Supporting Documents:
 
THE SUPREME COURT
DETERMINATION CMC MEDICAL OPERATIONS LIMITED (IN LIQUIDATION) TRADING AS CORK MEDICAL CENTRE PLAINTIFF / RESPONDENT AND
THE VOLUNTARY HEALTH INSURANCE BOARD DEFENDANT / APPLICANT
APPLICATION FOR LEAVE TO APPEAL TO WHICH ARTICLE 34.5.3° OF THE CONSTITUTION APPLIES
RESULT: The Court does not grant leave to the defendant/applicant to appeal to this Court from the Court of Appeal
REASONS GIVEN:
1. This determination concerns an appeal brought by the Voluntary Health Insurance Board, the defendant/applicant, referred to as “the applicant”, from the judgments of the Court of Appeal delivered on the 27th March, 2015, and the order of the 27th March, 2015, which was perfected on the 8th April, 2015.
2. The Court of Appeal ordered that the appeal of CMC Medical Operations Limited (in liquidation) trading as Cork Medical Centre, the plaintiff/respondent, referred to as “the plaintiff”, be allowed and that the application of the applicant for security for costs be dismissed.
3. This Court has jurisdiction to hear an appeal from the Court of Appeal, in the circumstances described in Article 34.5.3° of the Constitution, which states:
“3° The Supreme Court shall, subject to such regulations as may be prescribed by law, have appellate jurisdiction from a decision of the Court of Appeal, if the Supreme Court is satisfied that:
4. The decision of the Supreme Court under Article 34.5.6 is, in all cases, “final and conclusive”.
5. The constitutional framework established by the Thirty-third Amendment to the Constitution thus requires, that in order for a party to be entitled to appeal to this Court from a decision of the Court of Appeal it has to be demonstrated that either a “matter of general public importance” arises, or that “in the interests of justice it is necessary that there be an appeal to this Court.”
6. The statutory framework for the exercise of the right to appeal to this Court is to be found in the Court of Appeal Act, 2014, and, in particular, in the provisions of s.44 of that Act, which inserts a new s.7 into the Courts (Supplemental Provisions) Act, 1961.
7. The Rules of Court are set out in the amended Order 58 of the Rules of the Superior Courts.
8. The Constitution has retained the entitlement to have one appeal as a right from the High Court to the Court of Appeal, subject to express exclusions or regulation by statute. What is sought here is a second appeal. The jurisdiction to bring an appeal to this Court is confined, principally, to cases where, as a result of the determination of the Court of Appeal, the decision of that court is such that the issues raised on a proposed appeal would involve a matter of general public importance, or would be such that it is in the interests of justice that there should be a further appeal to this Court.
9. In these proceedings the applicant brought a motion before the High Court (Cooke J.) seeking an order per section 390 of the Companies Act, 1963, directing the plaintiff to provide sufficient security for the applicant’s costs of the proceedings if it was successful in its defence. The High Court, in a judgment delivered on the 12th June, 2012, ordered that an order for security for costs be made. The plaintiff appealed to the Court of Appeal, which, in judgments delivered on the 27th March, 2015, allowed the appeal, and dismissed the applicant’s application for security for costs pursuant to s. 390 of the Companies Act, 1963.
10. The applicant has applied for leave to appeal to this Court.
11. The applicant seeks leave to appeal against the entire decision of the Court of Appeal.
12. The applicant seeks leave to appeal on the basis of the public importance of the case and the interests of justice, as follows:-
The Public Importance of the Case
(i) The determination of the security for costs application in this case has consequences which extend well beyond the scope of the current appeal.
(ii) While the Court of Appeal (per the judgment of Mahon J) purported to confirm and apply the test articulated by Clarke J. in the High Court in Connaughton Road Construction Limited v. Laing O'Rourke Ireland Limited [2009] IEHC 7, to the special circumstance relied upon by the plaintiff, the manner in which the Court of Appeal approached the evidence adduced on the application in respect of the asserted special circumstances, and the observations made by Hogan J. in his separate judgment on the application, creates uncertainty as to the application of the Connaughton Road test and as to the nature of the evidence required to be adduced by a plaintiff to establish the required prima facie causal connection between its inability to pay the costs of the successful defendant (admitted or established) and the actionable wrong as asserted by that plaintiff against the defendant.
(iii) The judgment of the Court of Appeal (as delivered by Mahon J.) is notable for the absence of any review of the evidence before the Court as to the plaintiff’s behaviour in its application, at the development stage of the hospital and prior to opening, for approval by the applicant. In this context, the evidence demonstrated that the plaintiff had proceeded to develop a new hospital on the assumption that it would following this development, compel or prevail upon the applicant to provide cover regardless of the fact that the applicant had clearly explained that its members did not have any actual need for the services to be provided by the new hospital and of the fact that the extension of cover would create an unacceptable risk of loss to the applicant by reason of the unneeded and excessive capacity thereby created. In the light of this evidence, the learned High Court Judge concluded that it was quite probable or more likely than not that the plaintiff’s own decision/behaviour had caused its loss. He went on to find that the plaintiff had not established a prima facie case on the evidence that the hospital was obliged to close because the applicant had refused to grant approval. The failure by the Court of Appeal to engage in a like analysis of the evidence as to the underlying cause of the plaintiff’s financial difficulties demonstrates a clear departure from the Connaughton Road test or a serious actual dilution of the requirement that a plaintiff show that the alleged wrongdoing was the proximate cause of the inability to meet the applicant’s costs, meaning that the plaintiff's incapacity is due solely or principally to the actions complained of by the plaintiff as per Framus Ltd & Ors v. CRH plc & Ors [2003] ILRM 462 (Herbert J. at p. 470) approved by the Supreme Court on appeal [2004] 2 IR 20 (Murray J. at p. 43) and/or the requirement that a plaintiff establish a prima facie case on the evidence of the requisite causal connection between the asserted wrongdoing and a practical consequence for the plaintiff as per Connaughton Road.
(iv) Further, the judgment of the Court of Appeal treats as sufficient for the purposes of showing the required causal connection between the asserted wrongdoing and the plaintiff’s inability to pay costs, an assumed but unspecified increase in the income of the plaintiff but for the asserted wrongdoing. The Court of Appeal articulated this approach as "considering if there was this causal connection with a wider lens." [Paragraph 17 of the judgment delivered by Mahon J.] Such an approach eschews the established approach of assessing the evidence adduced by the plaintiff to ascertain whether, by means other than assertion or assumed fact, it has established (i) a practical consequence resulting in a loss which is recoverable and (ii) that the loss is enough to account for the difference between the plaintiffs ability to meet an order for the defendant's costs and not being so able.
(v) The Court of Appeal readily accepted the bald assertion relied upon by the plaintiff that, as the hospital ceased to trade, it must have been because of the refusal to cover. The Court of Appeal proceeded in this way notwithstanding the failure of the plaintiff to furnish by way of evidence any company accounts, any statement of its working capital or funding arrangements (taking account among other things of what if any actual entitlement the plaintiff had to cover, or of how soon this might be forthcoming if all the necessary information was furnished to the applicant. It did so despite also the absence of evidence from any director of the plaintiff as to these matters, or in response to any of the evidence put forward by the applicant. The failure of the Court of Appeal to require the plaintiff to prove, prima facie, that the conduct complained of was the proximate cause of its impecuniosity represents a significant error in approach. The test apparently applied by the Court of Appeal undermines the jurisdiction and object of section 390 of the Companies Act 1963; gives rise to uncertainty in the law; and gives rise to an apprehension of injustice/unfairness in the determination of the application for security for costs.
The Interests of Justice
(vi) It would also be in the interests of justice for the case to be heard by the Supreme Court in circumstances where doubt and uncertainty has been created by the judgments of the Court of Appeal on the application as to both the ambit and application of the Connaughton Road test.
(vii) To the extent that the decision of the Court of Appeal was influenced by a concern to balance the interests identified at paragraph 26 of the judgment of Mahon J. and in the separate judgment of Hogan J., namely, the protection of applicants against the potential abuse by plaintiff companies of the privilege of limited liability (the recognised object of section 390 of the Companies Act 1963) on the one hand and, on the other, the exercise of the Court's discretion in a manner which does not negate the constitutional right of access to the courts, it is respectfully submitted that it involved a significant departure from long established jurisprudence (see Lismore Homes Ltd (in Receivership) v. Bank of Ireland Finance Ltd. [1999] 1 IR 501), a misunderstanding and/or misapplication of the Connaughton Road test, and an unfair, and inappropriate weighting being afforded to the plaintiff's constitutional right of access to the courts.
(viii) The applicant is anxious to avoid what would undoubtedly be extremely expensive, prolonged and difficult proceedings in the context of a full hearing before the High Court, with the possibility of further appeals, against a background where it is clear, that the plaintiff will never be in a position to make good on the costs of the applicant if it succeeds in its defence and despite the fact that it is conceded that the applicant has a prima facie defence to the claim. The very concern identified by Hogan J as potentially causing injustice (adopting the words of Kingsmill Moore J in Thalle v. Soares [1957] IR 182), arises here and has not been properly recognised by the Court of Appeal viz. that a limited company could use the shield of limited liability in such a manner to force other litigants either to compromise on unfavourable terms or else face the threat of expensive litigation whose costs will be irrecoverable.
(ix) In the premises, it is respectfully submitted that the interests of justice weigh heavily in favour of the grant of leave to appeal to the Supreme Court against the determination of the Court of Appeal.
13. The plaintiff in reply, separately deals with the issue of General Public Interest and the issue of the Interest of Justice. For the reasons as given it claims that neither threshold has been met, which is a necessary pre-condition for a further appeal to this Court, and accordingly that the application should be rejected.
14. General Public Interest:
(i) The decision of the Court of Appeal does not involve any matter which by reason of its gravity, general application or general importance would meet this requirement. In fact, the court applied well established and agreed principles by which the provision of security for costs is governed. Neither does the decision of Mahon J. or Hogan J. of that court create any uncertainty.
(ii) Contrary to what is claimed, the Court of Appeal did not depart from the principles set out in Connaughton Road Ltd v. Laing O’Rourke Ireland Ltd [2009] IEHC 7 (“Connaughton Road”). Following the Supreme Court’s decision in Framus Ltd v. CRH Plc [2004] 2 I.R. 20 at 52, the obligation on the plaintiff was simply to adduce prima facie evidence of a causal connection between the alleged wrongdoing and its incapacity to meet a cost order. The judgment of Mahon J., with which the other two members of the court agreed, shows that the test was correctly understood and correctly applied to the evidence placed before it. Insofar as the High Court judgment might suggest that the obligation on a party who wishes to assert special circumstances, is to prove that the wrongdoing “solely or principally” caused the loss, such is not supported by authority.
(iii) Again contrary to what is claimed, the Court of Appeal did not fail to engage with the evidence, which on any reading was capable of sustaining the decision reached by that Court. In so deciding the court, in its careful assessment, did not overreach in the conclusion which it arrived at.
The Interests of Justice:
The Concurring Judgment of Hogan J.:
Decision:
15. The essence of the claim made is that the applicant, as a dominant undertaking in the relevant market, abusively refused to make available its insurance cover to customers who might wish to avail of the services provided by the hospital, either directly or through referrals. This it is alleged is an actionable wrongdoing under both s. 5 of the Competition Act 2002 (as amended), and Article 102 of the Treaty of the Functioning of the European Union (TFEU). As a result, the financial viability of the enterprise was fatally compromised in a variety of ways, including the reluctance of consultants to commit to the project in light of the said refusal. In consequence, enormous loss and damage has resulted. Hence, the cause of action as pleaded.
16. The applicant intends to defend this action by fully contesting the alleged wrongdoing and also even if unsuccessful in that regard, by contending that the losses suffered, have their foundation elsewhere. It is of course fully entitled to so do. However, at this stage of the proceedings to engage in any in depth evaluation of either the claim or the suggested defence would be entirely inappropriate, particularly on an application such as this.
17. In accordance with established and uncontroverted law, where a plaintiff is insolvent and thus where it will not be in a position to meet an order for costs if made against it, in the event of being unsuccessful in his or her action, and where the defendant has established a prima facie defence to the claim as asserted, the plaintiff, if he is to successfully resist such an order, must disclose the existence of “special circumstances”. One such way is to show that the admitted or established impecuniosity, and thus the inability to discharge a cost order, flows from the alleged wrongful activity of the defendant. There must therefore in this regard be established a relationship between the wrong and the financial position of the plaintiff. In law any party so asserting must prove, at a prima facie level, a causal connection between both.
18. The plaintiff in this case is so insolvent: the defendant in this case has established such a defence and as accepted by all parties the onus of proof is therefore on the plaintiff to prove, the only strand of “special circumstances” which it relies upon. Given the assumption, but only for the purposes of the application, that an actionable wrong can be established, the single question which remains, is whether on the “special circumstances” provision, the decision of the Court of Appeal is such, as to merit a further appeal to this Court.
19. At paras. 7 and 9 of its judgment, the Court of Appeal set out the principles of law which were applied by the High Court on the application so made. In particular, the learned trial judge, in the context of establishing special circumstances, referred with approval to and followed the judgment of Clarke J. in Connaughton Moore Construction Ltd v. Laing O’ Rourke Ltd (Unreported, 16th January, 2009). No party takes issue with this statement of the law. Neither did the Court of Appeal. At para. 10 of the judgment of Mahon J., it is stated:-
“This is the correct test to be applied in order to determine what must be established to prove the existence of ‘special circumstances’.”
Consequently, the factual preconditions for shifting the onus of proof are not in issue and neither are the principles of law by which a security for costs application should be determined.
20. In this Court’s view none of the points advanced to ground this application are of sufficient gravity to satisfy either of the two necessary criteria, being specified at a general level by the provisions of Article 34.5.3 of the Constitution, and at a more particular level as expanded and explained by several of the Determinations previously given by this Court. The reasons for this conclusion are as follows.
21. The underlying application is one for security of costs: such is interlocutory in nature and has been made at a time when the pleadings have not yet closed and when a full exchange of information, as required by the rules of court, has not yet been undertaken. In fact, a defence has yet to be filed. Therefore, the court hearing the initial application and the appellate court on review, must remain conscious of the nature of the application in question, the timing of its making, the state of the pleadings and in particular of the obvious distinction between what a resisting party has to prove in order to establish special circumstances, on the one hand and what ultimately must be established at trial, for a successful outcome, on the other hand. It would be entirely inappropriate to apply the latter standard on an application such as this.
22. The vast majority of complaints which the applicant has with the judgment in question, fall comfortably within the range of issues which are routinely argued on appeal from such a decision. Was the test correctly applied, was the available evidence sufficient to allow the conclusion reached, and did the judge err in deciding as he did? In particular given the assumption, accepted in both the High Court and the Court of Appeal that an actionable wrong can be assumed, it is difficult to see how the correspondence and contact between the parties prior to the Hospital’s opening, can be significant on this application. Accordingly, in this Court’s view none of these points reach the required threshold, so as to justify a further appeal to this Court.
23. The only real argument is whether the Court of Appeal by looking at the evidence through what it classified as “a wider lens” than that adopted by the High Court, could be said to have so disturbed established practice that uncertainty across the “special circumstances” provisions have been created, and to have done so to such an extent that requires definitive clarification by this Court.
24. The decision of the Court of Appeal rested on principles of law which are settled and on their application which was carried out routinely. No uncertainty could possibly result from such decision. Whilst an appellate court will always have due regard to the views of a trial judge, even on an application determined solely on affidavit evidence, nonetheless it can and in the past has frequently arrived at a conclusion different to that expressed, by the said judge. Without creating or invoking any new rule of law and by applying settled views in a traditional way, the court’s decision fell comfortably within the range of established principles which the law permits, and accordingly does not give rise to any issue which could merit a second level appeal to this Court. In essence, the applicant is dissatisfied with the factual conclusion which the Court of Appeal draws in its judgment, from the evidence so tendered. A further appeal to this Court is not available to an aggrieved party in such circumstances.
25. Finally, in the court’s view there is no substance in any of the arguments advanced by reference to the judgment of Hogan J.. If any of the circumstances postulated by the learned judge should arise, then such will be considered in the normal way, when and where it is appropriate to do so. In the instant case, as CMC has in fact met the established test, there was no necessity to look elsewhere for a solution.
26. Consequently, the court does not grant leave to the defendant/applicant to appeal to this Court from the Court of Appeal.
AND IT IS HEREBY SO ORDERED ACCORDINGLY.
|