Stay of subsequent action pending payment of costs

Order 26, rule 4 of the Rules of the Superior Courts provides that the High Court may stay proceedings if they are subsequent to previous proceedings for the same or substantially the same cause of action and the costs due by the Plaintiff in the previous proceedings have not been paid.

In a recent application Judge Barrett provided a written Judgment as the most recent case law available was a House of Lords decision on an appeal from the then Irish Court of Appeal in 1889 (M’Cabe (Pauper) v Bank of Ireland (1889) 14 App. Cas. 413).

The facts of the recent case were that Lenaghan International Transport Limited had brought proceedings claiming damages for an alleged breach of Competition Law against various parties, including Lombard Ireland Limited (“Lombard”). The Plaintiff did not deliver its Statement of Claim and so on 15 November 2016 an application was issued on behalf of Lombard to have the proceedings struck out for want of prosecution. The application was served on the Plaintiff’s Solicitors on 15 November 2016 and on 24 November 2016 the Plaintiff’s Solicitors filed a Notice of Discontinuance, which was not received by Lombard until 29 November 2016. When the Motion to Dismiss came before the Court on 5 December 2016, and despite opposition,  the Court made an Order for costs in favour of Lombard against Lenaghan International Transport Limited.

On 30 November 2016 Lenaghan International Transport commenced proceedings against the same Defendants and seeking the same reliefs, except that one of the reliefs sought was in respect of negligent misrepresentation rather than fraudulent misrepresentation.  These proceedings were not served until 8 December 2016 but were known when the application for costs in the previous proceedings was made.

Lombard brought an application to have the second set of proceedings stayed as against it until such time as the Order for costs in its favour had been discharged. On 14 March 2017 the Order was granted as sought and the costs of the application were ordered against Lenaghan International Transport Limited. On 12 May 2017 Judge Barrett delivered his written Judgment in which he made the following propositions;

1) the Court’s power to make an Order under Order 26, rule 4 is a discretionary one;

2) notwithstanding the discretionary nature of the power, as a general rule where a plaintiff having failed in one action commences a second action for the same matter, the second matter should be stayed until the costs of the previous matter have been paid;

3) a like discretion arises in a subsequent action that has the same, or substantially the same, cause of action as a discontinued action;

4) the Court’s discretion may be exercised notwithstanding a technical difference in the capacity in which he subsequent action is brought; and

5) the prospects of success in the subsequent action should generally be of no relevance.   

For further information on this topic please contact Gavin Simons (Partner) or your usual AMOSS contact.