Background
Michael Flatley sued a building and restoration company and several insurers over work performed at Castlehyde, his County Cork property, after a 2016 fire. He alleged that the restoration was negligently carried out, that the insurers were responsible for the builder’s negligence and failed to disclose contamination-related matters when negotiating a settlement, and that the settlement breached consumer-contract regulations. His claim was estimated at €30 million.
Flatley was ordinarily resident in Monaco. Austin Newport and the insurer defendants sought security for their costs under Order 29 of the Rules of the Superior Courts, relying on his residence outside Ireland, the EU and the EEA and their prima facie defences. The High Court found that Flatley’s assets within Ireland did not provide adequate protection against the estimated costs, ordered him to provide €1.1 million in security, and stayed the proceedings pending provision of that security.
Flatley appealed, arguing that the defendants had delayed too long, that he had ample Irish assets, that the order would stifle his access to the courts, and, alternatively, that the amount exceeded the customary one-third proportion of estimated defence costs.
The Court’s Holding
The Court of Appeal dismissed the appeal and affirmed the High Court’s order. Applying the Supreme Court’s intervening decision in Sweeney v Voluntary Health Insurance Board, it held that the defendants had moved as soon as reasonably possible after the grounds for seeking security became known. They were entitled to seek information about Flatley’s Irish assets, rely initially on his assurances and €20 million valuation of Castlehyde, and reassess the position after obtaining documents showing materially lower valuations and a larger secured liability. Their decision to await the outcome of efforts to refinance the property was also adequately justified.
The High Court had been entitled to disregard the asserted values of Lord of the Dance and Flatley Whiskey. Flatley’s own evidence located the Lord of the Dance rights wherever he resided, which was Monaco, while the evidence concerning ownership, location and value of the whiskey business was vague and inconsistent with company records. The High Court also permissibly preferred supported valuations of Castlehyde at €8.5 million and €10.5 million over Flatley’s unsupported €20 million valuations, arriving at a €9.5 million value and approximately €1.6 million in equity after secured debt.
The order did not improperly restrict access to the courts because Flatley himself maintained that he was a man of means who could pay costs. Nor was €1.1 million excessive: the “one-third rule” is a practice, not an inflexible rule, and the award was approximately one third of the defendants’ combined estimated costs of €2.86 million. The High Court was entitled to balance the available Irish equity, Flatley’s ability to provide security and the defendants’ enforcement risk.
Key Takeaways
- A defendant seeking security against a non-resident plaintiff should apply as soon as reasonably possible after the grounds are known or could, with due diligence, have been known.
- Time spent obtaining and assessing promised asset information is not necessarily culpable delay, particularly where the plaintiff’s assurances initially appear to answer the enforcement concern.
- A plaintiff relying on assets within Ireland must provide credible evidence of their ownership, location, net value and practical availability to satisfy a costs order.
- The customary award of about one third of estimated costs is a flexible practice rather than a binding mathematical rule.
Why It Matters
The decision clarifies how the Supreme Court’s approach to delay in Sweeney applies to security applications under Order 29. Courts will examine when the factual grounds for an effective application became reasonably known, including whether defendants justifiably relied on asset representations before moving.
It also illustrates the evidential scrutiny applied when an overseas plaintiff invokes Irish assets to resist security. Unsupported valuations, unclear ownership structures and assets located with the plaintiff abroad may not overcome the jurisdictional enforcement risk that Order 29 addresses.