Security for costs refused where plaintiff's impecuniosity stems from defendant's actionable wrongdoing in selling property twice.

APPROVED [2025] IEHC 667

THE HIGH COURT

2024 3981 P

BETWEEN

GOOD HOPE INVESTMENTS LIMITED

PLAINTIFF

AND

NEW IRELAND ASSURANCE COMPANY PLC

DEFENDANT

JUDGMENT of Mr. Justice Nolan delivered on the 28th day of November 2025

Introduction

1. It is remarkable, to say the least, that a party who has gone to the trouble of purchasing property of some value, did not go to the trouble of registering it, in circumstances where the failure to do so, meant that the very party from whom it had been purchased, remained the legal owner.

2. By the same token it is remarkable that the party who sold the said same property, did not have in place appropriate systems to be able to identify that it had been sold and that it should not sell it again.

3. That, in essence, is the factual matrix behind this dispute.

4. It is in those circumstances that the Defendant (“New Ireland”) brings this application for security for costs against of the Plaintiff.

Background

5. Bride Street is part of the mediaeval quarter of the city of Dublin. The property in question is at 67 Bride Street which is held under Folio GN2249F (“the Property”). Since 1983, Mrs. Chan and her family ran an Asian food business from it. The Property is beside the Molyneux Church, which was redesigned in 1973 by the architect Sam Stephenson, known for his controversial and modernist work in Dublin. The site was historically the home to Dublin’s Bird Market, which dates back centuries. Mr. Stephenson even provided a walled garden for bird traders to continue their trade after public selling was restricted. For a time, it relocated to an area across the road, which is now the modern Kevin Street Garda station.

6. On the 4th of October 1990,by High Court Order, an associated company, China Co Ltd., was declared to be entitled to a 35-year lease to the property, pursuant to the Landlord and Tenant Amendment Act of 1980.

7. Presumably in order to regularise the family’s affairs, the Plaintiff was incorporated as a special purpose vehicle in the Turks and Caicos Islands on the 20th of May 1991. Thereafter, on the 31st of October 1991, the parties entered into a Contract for Sale, whereby the Plaintiff paid the sum of £78,000. On the 4th of December 1991, New Ireland executed a Deed of Transfer which transferred the Property to the Plaintiff. However, notwithstanding the execution of the Contract of Sale and the Deed of Transfer, the Plaintiff’s interest was not registered with the Land Registry.

8. Nonetheless it seems to be common case that the Plaintiff held an equitable beneficial interest in the Property and was the sole party entitled to be registered as the owner.

9. What happened thereafter is indeed quite remarkable. Not only did the Plaintiff not register the Property, thereby allowing New Ireland to remain the legal owner, but 26 years later, in 2017, on being approached to see if it was interested in selling the property, it agreed to do just that.

10. On the 2nd of November 2017, it executed a second Deed of Transfer in respect of the very same property in favour of a company called Xemium Mainguard limited.

11. The explanation given for this remarkable turn of events is change of personnel and information systems during the period. In other words, one of the biggest life assurance companies in the country had forgotten it had previously sold it. Instead, it relied on the accuracy of the ownership recorded on the Folio.

12. The Property, which was sold in 1991 for £78,000, (which equates to over €200,000 now), was sold again in 2017 for €2,507,500. In 2022, the purchaser sold it again for over €3 million.

13. Again, for reasons that have never been explained, the Plaintiff was unaware of all of this until it discovered it in or around 2022, at which point it registered a caution on the Folio. Mr. Chan, the sole director of the Plaintiff said that in 2022 he became aware that a planning application have been lodged for a hotel development in an adjoining property and was surprised to see that it included the Property.

14. The Plaintiff then wrote to New Ireland complaining about the 2017 sale. Correspondence ensued between the respective solicitors with New Ireland requesting basic information in relation to the completion of the original sale in 1991, the payment of the purchase price and the Plaintiff’s acts of ownership, control and possession of the property. They received no response. Finally, in 2024 further correspondence ensued which ultimately ended with these proceedings.

The Plaintiff’s Cause of Action

15. On the face of it, the Plaintiff's cause of action is a straightforward one. New Ireland, in breach of trust, sold the property twice and wrongfully continues to retain the proceeds of sale.

16. However, matters are not quite as simple as that since New Ireland states that prima fascia the Plaintiff’s claim is statute barred, since if such a cause of action existed, it accrued no later than 2017. These proceedings were commenced in July 2024, seven years later, on that basis, the claim is out of time.

The Statute of Limitations

17. The primary issue between the parties is the interpretation of the Statute of Limitations 1957, in relation to causes of action which involve a breach of trust. The two relevant sections are Section 43 and 44. They read as follows: - “Limitation of actions against trustees. 43.—(1) (a) Subject to section 44 of this Act, an action to recover money or other property or in respect of any breach of trust, not being an action for which a period of limitation is fixed by any other provision of this Act, shall not be brought against a trustee or any person claiming through him after the expiration of six years from the date on which the right of action accrued.

(b) For the purposes of paragraph (a) of this subsection, a right of action shall be deemed not to have accrued to a beneficiary entitled to a future interest in trust property until the interest falls into possession.

(2) No beneficiary, as against whom there would be a good defence by virtue of this section, shall derive any greater or other benefit from a judgment or order obtained by another beneficiary than he could have obtained if he brought the action and this Act had been pleaded in defence. Exclusion of actions against trustees in cases of fraud or retention of trust property. 44.—No period of limitation fixed by this Act shall apply to an action against a trustee or any person claiming through him where—

(a) the claim is founded on any fraud or fraudulent breach of trust to which the trustee was party or privy, or

(b) the claim is to recover trust property or the proceeds thereof still retained by the trustee or previously received by the trustee and converted to his own use.”

18. Therefore, a claim brought for breach of trust has a limitation period of six years, pursuant to Section 43. The cause of action shall not be deemed to have accrued until the interest falls into possession. But all of this is subject to the exclusions of actions against trustees, in cases of fraud or retention of trust property. In those circumstances, there is no period of limitation. But the claim must be founded on fraud or fraudulent breach of trust, or where the claim is to recover trust property or the proceeds of trust property still retained.

The Threshold Requirements for Security for Costs

19. This application is brought pursuant to Order 29 Rule 3 of the Rules of the Superior Courts (“the Rules”) or alternatively under what is described as the court’s inherent jurisdiction, by analogy with Section 52 of the Companies Act 2014. In this case, it seems to me that both principles apply since Order 29 is relevant in that the Plaintiff is resident outside the jurisdiction, while Section 52 is relevant in that it is accepted that the principles of the Act relate to a company registered outside the jurisdiction as well as one inside the jurisdiction.

20. The first requirement is for the court to be satisfied as to whether New Ireland can establish a prima facie defence. If the court is so satisfied, then the court has to determine if it in a position to satisfy any order for costs made against it. Indeed, Section 52 goes as far as to say that where both these factors are established, security should be ordered, unless the plaintiff can establish a sufficient reason or “special circumstances” tilting the balance of justice against making the order.

21. However, the role of the court at this point is restricted. In this regard I can do no better than repeat the words of Charlton J. in Oltech (Systems) Ltd v Olivetti U.K. Ltd [2012] IEHC 512: - “4. It is no part of the task of a court on an application for security for costs to take a view as to who ought to win at trail.”

22. In Connaughton Road Construction Ltd. v. Laing O’Rourke Ireland Ltd. [2009] IEHC

7 to which I shall refer further, this principle was emphasised at para. 3.3 by Clarke J. (as he then was) as follows: “I am mindful of the fact that all of the authorities make clear that the court’s assessment must be conducted on a prima facie basis. As was pointed out in Irish Conservation and Cleaning Ltd v. International Cleaners Ltd (Unreported, Supreme Court, Keane C.J., 19th July, 2001) to do otherwise would be to invite the court, on a preliminary motion, to decide the case. Everything which I say hereafter should, therefore, be subject to the qualification that I am referring, even if not expressly stated, to the various necessary matters being established on a prima facie basis.”

Prima Facie Defence

23. Therefore, it is not the role of this Court to determine with finality the likelihood of success or otherwise of New Ireland’s defence, simply to determine that it has a prima facie defence. Nonetheless the authorities make it clear that the court should consider the matter in some detail. (see Quinn Insurance Ltd (Under Administration) v PricewaterhouseCoopers (A Firm) [2021] IESC 15). The Plaintiff says that New Ireland became a trustee. In this regard, it would seem that the parties are ad idem, since New Ireland relies on the judgment of Meredith

J. in Re Strong [1940] IR 382, that the entire beneficial estate and interest in the property passed to the plaintiff with the registered owners i.e. New Ireland became a bare trustee once the Contract of Sale and the Deed of Transfer and the price was all paid and sent to the Plaintiff’s solicitor. There was nothing more for the vendor to do and, in the words of Meredith J., at pp.

399/400: -

“...responsibility for procuring registration was thrown entirely on the purchaser, and the vendor had done all that he was required to do or could do, once he executed the transfer. The neglect or failure of the purchaser to do what, under the statute, was necessary to effect a transfer of the legal estate did not preserve any equity in him. He might have delayed as long as he pleased.”

24. Mr. O’Neill SC for New Ireland says the same point is made by Kinlen J. in Jobling-Purser v. Jackman [2001] IEHC 186 where he relied on the case of Soar v. Ashwell

(1893) 2 AB 390, where he said: -

"The questions in this case Ashwell was not in view of a court of Equity a trustee of the money before the alleged breach by misappropriation, and, if he was, under which class of trust he was with regard to limitations. The moment the money was in his hands, he was in a fiduciary relation to the nominated trustees; he was a fiduciary agent of theirs; he held the money in trust to deal with it for them as directed by them; he was a trustee for them. He was therefore trustee of the money before he committed, if he did commit, the alleged breach of trust, and was in possession of and had control over the money before he committed, if at all, the alleged breach of trust. The cases seem to me to decide that where a person has assumed, either with or without consent, to act as a trustee of money or other property, i.e., to act in a fiduciary relation with regard to it, and has in consequence been in possession of or has exercised command or control over such money or property a Court of Equity with impose upon him all the liabilities of an express trustee and will class him with and will call him an express trustee of an express trust. The principle liability of such a trustee, is that he must discharge himself by accounting to his cestui que trusts for all such money or property without regard to lapse of time.”

25. Indeed, in its defence New Ireland specifically pleads, in the alternative, that a constructive trust arose. At para. 13 reads: - “While it is accepted that following the making of the Contract for Sale, a constructive trust arose between the Plaintiff and Kay Chan on behalf of the Plaintiff, and that, following the payment of the purchase money, the Property was held by the Defendant for the Plaintiff on a bare trust, once the Deed of Transfer was executed and the vendorpurchaser trust (whether constructive or bare or otherwise) was discharged or otherwise satisfied and the defendant had no further obligations or duties in respect of the Plaintiff.”

26. Therefore, he submits that it has a prima facie defence on the grounds that the proceedings issued in July of 2024, in circumstances where the cause of action accrued on the 2nd of November 2017 when the second deed of transfer was signed which is more than six years.

27. Mr. O’Neill questions whether or not his client was a trustee at all, given the definition of trustee as set out in the legislation or whether Sections 43 and 44 have any application at all given Section 2(2) of the Act.

28. Section 2(2)(a)(i) of the 1957 Act expressly excludes from the definition of trustee: - “... a person whose fiduciary relationship arises merely by construction or implication of law and whose fiduciary relationship is not deemed by any rule of law to be that of an express trustee.”

29. He relies upon the Northern Ireland Court of Appeal decision dealing with a similarly worded statutory provision, McLean v McErlean [1983] NI 258. In that case Gibson L.J. considered whether a vendor who had entered a contract for the sale of land was a trustee for the purposes of Section 74(2) in the Statute of Limitations (Northern Ireland) 1958. It was found that since the bare trustee came into existence by construction or implication of law, by virtue of Section 2.2, the vendor was not a trustee for the purposes of the Statute of Limitations.

30. Mr. Lyons SC for the Plaintiff agrees that New Ireland was a bare trustee by implication of law and falls outside the provisions of Section 43 and 44 of the Act. There is no express trust in this case, and none is argued for, but if it there were an express trust, then he says that Section

44 allows the matter to proceed since there is no statute of limitations.

31. He quotes Snell’s Equity, the following description is given of the obligation imposed upon a bare trustee: “A bare (or simple trust) is one where property is vested in one person on trust for another, but where the trustee owes no active duties arising from his status as trustee. His sole duty is to convey the trust property as the beneficiary directs him”.

32. He submits New Ireland was not permitted to sell or deal with the Property; it remained a bare trustee. That bare trust is only discharged upon completion of the conveyance of the Property, which in this case was once the Plaintiff’s interest was registered with the Land Registry. While New Ireland suggests that the trust is discharged once it has handed over possession and executed the Deed of Transfer, that cannot be, since taken to its logical

conclusion, New Ireland would be free to transfer the land to a third party, pending registration and would not be in breach of any legal obligation owed to the Plaintiff. By selling the Property New Ireland acted in flagrant and unjustifiable breach of trust.

33. In those circumstances if neither of the sections apply, then there is no statutory limitation period that applies to the Plaintiff’s action and New Ireland is left having to rely on equitable principles (if proven) to defeat its claim. Therefore, New Ireland cannot avoid its obligations as a trustee until registration of the Plaintiff’s interest.

34. There are many issues which divide the parties given the bizarre factual matrix. But as Charlton J. has pointed out, it is not the role of this court to determine with finality the issues. All I have to see is whether or not the defendant has a prima facie defence.

Decision on Prima Facie Defence

35. The first issue to be addressed is whether or not a trust situation was created at the time of the making of the Contract of Sale and the signing of the Deed of Transfer. I am satisfied that such a trust relationship was created. That seems clear from all the authorities which have been raised; it also makes eternal sense, which is always reassuring. Clearly, the Property in equity was that of the Plaintiff. But the registration did not take place and so therefore the legal ownership rested with New Ireland. In order to protect the Plaintiff, a trust came into existence.

36. In those circumstances, the next question to be asked is what type of trust came into existence. Again, I am satisfied that it was a trust, whether it be a bare trust or a constructive trust, which was created. The parties did not describe it as a trust and it arose from the circumstances of the case and by implication of law. Therefore, I am satisfied that New Ireland was a trustee by implication of law.

37. The next issue to be addressed is what implication does that have in relation to the Statute of Limitations. Section 2(2)(a)(i) is clear, in that the term “trustee” does not include a person whose fiduciary relationship arises merely by construction or implication of law. The second limb of the Section does not arise in that there never was an express trustee relationship. There simply was a trustee relationship which arose by construction or implication of law.

38. That being the case, then the trust relationship, which was created, falls outside the parameters of the Statute of Limitations and therefore Sections 43 and 44 do not apply.

The Effect of the Trust Falling Outside the Statute

39. This is where the parties go their separate ways. New Ireland says that since this is not a trust which is determined by the statute, it becomes a cause of action akin to any other cause of action. In those circumstances the statute applies in the normal course. In the alternative, the law in relation to latches by analogy applies, with the Statute of Limitations coming back into play.

40. The Plaintiff says that there is simply no limitation period applicable and therefore Mr. Lyons urges court to conclude that New Ireland cannot have a prima facie defence.

41. However, it seems to me that on the face of it, which is the approach I must take, that New Ireland has shown a prima facie defence. The concept of there being no statute of limitations applicable to a bare trust or a constructive trust is a novel one. While I appreciate that before the Trustees Act of 1888, there was no Statute of Limitations, the whole purpose of the 1957 Act, was to put in place, on public policy grounds, a regime which put a time period or time bar on litigation. The Act specifically dealt with situations of fraud or fraudulent behaviour, which does not apply in this case.

42. But the idea that in a perfectly ordinary non fraudulent matter, involving a bare trust or a constructive trust, that there would be no statute of limitations, seems to me at this remove, to be unlikely.

43. Mr. O'Neill says it would be ironic to say the least if an express trust were visited with a defence of the statute, while there is no statue for constructive trustees who do not fall within the definition of the Act. There is strength in that argument, and it seems to me that on the face of it, prima facie, which is not a high threshold, New Ireland has demonstrated that it has a defence.

44. However, I emphasise, as do all of the authorities, this is not to decide the case. I am not carrying out any assessment of ultimate liability other than stating that there is a reasonable prospect of a defence which may succeed at trial and no more.

45. Naturally it will be a matter for the trial court to determine whether New Ireland is or was a bare trustee and whether or not the limitation period applies or not.

46. That is not the only defence New Ireland pleads and for sake of completeness I should deal with its other defence under the Civil Liability Act. The argument is that the Plaintiff is guilty of contributory negligence to the extent that it is liable for the negligent acts and or omissions of its previous solicitor who failed to register the title, who was not sued and therefore the Plaintiff is liable as a concurrent wrongdoer for the loss of its interest in the Property, pursuant to the Act.

47. Mr. Lyons says that for New Ireland to avail of the Civil Liability Act effectively, it would be necessary for it to show that the Act provided a full defence to the whole claim. It is not sufficient that they demonstrate that the solicitor was 25% or even 50% liable, it would have to be to the whole claim.

48. It seems to me that if this were the only defence which New Ireland put forward, it would not reach the threshold of a prima facie defence. However, since I have found that such a defence is shown on the issue of the statute in relation to a trust, I do not have to determine this matter conclusively.

49. That being the case I now move to the next issue which the court must determine.

Security for Costs

50. The next issue which the Court must determine is whether the Plaintiff is in a position to meet an award of costs if it were to lose the action. Normally this would require a discussion in relation to the financial circumstances of the Plaintiff. However, there was no necessity to do that in this case where the affidavit sworn by the representative of the Plaintiff, Mrs. Chan, states that it does not have sufficient assets to provide full security for costs, which are said to be close to €400,000 including VAT.

Special Circumstances

51. Therefore, in those circumstances it is clear that the last question which the Court must ask is whether there are any special circumstances which would lean towards the refusal of the relief.

52. In this case the Plaintiff has said its impecuniosity is due to the actions of New Ireland, since its sole purpose was the holding of the Property. The Plaintiff has not traded and simply held the Property as an unencumbered interest on its balance sheet. Other than the Property it holds no other assets. The sole and exclusive reason why it is not able to meet any claim is because of the actions of New Ireland, in depriving it of its sole property.

53. New Ireland says that there is no evidence to suggest that the directing of such a security would in fact end the litigation. In many ways this is a surprising submission, since the whole purpose of bringing such an application is tactical and often has the effect of stifling litigation. But in response, Mr. O'Neill says that the Plaintiff is simply taking a chance without investing any money into the action. If it loses there are no consequences. But the opposite is not true in that if his client wins there will be no recovery of costs. There was much discussion as to whether or not the action will be stifled. The defence points out that the Plaintiff has been able to instruct solicitors, to lodge a caution against the property's folio and defend the proceedings right up to this point, and therefore since the onus is on the Plaintiff to prove the assertion, it has not done so.

Special Circumstances Connaughton Road

54. In applying the four limbs set out in Connaughton Road, Mr. Lyons submits that the caselaw makes it clear that his client only needs to establish the proofs on a prima facie basis. Clarke J. set out the test which were later approved by the Supreme Court in Quinn Insurance Ltd (Under Administration) v PricewaterhouseCoopers (A Firm) [2021] IESC 15 as follows: - “3.4 In order for a plaintiff to be correct in his assertion that his inability to pay stems from the wrongdoing asserted, it seems to me that four propositions must necessarily be true: -

(1) That there was actionable wrongdoing on the part of the defendant (for example a breach of contract or tort);

(2) that there is a causal connection between that actionable wrongdoing and a practical consequence or consequences for the plaintiff;

(3) that the consequence(s) referred to in (2) have given rise to some specific level of loss in the hands of the plaintiff which loss is recoverable as a matter of law (for example by not being too remote); and

(4) that the loss concerned is sufficient to make the difference between the plaintiff being in a position to meet the costs of the defendant in the event that the defendant should succeed, and the plaintiff not being in such a position”.

55. Mr. Lyons accepts that the onus of proof shifts to his client and submits that firstly, the Plaintiff can clearly show an actionable wrongdoing that has occurred. New Ireland unlawfully sold the same Property twice which the Plaintiff was beneficially entitled to. New Ireland has retained the proceeds of sale from both the Plaintiff and Xenium, which amounts to an actionable wrong for a variety of different reasons and causes of action.

56. Secondly, there is a causal connection between the wrongdoing and the immediate consequences felt by the Plaintiff. As a result of the matters complained of in these proceedings its balance sheet went from a company that held a valuable unencumbered property to one in which it held no assets. New Ireland’s actions deprived it of its only valuable asset.

57. Thirdly, the amount of the Plaintiff’s loss can be readily capitalised. In 2017, New Ireland agreed to sell the Property to Xenium, at an arm’s length commercial transaction. The purchase price was €2,507,500. At the very least, this is a measure of its loss, excluding any additional consequential losses it might have.

58. Fourthly, the purchase price of €2,507,500 is much more than the total amount of costs likely to be incurred by New Ireland in defending this claim, which the legal costs accountant says is close to €400,000.

59. In response Mr. O'Neill says the Court must proceed to analyse whether the proceedings would in fact be stifled if security was ordered. Here, there is no suggestion that an order would have a chilling effect on the prosecution of these proceedings. It was also able to issue and press on with these proceedings despite its acknowledged impecunious state.

Decision on Special Circumstances

60. There is no doubt that the circumstances in this case are very special indeed. However, whether they fall into the category of special circumstances as envisaged in the legislation is less clear. As Clark J. said in Connaughton Road, the plaintiff is only required to establish the special circumstances arising out of its inability to pay costs on a prima facie basis. It does not seem to me that the court is restricted in determining whether the proceedings will be stifled or not. In that regard Clarke C.J. said in Quinn: - “The overriding injustice in such a case stems from the fact of a plaintiff being at risk of not being able to maintain a good claim in circumstances where there is an arguable basis for asserting that the impecuniosity of the plaintiff concerned is due to the wrongdoing in respect of which the very proceedings are brought. The risk of that injustice occurring outweighs any potential risk of injustice to the defendant concerned.”

61. As I said as above, there was a lot of discussion in relation to stifling of the proceedings if the order is made. That was dealt with by the Chief Justice at para.101 of his judgment where he referred to a two stages process. The first was whether an inability to pay costs should be ordered on a Connaughton Road basis, if so then security should not ordinarily be ordered. If not, the court should enter into an inquiry as to the likelihood of the proceedings actually being stifled if an order is made and take the result of that analysis into appropriate account in its overall assessment.

62. As I read the judgment however it seems to me that the issue of stifling is a matter of which the court does not have to consider if the Plaintiff comes on the under the Connaughton Road criteria.

63. In this case I am satisfied that the Plaintiff has been able to establish, on a prima facie basis, that there was actionable wrongdoing on the part of New Ireland when it sold the property the second time. I am satisfied that there is a causal connection between that actionable wrongdoing and the consequences for the Plaintiff, in that its only asset has been disposed of without its consent and therefore it has suffered a loss. The level of loss is easily calculable as the sale price in 2017. Finally, it is clear that the loss is sufficient to make the difference between the Plaintiff being in a position to meet the cost of New Ireland and the point of not being in such a position, given that it's only asset, the property has been sold.

64. I am satisfied the balance has been tipped where it could be shown that rather than the alleged wrongdoing only forming part of the shortfall giving rise to the financial difficulties the Plaintiff is in, it is arguable that it forms all of it.

65. That being the case I shall refuse the application to direct the Plaintiff to provide security for costs.