Discontinuance of Proceedings and Default Costs Liability under Section 169(4) of the Legal Services and Regulation Act 2015

Introduction

In CDB Aviation Lease Finance Designated Activity Company & Ors v Lloyd’s Insurance Company SA & Ors ([2025] IEHC 243), Ms Justice Eileen Roberts of the High Court of Ireland addressed a contested costs application arising out of multi-party litigation concerning aircraft leasing and insurance cover following the Russian invasion of Ukraine in 2022. The plaintiffs (“CDB”) are a group of aircraft lessors who sought insurance indemnities for nine aircraft remaining in Russia, invoking both their “war risk” and “all risks” policies. The defendants comprise twenty-one insurers (All Risk Insurers, War Risk Insurers and Mixed Insurers) who, between them, underwrote CDB’s cover. After extensive coordinated trials of six related sets of proceedings (the “Aviation Proceedings”), CDB settled with a majority of the insurers but discontinued their alternative “all risks” claim against a subset of insurers (the “Remaining All Risk Defendants”) on Day 93 of the trial. The only issue left was who should pay the legal costs of those defendants.

Summary of the Judgment

The Court held that:

Under section 169(4) of the Legal Services and Regulation Act 2015, a party who discontinues proceedings is, by default, liable to pay the reasonable costs of every other party up to the date of discontinuance unless the court orders otherwise.
By discontinuing its claim in full against the Remaining All Risk Defendants, CDB triggered the default rule: the Remaining All Risk Defendants became “entirely successful” and thus “entitled” to recover costs on a party-and-party basis.
CDB advanced multiple arguments—conduct prior to proceedings, a 50/50 provisional settlement clause, late withdrawal of defences, and the unusual structure of the Aviation Proceedings—to persuade the Court to depart from the default costs rule or cap liability. None succeeded.
The Court refused to impose any form of cap or percentage apportionment of costs, as that would impermissibly pre-empt the detailed adjudication process under the Act and usurp the Legal Costs Adjudicator’s role.
Accordingly, the Court ordered that the Remaining All Risk Defendants recover their costs against CDB, to be adjudicated in default of agreement, and struck out the claims against them.

Analysis

Precedents Cited

Chubb European Group SE v. Health Insurance Authority [2022] 2 IR 734
Murray J distilled the interaction between the court’s general discretion on costs (section 168 and O.99 r.2) and the entitlement of an entirely successful party under section 169(1). He confirmed that, absent “ordering otherwise,” success entitles one to costs, and departure from that rule requires clear reasons anchored in factors listed in section 169(1).
Word Perfect Translation Services Ltd v. Minister for Public Expenditure and Reform [2023] IECA 189
The Court of Appeal emphasized that an award of costs under the 2015 Act does not oblige a successful party to prove it was the most cost-efficient litigant. While unreasonable conduct can reduce costs, nit-picking over every item must be avoided in favour of a broad-brush approach.
Shell E & P Ireland Ltd v. McGrath (No. 3) [2007] 4 IR 277
Laffoy J recognized that, when a plaintiff discontinues, “just provision” for costs normally entails the defendant recovering costs to date, reflecting the rationale of O.26 r.1 on early discontinuance.
Callagy v. Minister for Education (Supreme Court, 23 May 2003)
Keane CJ held that a plaintiff who abandons proceedings must bear the defendants’ costs incurred—if the plaintiff wants costs, it must see the case through and succeed.
AB [2024] IEHC 361
Barniville P noted that specialised wards or public interest contexts may attract additional cost considerations, illustrating that any departure from the default rule demands specific, clearly articulated reasons.

Legal Reasoning

The Court’s reasoning unfolded in several stages:

Statutory Framework: Sections 168 and 169 of the 2015 Act, together with the recast Order 99 of the Rules of the Superior Courts, grant broad discretion on costs but establish a default rule: a discontinuing party pays the successful party’s costs (s.169(4)), and an entirely successful party is “entitled” to costs unless the court “orders otherwise” after considering s.169(1) factors.
Default Rule Applies: CDB fully discontinued against the Remaining All Risk Defendants on Day 93. The Court held that they became “entirely successful,” so the statutory entitlement to costs crystallized immediately, regardless of the timing or quantum of costs already incurred.
CDB’s Arguments for Departure: CDB urged departure on grounds of poor pre-litigation engagement, failure to implement a “50/50 provisional claims” clause, maintenance of unnecessary defences, and the extraordinary shared-trial structure of the Aviation Proceedings.
- Pre-litigation engagement: No breach of duty was found; the insurers engaged once proceedings issued and maintained robust defences.
- 50/50 clause: The conditional clause never operated, as no mutual agreement on liability among insurers arose; its plain wording precluded unilateral advance payments.
- Late withdrawal of defences: While certain points were dropped, these were also raised by other defendants and were peripheral to CDB’s primary war-risk claim; any incremental costs were immaterial in the broad-brush assessment.
- Shared-trial structure: Although costs savings resulted from joint management of six cases, it was not practicable or principled to cap costs by reference to a fraction of an unknown global bill. Detailed adjudication, not this court’s cap, is the correct route to reflect shared effort and percentages of cover.
Discretion and Reasons for Refusal: The court acknowledged its discretion but emphasized that any departure from the clear statutory default rule requires specific explanations. The decision to discontinue rested entirely with CDB and carried the known risk of a costs liability. CDB’s tactical choice to maintain the Remaining All Risk Defendants in the litigation until late did not justify a no-costs order.
Role of the Legal Costs Adjudicator: The Court declined to pre-empt the adjudicator’s function. Under section 155–169 and Schedule 1 of the 2015 Act, the adjudicator must examine the actual bill of costs, consider the entire context, and determine what is reasonable. It is the statutory expert mechanism to assure proportionality and prevent windfalls.

Potential Impact

This judgment clarifies key points for Irish civil litigation:

Section 169(4) is a powerful default rule: discontinuance almost inevitably triggers a costs liability unless exceptional reasons justify departure.
Attempts to segment or cap costs by reference to shared-trial structures or insurance-coverage percentages cannot override the statute and court discretion; parties must rely on the adjudication process to reflect any saving or apportionment.
Parties should be aware that tactical late discontinuance carries an inherent costs risk. Early assessment of strengths and weaknesses, and consideration of targeted discontinuance or settlement, will better manage exposure.
Costs adjudicators and courts will apply a broad-brush approach, resisting nit-picking, yet demanding clear evidence of any unreasonable conduct or duplication to reduce costs.

Complex Concepts Simplified

Discontinuance: A plaintiff’s formal abandonment of all or part of its claim. Under s.169(4), this typically triggers a costs obligation to the successful side.
Party-and-Party Costs: A scale-based assessment of solicitor and counsel fees recoverable by a successful party against an opponent, distinct from solicitor-and-own-client costs.
Costs Adjudication: A statutory process under the 2015 Act where a Legal Costs Adjudicator examines a detailed bill of costs and determines what charges are reasonable and proportionate.
Default Rule vs. Discretion: While the court has broad discretion (section 168), section 169(4) establishes a presumption that the discontinuing party pays, which can be displaced only by expressly “ordering otherwise” with clear reasons.

Conclusion

The High Court’s decision in CDB Aviation v. Lloyd’s & Ors reinforces the primacy of the default costs rule under section 169(4) of the 2015 Act: a discontinuing plaintiff will pay the successful defendant’s costs unless very strong, specific grounds exist to depart from it. The judgment underscores that complex multi-party or shared trials do not, of themselves, justify a partial or capped costs order. Instead, parties must address cost-saving measures at the case-management stage and rely on the detailed adjudication process to secure proportionate outcomes. This decision will guide litigants and practitioners in strategizing claims, discontinuances and settlements against the ever-present spectre of costs exposure.