Supreme Court Sets New Rules On Delay In Security For Costs Applications

Introduction

In the most significant ruling on security for costs in many years, the Supreme Court has delivered a judgment clarifying the operation of security for costs and providing important guidance for litigants and practitioners.

Where a plaintiff company is unlikely to be able to meet a costs award, a defendant may apply for security for costs under section 52 of the Companies Act 2014. Courts retain a discretion to refuse such an order where "special circumstances" exist, one of which is undue delay on the part of the applicant.

In Sweeney & The Limerick Private Ltd v VHI, the Court has, for the first time, set out a clear, graduated framework for assessing delay as a "special circumstance". The judgment explains when delay begins to run, what level of prejudice must be shown, and when delay alone may justify refusing security. Anyone involved in, or contemplating, a security for costs application should take careful note of these principles.

Background 

The proceedings arose from a dispute concerning insurance cover for a proposed private hospital in Limerick. The plaintiffs issued proceedings in May 2015, alleging, among other things, abuse of a dominant position.

Security for costs was first raised in correspondence in May 2015. The motion was ultimately issued in June 2023, eight years later. The High Court ordered security in the sum of €1.79 million, and the Court of Appeal upheld that order. 

The Supreme Court has now set both orders aside, finding that the length of the intervening delay, and the absence of any explanation for it, constituted a special circumstance sufficient to defeat the application.

Before the High Court, two special circumstances were argued by the appellants in opposition to the application: (1) delay, and (2) a contention that the defendant's own conduct had caused the appellant company's impecuniosity. Only the delay ground proceeded to the Supreme Court.

The Supreme Court was asked to resolve three related questions: 

1. Whether a plaintiff could rely on the length of delay alone, together with presumed or inferred prejudice, without proving actual prejudice? 
2. If actual prejudice was required, whether the appellants had established it on the evidence? 
3. Is there a point at which delay is so extreme that no proof of prejudice of any kind is necessary, which is an issue considered in light of the Supreme Court's recent decision in Kirwan v Connors?

The Court answered all three questions in the plaintiffs' favour.

The Supreme Court’s Ruling

The Court set out eight principles that will now govern how courts approach delay as a special circumstance. In summary:

1. Courts must balance justice in these applications without forming a strong view on the merits of the underlying claim.
2. The rationale for delay as a special circumstance is the plaintiff's right to make a fully informed decision before incurring further costs in the litigation.
3. The test is not whether the plaintiff would have continued regardless — it is whether the plaintiff had the opportunity to decide with full information.
4. The public interest in the efficient use of court resources is a material factor, and not merely the private interests of the parties.
5. The length of the delay matters to the overall balance of justice. 
6. Prejudice must generally be proven, but the weight of evidence required decreases as the delay lengthens.
7. Sufficiently lengthy, unexplained delay shifts the balance against ordering security even without proof of prejudice. 
8. The obligation is to apply as soon as reasonably possible, with tiered consequences at the six-month to one-year and over one-year marks.

When does the Clock start?

The Supreme Court confirmed that delay is measured from the point at which the defendant had sufficient knowledge to bring the application, not necessarily from when the defence was formally filed. Where affidavits have already been exchanged in interlocutory proceedings, or where the defendant has expressly flagged its intention to apply, the clock may start running well before any formal procedural milestone. Knowledge on the part of the defendant will be the guiding principle and will be fact-dependent.

The Court drew a clear and practical line:

• An application should ordinarily be brought within weeks, or at most a few months, of the defendant acquiring the necessary knowledge.
• A delay of six months to one year that is significantly unexplained may tip the balance against ordering security, even without proof of specific prejudice to the plaintiff.
• A delay exceeding one year that is substantially unexplained will, absent a compelling justification, shift the balance firmly in favour of refusal.

The Public Interest Dimension

A notable development is the Court’s express recognition of the public interest in the efficient use of court resources. Drawing on Dekra Éireann Teo v Minister for Environment, the Court emphasised that security for costs applications, "relate to decisions in a commercial field, where there should be very little excuse for delay". Late security applications can consume court time unnecessarily, particularly where earlier interlocutory steps might have been avoided had security been addressed promptly.

Practical Implications

1. Act Promptly
   Defendants should seek advice on security for costs as soon as they have formed a view on their defence and the plaintiff's financial position, rather than waiting for formal procedural milestones such as the delivery of a defence.
2. Treat One Year as a Hard Limit
   The Supreme Court's guidance makes clear that a delay exceeding twelve months that is substantially unexplained will, in most cases, be fatal to a security application. This should be treated as a firm practical deadline.
3. Explain Any Delay on Affidavit
   If there is a genuine reason for delay, for example, awaiting resolution of a prior interlocutory matter, that explanation must be set out in the grounding affidavit evidence. Delay that goes unexplained will be treated as inexcusable.
4. Consider the Sequencing of Applications
   Where multiple interlocutory steps are under consideration, defendants should assess whether the security for costs application should be prioritised. Courts will now take account of the resource implications of how interlocutory litigation is sequenced when assessing delay as a special circumstance. In this case, the Court took note of the fact that court resources had been consumed by an earlier application regarding expert witnesses which, had the application for security succeeded, would have been entirely unnecessary.
5. Costs Orders Are Cognisable Prejudice
   Plaintiff companies should document all costs orders made against them during the period of delay. These represent a recognised and verifiable form of prejudice and should be relied upon when resisting a late application.

Conclusion

Sweeney v VHI is now the leading authority on delay in security for costs applications. It resolves longstanding uncertainty, introduces clear thresholds, and elevates the public interest in efficient court administration. Timing is now critical: both plaintiffs and defendants must approach security for costs applications with greater urgency and strategic care.

Footnotes

1. [2026] IESC 32
2. [2025] IESC 2
3. [2003] 2 IR 270

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.