Interlocutory Costs Must Be Determined Now: “Not Possible Justly” Requires Truly Exceptional Circumstances, with Pragmatic Power to Stay Pending an Imminent Trial

1. Introduction

This Supreme Court ruling concerns costs following the Court’s dismissal of an appeal in the underlying proceedings between Irish Bank Resolution Corporation Limited (in Special Liquidation) and Irish Nationwide Building Society (plaintiffs/respondents) and Michael P. Fingleton (defendant/appellant, acting through attorneys).

The substantive appeal (determined in [2024] IESC 59) concerned the defendant’s attempt to dismiss or permanently stay the proceedings under the Court’s inherent jurisdiction on the basis that, due to the passage of time and his severe ill health, there was said to be a real or substantial risk of an unfair trial or unjust result. That attempt had failed in the High Court (Hunt J.) and in the Court of Appeal, and ultimately failed in the Supreme Court.

The present ruling addresses a narrower but practically important question: having lost an interlocutory appeal, can the unsuccessful party avoid an immediate costs order by arguing that (i) he might later win at trial on the merits, or (ii) he might later persuade the trial judge that the action cannot be fairly tried, or (iii) the documentary record is deficient in a way that may affect ultimate costs? Alternatively, if costs are awarded now, should their execution be stayed pending trial?

2. Summary of the Judgment

  • The Court reaffirmed the default rule (under s. 169 of the Legal Service Regulation Act, 2015 and the re-cast O. 99, r. 2 of the Rules of the Superior Courts) that the court determining an interlocutory application will normally determine the costs of that application, and the successful party is normally entitled to costs.
  • The Court held that departure from that default requires the unsuccessful party to show, per O. 99, r. 2(3), that “it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application”.
  • The defendant failed to identify any exceptional circumstances meeting that standard. Arguments that he might later succeed at trial (on the merits or on unfair-trial grounds), or that the documents were deficient, did not make it unjust to decide costs of this discrete interlocutory appeal now.
  • Nevertheless, because trial was imminent (listed for 6 May 2025), the Court exercised a pragmatic discretion to stay execution of the costs order pending determination of the proceedings, to facilitate potential set-off and reconciliation of costs orders at the end of trial.

3. Analysis

3.1. Precedents Cited

[2024] IESC 59

Although this costs ruling is procedurally distinct, it is anchored to the Court’s earlier substantive appeal determination in [2024] IESC 59. The costs discussion assumes the interlocutory character of what had been litigated: a discrete application to dismiss or stay proceedings on fairness grounds, rather than a final adjudication on liability. The ruling also references the earlier judgment’s observations that the case had become “more rather than less document dependent” and that issues about the documentary record were for the trial judge (not the appellate court) to evaluate in the action proper.

The key influence of [2024] IESC 59 in this costs ruling is contextual: it confirms that (i) the appeal was unsuccessful, (ii) the issue argued was interlocutory and self-contained, and (iii) certain factual/contentious matters (such as documentary adequacy) were identified as trial issues. That context supports the Court’s conclusion that costs of this appellate interlocutory phase can be determined “on the basis of the interlocutory application” without speculating about trial outcomes.

Statutory / Rules Framework: s. 169 of the Legal Service Regulation Act, 2015; re-cast O. 99, r. 2; O. 99, r. 2(3)

The operative “precedents” in this ruling are the modern costs regime:

  • s. 169 of the Legal Service Regulation Act, 2015, which forms part of the contemporary legislative framework for costs and reflects the policy shift toward clearer, more structured costs adjudication.
  • The re-cast O. 99, r. 2 of the Rules of the Superior Courts, which embodies the default position that costs typically “follow the event” for interlocutory applications, with defined and limited bases for departure.
  • O. 99, r. 2(3), which states the specific threshold for not deciding interlocutory costs immediately: “it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application”.

The Court treats this framework as decisive. The ruling is less about inventing a new discretion and more about disciplining the exercise of discretion by insisting that the rule-based threshold be met before “costs in the cause” or “reserve costs” orders are made.

3.2. Legal Reasoning

(a) The default position: decide interlocutory costs now

The Court begins from a point both parties accepted: under the 2015 Act and re-cast O. 99, the normal and intended approach is that the court which resolves an interlocutory matter should also resolve the costs consequences of that matter. This promotes:

  • finality for discrete procedural contests,
  • predictability in litigation budgeting and settlement incentives, and
  • procedural efficiency by preventing the deferral of costs disputes to an eventual trial judge who did not hear the interlocutory application.

(b) The exception: O. 99, r. 2(3) is a high bar

The Court emphasises that to depart from the default requires showing it is not possible justly to determine liability for costs by reference to the interlocutory application itself. The ruling characterises this as requiring exceptional circumstances—not merely arguable reasons of convenience or the existence of unresolved merits.

(c) Why the defendant’s “might win later” arguments failed

The defendant argued that awarding costs now could be unfair if he later: (i) successfully defends the proceedings on the merits, or (ii) demonstrates at trial that a fair trial is impossible. The Court rejected both as misconceived bases to avoid an immediate costs order because:

  • They run contrary to the rationale of the rules: if later success were enough, almost any losing party could resist interlocutory costs by pointing to the uncertainty of trial.
  • The interlocutory appeal involved a self-standing discrete issue. For costs purposes, it should be treated as a separate procedural event unless a genuine injustice prevents a fair costs decision at that stage.
  • The “unfair trial” contention was expressly recognised as potentially raisable at trial; that possibility did not mean the Court could not justly decide costs of the present interlocutory appeal now.

(d) Documentary deficiencies: relevance goes to trial, not to costs of this appeal

The defendant also relied on developments said to show the respondents’ documents were “severely deficient”. The Court held this had, at most, “very limited relevance” to interlocutory appeal costs, because documentary sufficiency was identified as a matter for the trial judge and was not to be pre-determined in this interlocutory costs context. The Court’s reasoning draws a firm line between:

  • the procedural correctness of deciding a discrete interlocutory appeal and awarding its costs, and
  • the evidential adequacy of the case at trial, which may affect substantive outcomes and possibly later costs, but does not prevent a fair costs decision for the interlocutory phase.

(e) The stay: a pragmatic, case-sensitive exercise of discretion

While refusing to defer or reserve the incidence of costs, the Court did grant a stay on the costs order pending trial. Importantly, the Court did not treat “pragmatism” as satisfying O. 99, r. 2(3); rather, it treated pragmatism as relevant to timing of enforcement, not to whether liability should be determined.

The stay was justified because:

  • trial was already listed for hearing on 6 May 2025, and
  • a short postponement of enforcement could allow efficient set-off and reconciliation of multiple costs orders at the conclusion of the proceedings.

The structure of the decision is therefore two-step: (1) decide liability for costs now (default rule; exception not met), but (2) where appropriate, manage the practicalities of enforcement by a stay to prevent wasteful interim execution.

3.3. Impact

(a) Costs practice in interlocutory appeals: reduced scope for “costs in the cause”

The ruling reinforces that, under the modern framework, “costs in the cause” (or reserving costs) is not a routine option merely because:

  • the merits remain unresolved,
  • the losing party asserts it may later win, or
  • facts relevant to the overall litigation remain contested.

Litigants should expect that discrete interlocutory contests carry their own costs consequences, decided at the time, unless they can demonstrate a concrete injustice in making that determination on the interlocutory record.

(b) Clear separation of (i) deciding costs liability and (ii) staying enforcement

The Court’s willingness to stay execution while still awarding costs clarifies an important tactical and doctrinal point: a party may fail to meet the high bar for deferring costs liability, yet still obtain a stay where the procedural posture (especially an imminent trial) makes immediate enforcement inefficient.

(c) Guidance for future “fair trial / delay / capacity” litigation

Even in litigation where one party argues that delay, health, or capacity concerns jeopardise trial fairness, this ruling indicates that:

  • those concerns do not automatically translate into special treatment on interlocutory appeal costs, and
  • the trial judge remains the primary forum for assessing how evidential or documentary limitations affect the fairness and conduct of the trial.

4. Complex Concepts Simplified

  • Interlocutory application: a procedural application made during a case (before final judgment), dealing with how the case should proceed rather than who ultimately wins.
  • Costs “follow the event”: the party who wins the application is generally awarded its legal costs of that application.
  • Costs in the cause: the costs of the interlocutory application are not decided immediately; instead, they “go with” (and are determined by) the final outcome of the overall case.
  • Reserve costs: the court postpones deciding which party should bear the costs until a later stage (often trial).
  • Stay (of a costs order): the court orders that, although a costs liability exists, it cannot be enforced (e.g., executed upon) until a later event, such as the conclusion of trial.
  • Set-off and reconciliation of costs: if each party wins different applications at different times (generating multiple costs orders), the net amount owed can be calculated at the end, avoiding unnecessary interim payments back and forth.
  • Inherent jurisdiction (in the interests of justice): a court’s power (outside specific statutes/rules) to control its own process to prevent injustice, including staying proceedings where a fair trial cannot be held.
  • O. 99, r. 2(3) “not possible justly”: a strict standard—more than inconvenience or uncertainty—requiring a persuasive showing that deciding costs now, on the interlocutory record, would itself be unjust.

5. Conclusion

This ruling crystallises a practical rule of modern Irish costs procedure: courts will normally determine costs of an interlocutory application immediately, and the losing party must satisfy the stringent test in O. 99, r. 2(3)—that it is not possible justly to decide costs on the basis of that interlocutory application—before costs are reserved or made “in the cause.”

The Supreme Court also demonstrates a measured, pragmatic counterbalance: even where the default costs order is made, the Court may stay enforcement when trial is imminent and a stay can prevent inefficiency by enabling final set-off and reconciliation. The combined effect is to strengthen the default “costs-follow-the-event” approach for interlocutory matters while preserving flexible case management on enforcement where doing so promotes efficiency without distorting the liability principles laid down by the rules.