When a defendant has grounds to seek security for costs, how long can it wait before making the application?
The Supreme Court (Court) considered delay in security for costs applications in Sweeney & Anor v The Voluntary Health Insurance Board [2026] IESC 32. The Court noted that the starting point is that the application should be made “as soon as reasonably possible” once the grounds for bringing it are known or could with due diligence have become known. What is reasonable will be fact-dependent, but usually this means “weeks or possibly months” rather than years.
In Sweeney, almost eight years passed between VHI raising security for costs and issuing its application. The Supreme Court described that delay as “truly extraordinary” and held that it was sufficient to justify refusing security. The judgment also addresses when the clock starts running, how delay interacts with prejudice, and, importantly, when delay may itself be sufficient to defeat an otherwise valid application.
Background
The proceedings arose from plans by Mr Sweeney and Limerick Private Limited (appellants) to establish a private hospital in Limerick. Following unsuccessful negotiations concerning recognition of the proposed hospital for insurance purposes, proceedings were commenced against the respondent, the Voluntary Health Insurance Board (VHI), in May 2015, primarily alleging an abuse of a dominant position in breach of competition law. VHI sought the provision of security for costs shortly after the proceedings began. In October 2015, its solicitors stated that they had instructions to issue an application unless security was provided voluntarily. The motion was issued on 28 June 2023, almost eight years later.
The proceedings did not stand still in the meantime. VHI pursued a separate application concerning the appellants’ expert evidence through the High Court, Court of Appeal and Supreme Court, with costs orders ultimately being made against the appellants. When VHI eventually sought security, the High Court ordered Limerick Private Limited to provide approximately €1.79 million. The Court of Appeal upheld that decision, but the Supreme Court allowed the appeal and set the order aside.
When does the clock start?
There is no hard-and-fast rule that delay only begin to run from the delivery of the defence. A key consideration is the defendant’s knowledge. The relevant question is when the defendant had sufficient information to take a view that it had a prima facie defence and to articulate that defence. While that point often arises after the defendant has considered the statement of claim and replies to reasonable requests for particulars, the assessment is fact-dependent, and the requisite knowledge may arise earlier. In Sweeney, the Court held that VHI had sufficient information to apply for security for costs by 23 October 2015 at the latest, when it expressly stated that it had been instructed to file a motion.
For applicants in a security for costs application, the point is that in assessing delay, a court will focus on when the defendant had sufficient information to make the application.
Does delay have to cause prejudice?
The answer is usually yes, but not always. The Supreme Court explained that the rationale for treating delay as a special circumstance is that a plaintiff should know, as early as reasonably possible, whether security will be required. That allows the plaintiff to decide whether and how to continue the proceedings with the benefit of that information. Importantly, the plaintiff need not prove that it would have abandoned the proceedings had security been sought earlier. The prejudice can lie in something more subtle, the lost opportunity to decide whether to incur further costs or liabilities with full knowledge that security would also have to be provided.
During VHI’s delay, the plaintiffs contested the expert evidence application through three levels of the Superior Courts and incurred adverse costs orders. The Court held that Limerick Private Limited was deprived of the opportunity to decide whether to continue incurring those costs and risks with knowledge that a substantial security for costs application would follow. While prejudice arising from delay will often be an important consideration, the Court stated that the significance of delay must be assessed on a spectrum. As delay becomes longer and less reasonable, the weight attached to it increases. Eventually, the delay may become significant enough to shift the balance of justice on its own. Where the delay is sufficiently significant, a plaintiff does not have to establish actual or inferred prejudice.
How long is too long?
The Court went further than simply saying that applications should be made promptly. It provided guidance as to how delay may affect the exercise of the court’s discretion.
In broad terms:
- Once the delay moves beyond weeks or months, the explanation for that delay assumes increasing importance;
- An unexplained delay of six months to one year may be sufficient to tip the balance against security, even without specific prejudice; and
- Where the delay exceeds one year, and there is no or insufficient explanation for a significant part of that delay, the balance shifts towards refusing security in the absence of a “pressing exigency of justice”.
These are not fixed time limits. The Court repeatedly emphasised that the assessment remains fact-specific, and security for costs is ultimately a discretionary remedy. Nonetheless, the guidance is significant. The judgment suggests that delay measured in months, rather than years, may be capable of influencing the balance of justice, particularly where a substantial part of that delay is unexplained.
The cost of keeping an application in reserve
During the period in which VHI could have pursued security for costs, it instead pursued its separate application concerning the plaintiffs’ expert. That application went through the High Court, Court of Appeal and ultimately the Supreme Court. The Court noted that VHI had chosen to pursue the expert application when it could likely instead have pursued its application for security for costs. The Court regarded that as a strategic choice which had consequences when assessing the later security application.
The Court’s analysis also went beyond the parties’ private interests. Drawing on the Courts’ recent authority on delay, Donnelly J emphasised the public interest in the efficient and effective use of limited court resources. The fact that substantial judicial resources had been used in dealing with an interlocutory issue during a period in which an application for security for costs could have been pursued was considered relevant to the overall balance of justice.
Practical implications for defendants
Three key points arise for defendants:
- Consider security early; do not assume that it is reasonable to wait until delivery of a defence before making an application. The relevant question is whether there is sufficient information to assess and articulate a prima facie defence and satisfy the requirements for security for costs.
- Be able to explain any delay. Delay does not automatically defeat an application, but an unexplained delay becomes increasingly difficult to overcome as time passes.
- Do not keep security in reserve where several interlocutory options are available. The sequencing of applications may matter. A decision to pursue other interlocutory applications first may affect a later security application, particularly where the plaintiff incurs additional costs or litigation risks during the intervening period.
The key takeaway from Sweeney is that security for costs should be considered as part of the overall litigation strategy from an early stage in the proceedings. A decision to defer an application may impact on a later application for security, where the delay cannot satisfactorily be explained.
To discuss security for costs in more detail, contact Adele Hall, Garrett Breen or another member of the William Fry Litigation & Investigations team. You can also read our previous publications on security for costs here.
Contributed by Aishling Taite
