1. Introduction
This costs judgment addresses an exceptional question: when may unsuccessful litigants recover costs from a successful State authority because their litigation has clarified the law for the wider public benefit?
The underlying proceedings concerned tax debts owed by two defendant taxpayers. They challenged the legality of arrangements between the Revenue Commissioners and solicitors’ firms under which conditional “uplift” fees depended on the amount of unpaid tax recovered. Their challenge required the Supreme Court to examine maintenance, champerty and the legal status of conditional litigation fees.
The Collector General ultimately succeeded. Nevertheless, the Court refused to award him costs and awarded the defendants half their Supreme Court costs. The significance of the decision lies not in establishing a general immunity from costs for public-interest litigation, but in applying the exceptional jurisdiction recognised in Little v. Chief Appeals Officer (No.2) [2024] IESC 53 to a defence raised in tax-recovery proceedings.
2. Background and the Earlier Merits Decision
In Howley v. Howard [2026] IESC 34, delivered on 17 June 2026, the Supreme Court upheld the challenged fee arrangements, although its reasoning differed appreciably from that of the Court of Appeal. In particular, it held that the conditional uplift structure in clause 5.3 of the relevant contracts was lawful having regard to section 149(1)(a) of the Legal Services Regulation Act 2015.
The earlier judgment also addressed the legality of “no foal, no fee” arrangements. The costs judgment expressly acknowledges that the broader observations supporting those arrangements were strictly obiter. That distinction matters: the present decision should not be read as converting every observation in the merits judgment into a binding holding.
The Collector General had obtained substantial judgments against both defendants and was entirely successful in the proceedings. The defendants nevertheless maintained that their challenge had been reasonable because the legislation and authorities were difficult, the issues were important, and they had secured a correction to the Court of Appeal’s reasoning about whether a champertous agreement could provide a defence to otherwise valid proceedings.
They also relied on concessions made by the Collector General concerning the extent to which he intended to charge the conditional uplift fee. The costs judgment records that submission, but its decisive reasoning centres on the systemic importance and public benefit of the appeal.
3. Summary of the Decision
The Court held that the defendants had narrowly met the heightened standard for an affirmative costs award in favour of an unsuccessful party. Their appeal had produced necessary and overdue clarification of legal rules fundamental to litigation practice and access to justice.
| Proceedings |
Costs outcome |
| High Court |
No order as to costs. |
| Court of Appeal |
No order as to costs. |
| Supreme Court |
The defendants awarded 50% of their costs, to be adjudicated if not agreed. |
| Attorney General and Law Society of Ireland, appearing as amici curiae |
Each to bear its own costs, as agreed. |
The costs disposition did not disturb the tax judgments or the Collector General’s substantive success.
4. Legal Framework: Success Creates a Presumption, Not an Absolute Right
Section 169(1) of the Legal Services Regulation Act 2015 supplied the starting point. Because the Collector General was entirely successful, he was presumptively entitled to costs. However, the provision permits consideration of other matters, including whether it was reasonable to raise and pursue a particular issue.
The Court distinguished two exercises of discretion:
- Protecting the unsuccessful party from the winner’s costs: making no order as to costs.
- Requiring the successful party to contribute to the loser’s costs: making an affirmative costs award against the successful State authority.
The second requires a materially stronger justification. Establishing that proceedings concern a point of general public importance does not, by itself, justify either result.
5. Precedents Cited and Their Influence
5.1 Howley v. Howard [2026] IESC 34
The earlier merits judgment supplied both the background and the principal justification for the exceptional costs disposition. It demonstrated the complexity of the statutory history and case law, the significance of conditional fee arrangements, and the extent of the clarification obtained through the appeal.
The defendants lost the substantive challenge but obtained important revisions to the Court of Appeal’s reasoning. That distinction helped explain why their litigation could possess substantial public value despite producing no ultimate victory for them.
5.2 Little v. Chief Appeals Officer (No.2) [2024] IESC 53
This was the controlling authority. Murray J.’s judgment identified the circumstances in which unsuccessful litigation involving the State may justify departure from ordinary costs consequences.
Its initial framework concerns proceedings involving a State body, public-law relief, and a point of general public importance. A challenge may arise through a defence or counterclaim rather than through proceedings commenced against the State. Nor must the litigant act solely for the public benefit: advancing a personal interest is not disqualifying.
The further considerations include the merits and uncertainty of the legal issue, its systemic significance, its effect on a wider class, and the potential deterrent effect of costs. Crucially, paragraph 62 reserves affirmative awards to unsuccessful parties for cases of real substance where clarification serves a clear and significant public interest on a matter of fundamental importance.
Hogan J. considered the present litigation almost a paradigmatic example of that exceptional category. Nevertheless, he stressed that the Little factors are judicial guidelines, not statutory language or a rigid checklist.
5.3 Little v. Chief Appeals Officer (No.1) [2023] IESC 25
This decision provided the substantive background to the later costs ruling in Little. A claimant unsuccessfully challenged decisions concerning Domiciliary Care Allowance for her child, including a refusal to revise an earlier decision under section 317(1)(a) of the Social Welfare Consolidation Act 2005.
Its relevance was contextual: the framework in Little (No.2) arose after an unsuccessful challenge, illustrating the distinction between losing on the merits and the separate evaluation of costs.
5.4 Pervaiz v. The Minister for Justice and Equality and ors. [2020] IESC 73
As incorporated into the guidance from Little, this authority establishes that a point of general public importance is necessary, but insufficient, for the relevant exemption from adverse costs. The issue must also involve meaningful uncertainty or a substantial question about whether established law should change.
The defendants satisfied that requirement because the governing statutes were convoluted and the maintenance and champerty authorities were difficult to reconcile.
5.5 ELG v. HSE (No. 2) [2022] IESC 26
This authority supports considering whether litigation will significantly affect the wider category of persons concerned by the legal issue. Hogan J. adopted the significance attributed to that consideration by Baker J.
Although these defendants sought a personal advantage, the clarification affected litigants and practitioners throughout the jurisdiction. Their private motives therefore did not prevent recognition of the appeal’s wider public value.
5.6 Lee v. Revenue Commissioners [[2021] IECA 114]
Cited through Little, this decision concerns the unfairness of exposing litigants to costs where avoidably unclear legislation makes litigation necessary. In the guidance reproduced by the Court, even a weak but stateable claim may sometimes justify protection in those circumstances.
Hogan J. did not apply that particular consideration here: the defendants’ arguments could not be characterised as weak. Legislative obscurity remained relevant through the broader assessment of uncertainty, substance and public benefit.
5.7 O'Keeffe v. Hickey and ors. [2009] IESC 39 and Cork County Council v. Shackleton [2007] IEHC 334, [2011] 1 IR 443
These authorities underpin the distinct treatment sometimes available to a genuine test case: a pathfinder selected from a larger body of pending claims to resolve issues governing the others.
The Court expressly held that these proceedings were not such a test case. Their importance did not depend on that designation; it arose from the substantive clarification they achieved.
5.8 Corcoran [v. Commissioner of An Garda Síochána [2021] IEHC 11]
This authority, reproduced in the quotation from Little, supports considering whether costs would significantly deter the category of persons affected by the legal issue.
The Court treated deterrence as broadly neutral here. The defendants already faced substantial tax judgments, which might diminish the practical influence of additional costs, but further costs exposure can nevertheless deter litigation.
5.9 Compania General de Tabacos v. Collector of Internal Revenue 275 US 87 at 100 (1927)
The Court invoked Holmes’ description of taxes as “what we pay for civilized society”. This was not an authority defining the costs jurisdiction. It reinforced the countervailing significance of the defendants’ failure to discharge their tax obligations and helped explain why the Court refused to award full costs.
6. Analysis of the Court’s Reasoning
6.1 A public-interest challenge can arise within debt-recovery proceedings
The principal threshold difficulty was that the proceedings were tax-debt actions rather than conventional judicial review proceedings. Similar questions about litigation funding could also arise between private parties.
The Court nevertheless found a sufficient public-law connection. The Collector General was exercising statutory tax-collection functions under the Taxes Consolidation Act 1997. The defendants questioned whether those functions could lawfully be exercised through proceedings allegedly affected by champerty.
Hogan J. described the argument as a tort-based defence to a statutory claim. Its substance, rather than its procedural form, brought it within the public-interest framework. His comparison with false-imprisonment claims arising from allegedly unlawful statutory detention illustrated that a claim framed through tort can still possess a sufficiently close public-law connection.
This reasoning does not make every dispute involving a State body public-interest litigation. The connection here lay in the challenge to the lawful exercise of a statutory function.
6.2 The appeal had genuine merits and systemic significance
The Court repeatedly emphasised that the defendants’ case was substantial. The legislation was obscure, the authorities were inconsistent, and the disputed arrangements had major practical importance.
In particular, “no foal, no fee” arrangements play a significant role in access to justice. Clarifying their legal position benefited not merely these defendants but litigants, solicitors and the legal system generally. The appeal therefore went beyond resolving an isolated dispute.
6.3 Public benefit justified more than protection from adverse costs
The decisive step was the conclusion that the public benefit transcended the defendants’ private interests. Their appeal enabled a comprehensive reconsideration of maintenance and champerty and an authoritative resolution of issues not previously definitively addressed by the Supreme Court.
The Court considered it unjust that the parties who facilitated that clarification should bear all the associated costs. That justified crossing the higher threshold from simply withholding costs from the successful party to awarding a limited contribution to the unsuccessful parties.
6.4 Misconduct and substantive failure limited the award
Three considerations prevented anything approaching full recovery:
- The defendants remained unsuccessful, and the statutory presumption favouring the successful party retained substantial weight.
- The proceedings arose from their serious failure to pay lawfully assessed taxes.
- They had made wholly unsubstantiated allegations of fraud in the High Court and Court of Appeal.
The 50% Supreme Court award balanced those factors against the exceptional public value of the appeal. The Court’s emphasis on the need to appeal to correct important reasoning also helps explain the stage-specific outcome: no costs order below, but a partial affirmative award in the Supreme Court.
7. Complex Concepts Simplified
- Maintenance
- Traditionally, improper support for another person’s litigation by someone without sufficient justification or interest in it.
- Champerty
- A form of maintenance involving an arrangement to share in the proceeds of litigation. The earlier judgment examined how these doctrines interact with modern fee arrangements; it did not treat all outcome-related fees as unlawful.
- Conditional uplift fee
- An additional fee dependent on a specified outcome. Here, the uplift was linked to the unpaid taxes recovered.
- “No foal, no fee”
- A success-dependent fee arrangement under which the solicitor’s entitlement to fees depends on achieving the relevant result. Its precise operation depends on the agreement.
- Obiter
- A judicial observation not necessary to decide the case. It may be influential without having the same binding status as the essential reasoning.
- No order as to costs
- Neither party is ordered to reimburse the other’s costs for the relevant proceedings.
- Costs adjudication
- The process for determining recoverable costs if the parties cannot agree them. An award of 50% does not automatically approve half of every amount billed.
8. Potential Impact
First, procedural form is not decisive. A defendant challenging the legality of State action can potentially invoke public-interest costs principles without having initiated judicial review proceedings.
Second, personal interest and public benefit can coexist. Litigants need not be disinterested campaigners. What matters is the substantive public importance and value of the legal clarification achieved.
Third, affirmative awards remain exceptional. Novelty, permission to appeal or public importance alone does not establish entitlement. The litigation must satisfy the substantially higher justification required for shifting costs to a successful State authority.
Fourth, conduct remains important. Public value does not erase tax default, unsupported allegations or ultimate failure. Those considerations may reduce or defeat a claimed costs benefit.
Finally, the decision favours calibrated outcomes. Courts can distinguish between litigation stages and award only a proportion of costs. The judgment supplies a concrete application of existing discretion, not a universal 50% rule or a general entitlement for unsuccessful litigants.
9. Conclusion
The judgment confirms that an unsuccessful defence to statutory tax-recovery proceedings may exceptionally justify a partial costs award where it secures authoritative clarification of fundamental, system-wide legal questions.
Its central lesson is one of balance: success remains the starting point, but exceptional public benefit can justify departure from ordinary costs consequences. Here, that benefit warranted half the defendants’ Supreme Court costs—notwithstanding their substantive defeat, tax defaults and unsupported allegations below.