High Court orders security for costs against insolvent plaintiff in multi-defendant competition law litigation.

Neutral Citation Number [2012] IEHC 198

THE HIGH COURT

COMPETITION

[2010 No. 10685P]

BETWEEN

GOODE CONCRETE

PLAINTIFF

AND

CRH PLC, ROADSTONE WOOD LIMITED AND KILSARAN CONCRETE

DEFENDANTS

JUDGMENT of Mr. Justice Cooke delivered the 15th day of May, 2012

1. In its judgment of 21st March 2012, the Court ruled in favour of the motions brought by the defendants requiring the plaintiff to

provide security for costs, but did so with the intention of fixing such security on a phased basis rather than as global amounts, by

way of security for the estimated costs of a full trial of all the issues, as apparent from the statement of claim and the affidavits filed

in the proceeding to date.

2. The Court did so for the reasons of fairness explained in that judgment, and also because the Court anticipates that it may be

difficult to assess with any confidence the precise extent of the trial that these issues may ultimately require. The Court anticipates

that when formal pleadings have been closed and the inevitable discovery of documents has been undertaken, it will be necessary for

the Court, after hearing the parties, to identify a number of discrete issues which may usefully be tried, possibly on affidavit or with

limited oral evidence and with limited recourse to expert witnesses.

3. The Court expresses no definite or even provisional view in this regard at this stage prior to the close of pleadings, but it does not

seem unrealistic to anticipate that the efforts of the parties and the time of the Court may be more efficiently employed if it is

possible at an early stage to isolate some key issues the Court will be required to decide and to tailor subsequent trial preparations

accordingly.

4. The plaintiff company ceased trading in February 2011. It is insolvent so that it's primary objective in this litigation in practical

terms is presumably to recover damages for having been put out of business by the allegedly unlawful activities of the defendants. As

pleaded to date, the plaintiff's claim ranges over different product markets and different geographic markets and alleges infringement,

both of the cartel provisions of s.4 of the Competition Act and Article 101 TFEU, and abuse of dominance under s. 5 of the

Competition Act and Article 102 TFEU. In addition, claims of wrongful inducement of breach of contract, interference with economic

relations and conspiracy are raised.

5. At the heart of the claims as currently pleaded, however, it would appear that there is an issue which arises out of an alleged

corporate relationship between the CRH defendants and Kilsaran, upon which is based the allegation of the existence of "collective

dominance" in the market in the Dublin area for ready-mix concrete, that being the primary product market from which the plaintiff

claims to have been driven when forced to cease trading. Depending upon the defences advanced in further pleadings, it seems

reasonable to suggest therefore, that it will be in the interests of the parties and of the economy of the litigation, to explore at an

early stage whether issues directed at the definition of those markets and core issues such as those arising out of the alleged

existence of "corporate links" and "collective dominance" may be usefully determined in advance of any full witness trial.

6. The Court makes these observations at this stage, not by way of prejudging a discussion at a motion for directions, but by way of

a background to the approach it now takes to the fixing of the amounts of security on a phased basis.

7. The Court will fix amounts for the first phase which it described in paragraph 54 of its judgment of 21st March last, as covering the

completion of exchange of pleadings and the making of discovery on either side. The Court has considered the reports submitted by

the costs accountants on either side and the arguments advanced at the hearing on 8th May last.

8. Essentially, CRH proposes security for this phase to be fixed at €215,000 while the plaintiff proposes a figure of €23,000. Kilsaran

proposes a figure of €232,000 and the plaintiff says it should be €16,000. In broad terms the major discrepancies between the the

plaintiff and defendants are attributable to two factors:

(a) A disagreement as to which heads of costs fall to be covered in this first phase; and

(b) A disagreement as to the basis upon which the amount should be fixed; (i) whether as "sufficient security" by

analogy with s.390 of the Companies Act in 1963, that is security for the estimated full costs of the relevant

proceeding; or (ii) on the basis of the traditional practice under 0.29 Superior Court Rules as one third or 30% of the

full estimate.

The respective positions of the parties before the application of the 30% adjustment are represented in the following table:

TABLE

CRH Costs Kilsaran Costs

CRH Est. Plaintiff Est Kilsaran Plaintiff Est. Total costs

Est.

CRH&

Kilsaran

Phase One Phase One Phase One Phase One Phase One

Solicitors Fees

Exchange of 50.000 80,000 58,000 35,000 108,000

Pleadings

Furnish discovery 100,000 17,500 72,000 12,5000 172,00

Review other's 25,000 22,5000 36,000 17,500 61,000

discovery

TOTAL 175,000 120,000 166,000 65,000 341,000

Senior Counsel

Injunction 0

Other pre-trial 15,000 4,250 9,000 2,750 24,000

Brief 0

Refreshers & 0

Submissions

Junior Counsel

Injunction 0

Other pre-trial 15,000 4,500 9,000 2,600 24,000

Brief 0

Refreshers & 0

Submissions

Expert Witnesses 0 48,000 0 48,000

Factual Witnesses 0

Stenography 0

Electronic data 10,000 10,000

services

TOTAL 215,000 128,750 232,000 70,350 447,000

9. In reaching its proposed figure of €23,000 security, the plaintiff starts with the CRH proposed figure of €215,000 and, based upon

its own costs accountant's report, reaches the TOTAL figure given in the table of €128,750. To this a series of adjustments is made

to arrive at €23,000. First, €30,000 is deducted representing the difference between the respective instruction fees for the solicitors

of €50,000 and €80,000 on the basis that the plaintiff ought not to be asked to bear more costs than CRH itself estimates.

10. The second adjustment is directed at the scope of the first phase as identified by the Court in the judgment, and excludes the

amounts attributable to the review of the discovery made by other parties. Thus, €32,500 and €17,500 are deducted respectively

from the defendant figures. The estimated costs of furnishing discovery on the part of the defendants at €100,000 and €72,000 are

challenged as excessive, having regard particularly to the estimates originally given for instruction fees for the entire case.

11. Further adjustments are then proposed in relation to the fees of counsel as indicated in the above table. Furthermore, objection is

taken to the inclusion by CRH of the sum of€10,000 for electronic data services which is said to be the cost of scanning and

uploading to a searchable computer programme of all of the relevant discovered documentation. This is said by CRH to be justified in

the interests of economy and efficiency in the conduct of the litigation.

12. It is possibly unnecessary to underline that the exercise of fixing amounts of security for costs at an early stage in a case is not

an exact science; there are a variety of uncertainties and unpredictabilities. The best the Court can do is to fix figures which offer a

defendant a reasonable protection against the risk in costs which the order is intended to mitigate, while avoiding a risk of depriving

the plaintiff to access to the Court, by affording the defendant an unnecessarily generous cover.

13. So far as the broad issue of principle is concerned, the Court proposes to follow the approach of Clarke J. in his judgment of the

19th January, 2012, in Harlequin Property and Ors. v. O'Halloran [2012] I.E.H.C. 13. As Clarke J. explains, there is a divergence of

approach to the fixing of the amount of security under s. 390 as opposed to 0. 29. Under the former, "sufficient security" is based on

an estimate of the full cost of the trial. Under 0. 29, the custom and practice has been to fix a sum based upon one third or 30% of

the full estimate. It is to be noted of course that this measure is not a rule as such. It is no more than a custom or practice and the

Court can depart from it in appropriate cases in exercise of its discretion to grant security.

14. The background to this issue is fully explored and explained in Clarke J.'s judgment and it is unnecessary for the purpose of this

ruling to cover that ground again. In the view of the Court, the rationale of this difference of approach as between s. 330 and 0. 29,

lies in the fact that under the former, the plaintiff is insolvent and unable to pay anything and this poses a total risk to a defendant

with a stateable defence.

15. Under 0. 29 on the other hand, the practice as outlined in the Court's judgment of the 21st March last, has largely been confined

to orders made against parties resident outside the jurisdiction. Thus, there is a plaintiff who is not necessarily insolvent but who

may, because of being resident out of the jurisdiction make it cumbersome, protracted and expensive for a successful defendant to

recover any costs. Accordingly, such a plaintiff is compelled by order to bring into the jurisdiction evidence of its seriousness and

bona fides in asserting its claim. Security is not ordered against a plaintiff because it is insolvent, but because it is a potentially

expensive and remote mark for recoverable costs. The requirement that the non​ resident plaintiff secure one third of the estimated

costs does not preclude its ultimately being pursued for the remaining two thirds by a successful defendant. When a resident limited

company as plaintiff is insolvent on the other hand the security fixed is all that will be available for the defendant.

16. It follows in the view of the Court that where, as here, the corporate plaintiff is admittedly unable to pay, although within the

jurisdiction, it is appropriate to depart from the facts under 0. 29 and to apply the corporate rule of s. 390 by analogy and to fix costs

on the basis of "sufficient security".

17. It remains therefore to fix the amount of security to be provided on that basis by the plaintiff to the CRH and Kilsaran defendants

respectively. In fixing the amount set out below, the Court makes the following points:

(a) As indicated above, this security is fixed for a first phase covering the delivery of the defences and possible

replies and rejoinders. This is particularly a matter for a counsel or draftsman based on appropriate instructions.

(b) Given the nature of the claims, it seems improbable that the formulation of counterclaims will arise.

(c) Having regard to the exchanges of particulars and of affidavits to date, it seems highly probable that the

defence pleadings will consist of comprehensive traverses of all the claims so far advanced.

(d) In advance of the close of pleadings and exchanges of discovery, it is not necessary for the prosecution of the

proceedings that expert opinions be retained at this stage, although the parties are of course free to do so. In view

of the intention of the Court to define key issues to be tried in the second phase of this litigation, the Court

considers it premature to include any costs attributable to experts in the amount that the plaintiff would be required

to furnish as security.

(e) While there may be some benefit to the litigation in the long run of uploading documentation in order to make it

searchable, such an expense is not indispensable to the swearing of affidavits of discovery.

(f) The completion of this first phase encompasses the making of discovery. The costs of any subsequent review of

documents by the parties will fall to be dealt with in a later phase in the light of the issues to be tried.

18. In the light of these considerations and having regard to the submissions made and in view of the difficulty already explained of

predicting the precise scope and immediate progress of this case, the Court will require the plaintiff to provide by deposit in Court or

secured by bond, amounts for security of€110,000 for the CRH defendants and €85,000 for Kilsaran. These amounts are arrived at as

follows:

CRH defendants:

Solicitor's instruction fees:

Pleadings: €30,000

Discovery €70,000

Senior counsel's pre-trial fees: €5,000

Junior counsel's pre-trial fees: €5,000

Total: €110,000

Kilsaran:

Solicitor's instruction fees:

Pleadings €25,000

Discovery €50,000

Senior counsel's pre-trial fees: €5,000

Junior counsel's pre-trial fees: €5,000

Total: €85,000.

19. In fixing these amounts, the Court has taken account of the scope of the claims made against the CRH defendants as compared

with those made against Kilsaran, and the likely comparative burden to be involved in defending the proceedings for those two sets of

defendants, as well as the likely differences in legal costs in making discovery of documents in each case and the possible

requirements for legal advice in the first phase.

20. Accordingly, the order of the Court will be that the plaintiff provides security for costs to the first and second named defendants

in the amount of €110,000 and to the third named defendant in the amount of €85,000.