Costs in Mixed-Outcome Commercial Litigation: Supreme Court Applies the “Costs Follow the Event” Default Only to the Appeal Itself

1. Introduction

This ruling concerns costs following the Supreme Court’s substantive decision in ACE Autobody Ltd v Motorpark Ltd & Ors ([2026] IESC 9). The parties were ACE Autobody Limited (plaintiff/respondent) and Motorpark Limited, Brecol Limited and JDM Automotive Limited (defendants/appellants, collectively “Motorpark”).

The underlying dispute arose from ACE’s occupation of commercial premises. ACE sued asserting an entitlement to a 10-year lease. Motorpark defended and counterclaimed for a declaration that ACE had no estate, interest, right or title and sought an injunction requiring ACE to vacate, contending ACE was a mere licensee.

The key costs issues were:

  • Whether Motorpark, having been wholly successful in the Supreme Court appeal, should receive its costs there.
  • How costs should be treated in the High Court and Court of Appeal given that ACE failed on its 10-year lease claim but succeeded in resisting Motorpark’s “licensee/vacate” position and was found to be a yearly tenant.
  • Whether “general public importance” or alleged shifts in litigation focus justified departing from the statutory/default approach to costs.

2. Summary of the Judgment (Costs Ruling)

The Supreme Court made three principal orders:

  • Set aside the Court of Appeal’s costs order.
  • Ordered ACE to pay Motorpark the costs of the appeal to the Supreme Court (subject to adjudication if not agreed).
  • Made no order as to costs in respect of the High Court and Court of Appeal proceedings.

The Court held that Motorpark’s complete success in the Supreme Court appeal engaged the presumptive rule that costs follow the event under section 169(1) of the Legal Services Regulation Act 2015. However, because ACE obtained a significant and valuable benefit in the proceedings overall—principally the finding that it was a periodic (yearly) tenant and the consequent ability to pursue a statutory new tenancy—the Court considered it fair that each party bear its own costs in the High Court and Court of Appeal.

3. Analysis

3.1 Precedents Cited

The ruling expressly relied on:

  • Little v Chief Appeals Officer [2024] IESC 53
    • The Court cited Little (at §46) for the proposition that the mere fact an appeal raises issues of general public importance does not, of itself, justify departing from the ordinary rule on costs.
    • The Supreme Court used Little to reject ACE’s argument that the appeal’s broader contractual/equitable-estoppel themes warranted a “no order” approach in the Supreme Court.

Notably, while the parties argued about how to characterise the “main issue” (10-year lease versus periodic tenancy), the Court’s determinative guidance on departing from the presumptive costs position in the Supreme Court was anchored in Little v Chief Appeals Officer [2024] IESC 53 and the statutory framework.

3.2 Legal Reasoning

(a) Supreme Court appeal costs: section 169(1) and the presumptive rule

The Court treated Motorpark’s success on the appeal as decisive. Under section 169(1) of the Legal Services Regulation Act 2015, the starting point is that a successful party is prima facie entitled to costs.

The Court accepted it retains discretion to “order otherwise” depending on the case’s nature, circumstances, and conduct, but it found no basis to displace the default rule here. Two aspects were central:

  • Public importance is not enough: the Court held that even if the appeal involved broader issues (e.g., contract and equitable estoppel), that does not itself justify a costs departure, applying Little v Chief Appeals Officer [2024] IESC 53.
  • Motorpark narrowing its appeal did not change entitlement: Motorpark did not pursue, in the Supreme Court, the challenge to the High Court’s finding of a periodic tenancy; it focused on overturning the Court of Appeal’s 10-year lease conclusion. The Court held this election did not undermine Motorpark’s costs entitlement for the appeal it actually ran—and won.

(b) High Court and Court of Appeal costs: “significant benefit” and the real outcomes of the proceedings

The Court distinguished the costs of the Supreme Court appeal from the costs of the proceedings below by focusing on what, in practical terms, the litigation achieved.

The Court identified the “immediate catalyst” of the proceedings as Motorpark’s asserted right to immediate vacant possession on the basis ACE was a mere licensee. That counterclaim failed in the High Court. Although ACE failed on its asserted 10-year lease, the High Court’s finding that ACE was a yearly tenant was a “significant benefit” to ACE. The Court reinforced that significance by noting Motorpark itself treated that finding as important enough to cross-appeal (unsuccessfully).

The Court then linked that practical success to statutory consequences: because ACE was found to have occupied as a periodic tenant for five years, it had applied for (and was prima facie entitled to) a new tenancy under Part II of the Landlord and Tenant (Amendment) Act 1980. The Court rejected Motorpark’s attempt to characterise ACE’s continuing possession and statutory position as “extraneous” to the proceedings: Motorpark had directly put ACE’s entitlement to remain in occupation in issue and lost.

Given this mixed but materially valuable outcome, the Court concluded the fair order for both the High Court and Court of Appeal was no order as to costs.

3.3 Impact

  • Reinforcement of a two-level costs approach in multi-tier litigation: a party may win the final appellate battle (and receive costs of that appeal) while the costs below may still be neutralised where the other party obtained a substantial, litigation-generated benefit.
  • Limits on “public importance” arguments in costs: litigants in commercial disputes cannot expect a costs departure in the Supreme Court merely by framing an appeal as raising important points of law, given the explicit reliance on Little v Chief Appeals Officer [2024] IESC 53.
  • Practical outcomes matter: where one side’s failed counterclaim (e.g., immediate possession) effectively confers or confirms valuable occupation status, that benefit may drive costs neutrality at first instance and intermediate appeal levels, even if the beneficiary ultimately loses its primary positive claim.
  • Statutory tenancy pathways may influence costs: findings that engage statutory entitlements (here, the ability to pursue a new tenancy under the 1980 Act) may be treated as central to “who really won what,” affecting costs allocations.

4. Complex Concepts Simplified

  • “Costs follow the event”: the general rule that the party who wins the relevant application/appeal receives its legal costs from the losing party.
  • Section 169(1) of the Legal Services Regulation Act 2015: provides the statutory backdrop for awarding costs in line with success, while preserving a discretion to depart where justified.
  • “No order as to costs”: each party bears its own legal costs; neither recovers costs from the other.
  • Licensee vs tenant (periodic/yearly tenant): a licensee has permission to occupy without an estate in land; a tenant has a leasehold interest. A yearly tenant is a form of periodic tenancy renewing from year to year.
  • Counterclaim and cross-appeal: a counterclaim is a defendant’s claim against the plaintiff within the same proceedings; a cross-appeal is an appeal by the respondent challenging parts of the lower court’s decision.
  • Adjudication of costs: if parties cannot agree the amount of recoverable costs, a formal assessment process determines the figure.

5. Conclusion

The Supreme Court’s ruling draws a sharp distinction between (i) costs of the successful Supreme Court appeal, where the statutory presumptive position applied and Motorpark recovered its costs, and (ii) costs in the courts below, where ACE’s failure to secure a 10-year lease did not prevent the Court from recognising that ACE achieved a substantial practical benefit by defeating Motorpark’s attempt to characterise it as a mere licensee and to obtain immediate possession, and by securing a finding of periodic tenancy with consequential statutory implications.

In doctrinal terms, the ruling confirms that “public importance” is not a standalone gateway to a costs departure (per Little v Chief Appeals Officer [2024] IESC 53), and that costs discretion below may turn on the real-world value of what each party gained or lost in the litigation as a whole.