Irish Court of Appeal

 

THE COURT OF APPEAL

 

 

Approved

No Redaction Needed

Record Number: 2024/271

High Court Record Number: 2019 3512P

Neutral Citation Number [2025] IECA 61

Allen J.

Meenan J.

O'Moore J.

 

BETWEEN/

CENTRAL BANK OF IRELAND

AND

WALLS CONSTRUCTION LIMITED

PLAINTIFFS/APPELLANTS

-AND-

 

NIALL KEALY TRADING AS NK ENGINEERING

 

DEFENDANT/RESPONDENT

 

 

 

JUDGMENT of Mr. Justice Brian O'Moore delivered on the 14th day of March, 2025.

1.             In an ex tempore judgment of the 17^th October 2024 the High Court (Owens J.) dismissed a motion brought by the respondent ("Mr. Kealy") seeking the striking out of these proceedings on the grounds of inordinate and inexcusable delay.  However, somewhat unusually, the trial judge ordered the costs of the motion in favour of the losing party.  The trial judge also refused to put a stay on the order for costs.  The successful party on the motion ("Walls") has appealed both the order of costs against it and the refusal to place a stay on that order.  For the sake of convenience, I will refer to the appellants in this way though both plaintiffs have appealed the decision of the trial judge.

2.             It was made clear to the trial judge, and has also featured as an aspect to this appeal, that the real parties in these proceedings are neither Walls nor Mr. Kealy but rather their respective insurers.  The insurers for Walls have paid out on foot of a claim arising from the collapse of a ramp in August 2015.  The ramp which structurally failed was at the current headquarters of the Central Bank at North Wall Quay, Dublin 1.  In the current proceedings, the claim is essentially one made by the insurers of Walls to recover the original payout by those insurers and the uninsured excess. 

3.             As I have already noted, the ramp collapse occurred in August 2015.  Mr. Kealy received a telephone call in the early part of that month notifying him that the ramp had failed.  According to his affidavit grounding the motion, while he inspected the site of the incident "within a day or two" of receipt of the telephone call, he heard "little or nothing" about the matter until a letter of claim from Chubb, the insurers for Walls, was received on the 17^th November 2017.  That letter asserted that Mr. Kealy was responsible for the ramp collapse, and sought payment by Mr. Kealy of a sum of €115,724.35.  This amount constituted the outlay in respect of the incident up to the date of their letter. 

4.             Nothing further happened until, on the 2^nd May 2019, the plenary summons was issued on behalf of Walls.  The proceedings were not served until the 12^th August 2019, and an appearance was entered on the 24^th October 2019. 

5.             There was then a further significant period of delay.  Over three years after the service of the plenary summons, a notice of intention to proceed was served on Mr. Kealy's solicitors by letter of the 28^th September 2022.  The statement of claim was delivered on the 9^th May 2023.  Remarkably, no order seeking an extension of time for the delivery of the statement of claim was sought by the solicitors for Walls.  Even more remarkably, the solicitors for Mr. Kealy raised no issue about this and appeared to have proceeded on the basis that the statement of claim had been delivered in a proper and regular way.  Ultimately, no defence has yet been delivered notwithstanding the fact that the Rules require delivery of a defence within 28 days of the receipt of the statement of claim.  This is notable because, in a motion in which the defendant has agitated inordinate and inexcusable delay on the part of the plaintiff, the defendant has himself taken over twenty months to plead to a statement of claim delivered in May 2023.   While it is understandable that no defence was delivered until the resolution of the motion seeking to strike out the claim for inordinate and inexcusable delay, that motion was finally resolved in October 2024.  One would have thought that if there was real concern about the delay in bringing on the proceedings, a defence would then promptly have been delivered.  Instead, it appears from what was said at the hearing of the appeal that it was necessary for Walls to bring a motion seeking judgment in default of defence.  This motion was compromised and further time afforded to Mr. Kealy to deliver a defence to this claim. 

6.             For the sake of completeness, I should also mention that Walls brought a motion seeking to join L&S Structures as a co-plaintiff.  This motion was served on the 23^rd January 2023, but was unsuccessful.

7.             The current motion was issued on the 15^th December 2023, and heard on the 17^th October 2024.  Each side filed a relatively brief affidavit.  The affidavit of Mr. Kealy, as the moving party, runs to three pages of text.  The replying affidavit of Damien Giles, on behalf of Walls, runs to eight pages of text.  It appears that no written submissions were filed for the hearing of the motion before the High Court, as no such submissions have been made available to us.  In any event, the legal principles relevant to the determination of a motion to strike out for delay are well settled.  There was no attempt, in the legal submissions before the trial judge, to explore novel legal theories or to canvass innovative interpretations of the existing authorities.  This is not to be critical of counsel; it is simply the case that there was no capacity or need to do so in the context of this fairly run of the mill application. 

8.             The motion itself came on for hearing on the morning of the 17^th October, and finished shortly after an extended lunch break.  The trial judge delivered his judgment on the afternoon of the hearing.

9.             From the description I have given, it might be thought that the costs of the motion must have been on the modest side.  Whatever about the legal practitioner and own client costs, the costs as measured on a party and party basis should not have been enormous.  In the context of the business of two insurance companies, the costs would have been modest indeed.  This would be the case even if one accepts the estimate given by counsel for Mr. Kealy's insurers that the costs at issue for each side would be in the region of €50,000.  However, that estimate seems likely to be wrong.  It would be surprising if the costs of bringing or defending such a commonplace application could attract anything like that level of fees. 

10.         The trial judge, as already noted, refused the application that the claim be struck out.  He did so on the basis that any prejudice that Mr. Kealy was in a position to show did not constitute the level of prejudice which the authorities require must be established for a motion of this type to be successful.  There is no appeal against the judge's conclusion on the substance of the motion.

11.         There was no dispute between the parties, at the hearing of the appeal, that the relevant guidance is provided to this Court by the judgment of Collins J. in Pembroke Equity Partners Ltd v Corrigan [2022] IECA 142 at para. 19 as follows: -

"Before addressing the arguments advanced by the Company in support of its appeal, it is necessary to recall that, in an appeal from a costs order made by the High Court in the exercise of the significant discretion conferred on that court by sections 168 and 169 of the Legal Services Regulation Act 2015... and by Order 99 RSC, this Court is not at large. The appeal does not involve a de novo assessment of where the costs should fall here. Rather, this Court is essentially concerned with whether the order under appeal was or was not within the range of orders reasonable (sic) open to the Judge to make in the circumstances presented to him. If, applying the appropriate principles, the order was within the range of orders reasonably open to the Judge, then this Court should not interfere with it: O v Minister for Justice [2021] IECA 293, paras 30 & 51-52."

12.         Counsel for Walls submitted that there were three fundamental errors on the part of the trial judge which constituted errors of principle.  This was a welcome slimming down of the grounds of appeal filed on behalf of Walls.  In that regard, counsel expressly disavowed any reliance upon ground 4 of the notice of appeal (to the effect that the trial judge had erred "in circumstances where he acknowledged the contribution and the culpability of the defendant in the carriage of the proceedings").  Counsel accepted, quite correctly, that there was no such acknowledgment or finding in the judgment of the trial judge. 

13.         The three grounds addressed at the hearing of the appeal were: -

(a)        A careful review of the Transcript of the trial judge's ruling does not support a view that the trial judge had found an abuse of process on the part of Walls (or, to be more accurate, the relevant insurers).

(b)        The balance of justice does not support the granting of an order for costs in favour of a wholly unsuccessful party, in particular where unsuccessful applications would only be encouraged by such an order. 

(3)        The failure to grant the stay was an error of principle. 

14.         With regard to the first of these submissions, I do not think that counsel is correct in the construction which he places on the ruling of the trial judge.  In considering costs, the trial judge stated: -

"Now, it seems to me that -- incidentally that it would be an abuse of the process of the Court, and is in fact an abuse of the process of the Court to start an action without intending to proceed with it to a conclusion, and that a Court in a proper case would draw an inference in fact from issuing a plenary summons and doing nothing about it for years, if that was the intention.  However, I don't think that could be perhaps inferred in the present case because the plaintiffs themselves belatedly, finally got themselves together and energised themselves to reactivate this litigation in [2022]."

15.         It is correct, as counsel submits, that in this passage the trial judge has restrained himself from making a finding that there is an abuse of process on the part of Walls on the grounds that it commenced proceedings with no intention of seeing them through.  However, he goes on to find: -

"But there is a strong element of abuse of process nonetheless, in issuing a plenary summons, then not bothering to serve a statement of claim for four years.  The purpose of the Court system is to enable people to ventilate their legal disputes; not to institute proceedings and allow proceedings either to wither on the vine or simply exist out there in an amorphous -- in an amorphous state where one never can have great confidence that they are going to go away or wither on the vine.  That's an abuse."

16.         Here, the trial judge with admirable clarity finds that the bringing of proceedings and the failure to serve a statement of claim for four years constitutes an abuse of process.  That proposition, which of course itself may be controversial, was not disputed at the hearing before us and it is unnecessary to decide whether it is correct or incorrect.  The only submission made on this first argument advanced on behalf of Walls at the appeal was that no abuse of process was found by the trial judge.  That is mistaken. 

17.         A short while later in his ruling, the trial judge makes the following observations: -

"At the same time, the plaintiff has brought this application upon itself.  Their insurers are the authors of their own misfortune.  The Courts must take control of the process to ensure that they are not abused and those at fault are not rewarded.  I consider that it was completely appropriate to bring this application.  I intend to dismiss the application but on terms that the plaintiffs pay the costs when adjudicated and ascertained.  And that is an expression of my disapproval of what has been going on in this case.  I have done that on other cases and I am going to do this one again.  And I would expect that any further foot dragging by the plaintiffs would result in a further application for dismissal, which may well be successful.  A plaintiff cannot drag legal proceedings out indefinitely.  And it's in my view that that is an abuse of the process of the Courts."

18.         While admiring the ingenuity of the submission of counsel for Walls to the effect that this last sentence reflects only on the situation that would arise in the event that there was "further foot dragging" by Walls, I cannot accept it.  Both seen in the round, and considered by reference to specific unequivocal passages in the ruling, it is plain that the trial judge found that the actions of Walls in this case constituted an abuse of process, and that he therefore marked his disapproval of this abuse of process by awarding costs against Walls notwithstanding its success on the motion before him.  The submission that he made no such finding is incorrect.  This first line of appeal therefore fails. 

19.         With regard to the second line of appeal, it may be superficially attractive to suggest that awarding a party its costs in a motion where it has failed will simply encourage others to bring similar doomed applications, which in turn will adversely affect the operation of the court system.  However, an equally respectable analysis of what the trial judge did is to consider it an attempt on his part to dissuade parties (in particular insurers on recovery claims such as this) from issuing proceedings and then letting them lie for no good reason for a particularly lengthy period of time.  This is not an ex post facto rationalisation of the judge's approach.  It is plain from not just the costs element of his ruling but also earlier portions of the Transcript that this was the view that he had about such cases, and that he had on other applications made similar orders in order to mark his displeasure at what he saw as an abuse of process in launching such cases without prosecuting them diligently.  On the very first page of the Transcript, the trial judge observed: -

"This is I might say, if I might describe it just as a perfectory case, is being conducted with the usual energy with which insurance companies conduct collection cases after they have paid out to their customers."

The discouragement of such an approach towards this type of litigation, which is what the trial judge intended his costs order to achieve, is well within the discretion (or, as Collins J. describes it, "the significant discretion") which the trial judge certainly enjoys.  While a different agenda might have been pursued, resulting in a different costs order being made in this case, that is not to say that the exercise of the trial judge of his discretion was in any way misplaced or informed by an error of principle on his part.  This second strand of argument therefore also fails.

20.         The third and final argument advanced by counsel for Walls relates to the failure to grant a stay.  In my view, counsel shrewdly considered this part of the Walls appeal to be far and away the least compelling, and did not press it with any vigour.  The height of the argument on this point was that the award of costs may have the effect of hardening positions in litigation.  One would like to think that the insurance companies operating in Ireland are sufficiently hard-nosed to conduct litigation in a responsible, level-headed and clear-eyed way, free of the temperamental reactions that a private litigant might have to an unexpected reverse in court (whether embodied in a costs order or otherwise). Equally, it cannot be said that the payment of these costs at this stage of the proceedings could conceivably cause any hardship to the insurers for Walls.  Inevitably, no evidence was put before the trial judge which suggested that there would be any problem on the part of Walls' insurers in funding the payment of the costs (at whatever level they may be fixed).  Given the views formed by the judge that the behaviour of Walls—or, more precisely, its insurers—had involved an abuse of process, and given his desire to make it plain that an adverse costs order might follow such an abuse of process, it was entirely logical that the trial judge would refuse a stay so that those insurers would feel the immediate sting of having to pay the costs of the motion which they had (in his view) brought on themselves.  Again, no error in principle on the part of the trial judge can be discerned and this third argument fails. 

21.         Given the admirably concise way in which counsel for the appellant advanced the appeal, and the ease with which these arguments can be addressed, it is unnecessary to describe in any greater detail the submissions (either written or oral) advanced by the parties.  I have, of course, considered the written submissions filed in support of the appeal but nothing in them sets out any additional argument which means that Walls should succeed.

22.         There is, however, one further point to be made.  These proceedings have not advanced in any meaningful way. While a claim for general damages is made in the statement of claim, the special damages pleaded in the statement of claim are, to a cent, identical to the amount notified by Chubb (the insurers for Walls) in the letter of the 17^th November 2017 to which I have already referred.  In other words, in the five and a half years between the letter of claim and the delivery of the statement of claim, the special damages sought by the insurers for Walls have not varied at all.  If the estimate of the costs of the motion in the High Court provided to us (€50,000 per side) is remotely accurate, it means that the likely cost of the hearing of this motion—at High Court level and at the level of this Court—has already exceeded the special damages claimed in this litigation.  In a second letter of the 17^th November 2017, Chubb proposed to Mr. Kealy that the parties might find it in their best interests "to discuss [the] matter on a without prejudice basis in early course in an effort to avoid protracted litigation and the associated costs of same".  As a matter of mathematics, given the costs to date and the lack of progress made in the litigation, it would certainly be sensible either to initiate or resume discussions to see if the underlying dispute between the insurers can be resolved.

23.         Given that the appeal has failed, my provisional view is that the costs of the appeal should be awarded in favour of the respondent, Mr. Kealy (or his insurers).  In the event either side wishes to argue for a different order for costs, they should notify the office of the Court of Appeal by 5pm on the 21^st of March 2025. Should any such notification be received appropriate directions will be given.

Allen and Meenan JJ agree with the contents of this judgment. 

Result    Appeal Failed