Insurer Denied Costs Security After Double Property Sale

Insurer Who Sold Dublin Property Twice Denied High Court Costs Order

An assurance company that sold the same Dublin city centre property twice, first in 1991 and again in 2017, has been denied a High Court order for security for its legal costs in a remarkable case involving a 26-year oversight. The court found that the company’s own alleged wrongdoing was arguably the sole reason the original purchaser could not afford to cover the potential legal bill, estimated at nearly €400,000.

In a detailed judgment, Mr Justice David Nolan of the High Court refused the application brought by New Ireland Assurance Company PLC against Good Hope Investments Limited. The ruling clears a significant financial hurdle for Good Hope Investments, allowing its primary lawsuit for breach of trust to proceed to a full hearing. The case, cited as Good Hope Investments Limited v New Ireland Assurance Company PLC [2025] IEHC 667, shines a spotlight on the critical importance of property registration and the complex, sometimes unforeseen, consequences of administrative failures spanning decades.

A Tale of Two Sales

The origins of this convoluted legal dispute trace back to 31 October 1991, a different era in the Dublin property market. On that day, Good Hope Investments Limited purchased a property on Bride Street, Dublin, from New Ireland Assurance for the sum of £78,000. While the assurance company executed a deed of transfer, a crucial subsequent step was missed. For reasons not fully detailed in the judgment, the plaintiff, Good Hope Investments, failed to register its interest in the property with the Land Registry. This omission, while seemingly minor at the time, had profound consequences, as it meant that New Ireland Assurance technically remained the registered legal owner of the property on official records.

For over a quarter of a century, this administrative oversight lay dormant. The situation changed dramatically in 2017 when New Ireland Assurance was approached by an entirely different company interested in purchasing the very same Bride Street property. In what appears to be a significant internal failure, the assurance company, seemingly unaware of the 1991 sale, agreed to a new deal. On 2 November 2017, it executed a second deed of transfer for the property, this time for a staggering €2.5 million, reflecting the dramatic appreciation in Dublin commercial property values over the intervening 26 years.

The property changed hands yet again in 2022, when the 2017 purchaser sold it on for over €3 million. It was this transaction that finally brought the double sale to light. A director of the original purchaser, Good Hope Investments, became aware that a planning application had been lodged for a hotel development on an adjoining site. Upon closer inspection of the plans, the director was shocked to discover that the development included the property his company had bought back in 1991. This discovery triggered an investigation that unravelled the complex history of the subsequent sales. When confronted, New Ireland Assurance attributed the monumental error to changes in its personnel and information systems over the long period, an explanation suggesting the 1991 transaction had been lost in the digital and corporate shuffle.

The Legal Fallout

Faced with the loss of its asset, Good Hope Investments issued legal proceedings in July 2024. The core of its claim was that from the moment of the 1991 sale, New Ireland Assurance held the property as a ‘bare trustee’ for the plaintiff’s benefit. By selling the property again in 2017 and retaining the multi-million-euro proceeds, the plaintiff argued that the defendant had acted in profound breach of this trust and was wrongfully holding onto funds that rightfully belonged to Good Hope Investments.

In response, New Ireland Assurance mounted a robust defence, centred on a powerful legal argument: that the plaintiff’s claim was ‘statute-barred’. The defendant contended that any cause of action accrued, at the latest, when the second sale occurred in 2017. Under the Statute of Limitations 1957, there is generally a six-year period to bring such an action. As the plaintiff only initiated proceedings in 2024, seven years later, the defendant argued they were out of time and the case should be dismissed. It was on the basis of this defence that the assurance company brought its application for security for costs, a legal mechanism compelling a plaintiff to lodge funds with the court to cover the defendant’s legal expenses should the plaintiff ultimately lose the case. Such applications are often made when a defendant believes the plaintiff company may be insolvent or unable to pay a costs order.

A ‘Novel’ Question of Law

Mr Justice Nolan recognised that the dispute hinged on a complex interpretation of the 1957 Statute of Limitations, specifically sections 43 and 44, which govern actions against trustees. He summarised that section 43 sets a six-year limitation period, while section 44 creates crucial exceptions, removing any time limit for actions against trustees involving fraud or the retention of trust property.

However, a critical detail lay in the Act’s own definitions. The judge found that the term “trustee” as defined in the statute does not extend to a person whose fiduciary duty arises merely ‘by construction or by implication of law’. In this case, New Ireland Assurance became a trustee not through an express trust deed, but by implication of law after the 1991 sale—a relationship often termed a ‘constructive’ or ‘bare’ trust. This meant, paradoxically, that the specific sections of the Act dealing with trustees did not seem to apply.

This created what Mr Justice Nolan described as a “novel” legal question. The plaintiff argued that if these sections did not apply, then there was simply no limitation period at all for this type of breach of trust. The judge expressed considerable scepticism about this proposition. “The concept of there being no statute of limitations applicable to a bare trust or a constructive trust is a novel one,” he stated. “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.” He further noted the irony that an express trustee might benefit from a statutory time limit, while a constructive trustee, as alleged here, would face limitless liability. Despite these reservations, the judge’s role in this specific hearing was not to definitively decide the statute of limitations issue, but merely to determine if the defendant had an arguable, or prima facie, defence. He concluded that they did, thus satisfying the first part of the test for security for costs.

The Deciding Factor: Cause of Impecuniosity

Having established the defendant had an arguable defence, the court turned to the remaining criteria. It was accepted that Good Hope Investments did not have sufficient assets to meet a potential costs award of nearly €400,000. This brought the hearing to its pivotal point: were there ‘special circumstances’ that justified refusing the order? The plaintiff’s counsel advanced a powerful argument, invoking the legal test established in the landmark case of *Connaughton Road Construction Ltd v Laing O’Rourke Ireland Ltd*. They argued that the plaintiff’s impecuniosity—its inability to pay—was a direct result of the defendant’s own alleged wrongdoing.

The court was told that Good Hope Investments was a special purpose vehicle (SPV), a company whose sole purpose and sole asset was the Bride Street property. By selling that property from under them, the defendant had not merely caused a financial loss; it had stripped the plaintiff of its entire value and its ability to fund litigation or pay adverse costs. Mr Justice Nolan found this argument compelling. He was satisfied that the plaintiff had established, on a prima facie basis, three key points: that there was actionable wrongdoing by the defendant; that there was a clear causal link between that wrongdoing and the plaintiff’s financial state; and that the loss—the €2.5 million sale price from 2017—was more than sufficient to explain the plaintiff’s inability to provide security for costs.

In his concluding remarks on this point, the judge stated decisively: “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.” Accordingly, the High Court refused the defendant’s application, allowing the case to proceed without the plaintiff having to find a substantial sum to lodge with the court. The substantive battle over the property’s sale and the ‘novel’ question of time limits will now be fought in a full trial.