs given against them. So for those reasons I am satisfied that the decision of the learned High Court judge to order security for costs in this case was perfectly correct.

That brings me on to the second aspect of the appeal, because, as I have said, the learned High Court judge fixed a sum which to all intents and purposes represented the estimated cost of the full hearing. Of course, it is the case that where the court is exercising its inherent jurisdiction as to security for costs in a case not affected by the provisions of the 1963 Act, the normal rule adopted by the courts has been to fix the costs at approximately one-third of the estimated costs of the defendant in the proceedings. In the present case, as I have said, the learned trial judge fixed it on the basis that what the section says is “sufficient security” is to be given for those costs. In support of that, the IRTC

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and the notice party rely on the judgment of Mr. Justice McCracken in a case in the High Court, i.e. one of the cases in the long saga of the Lismore Homes litigation. However, Mr. Justice McCracken, having referred to the decision of the former Supreme Court in Thalle .v. Soares [1957] IR 182 said that he would draw a distinction between cases brought under the inherent jurisdiction of the court and cases brought pursuant to the statute. He drew attention to the use of the word “sufficient” and said that if it was intended that the exercise of discretion would be relevant in relation to the amount, he did not think the word “sufficient” would have been used. That would be indicated by the word “may” earlier in the section but he said the adjective sufficient must be given some meaning and he interpreted it as meaning “sufficient to enable the defendant to meet his costs in the event of his winning the action and the plaintiff being unable to pay his costs”. He derived support from that view, as I said, from the decision of Mr. Justice Kingsmill Moore in Thalle .v. Soares.

It is, of course, right to point out that the passage from the judgment of that eminent judge in that case may be regarded as obiter since he was in effect drawing attention to the provisions of s. 390 in order to arrive at an appropriate interpretation of the then Rules of the Superior Courts because that was a case not brought under s. 390. However that may be, undoubtedly some support for Mr. Justice McCracken’s view can be derived from what Mr. Justice Kingsmill

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Moore had to say in that case but he also indicated that he was not satisfied to follow the approach taken by the English Court of Appeal in a case on which the appellant relies here, that is the case of In Novaro Displays Plc. .v. Corporate Broking Service Limited.

It is obvious from the head note in that case that in that case a matter which weighed significantly with the court was the fact that there was a danger in the view of the judge who heard it at first instance that the claim would be stifled if security for costs at the full measure was ordered and the head note expressly says he ordered security in a sum which judge considered would not stifle it and that he was entitled so to do. Then the court went on to hold that sufficient security did not mean complete security and that is undoubtedly at odds with what Mr. Justice McCracken held: it meant security sufficient in all the circumstances to be just.

In this case, I am satisfied that even applying those criteria, even assuming that view of the law is to be preferred to the view expressed by Mr. Justice McCracken, it was just in this case to order the full measure of security because there is no suggestion that the action would be stifled by the award of security for costs in the sum actually awarded as opposed to awarding security for costs in the more conventional measure of one-third. On those

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grounds, I would also uphold the judgment of the trial judge and I would dismiss the appeal in this case.