Factual and Procedural Background
This judgment concerns an appeal by the second defendant/appellant ("the Receiver") against a High Court order regarding costs following the determination of substantive issues between the plaintiffs and the Receiver. The substantive case involved claims brought by the plaintiffs against the Receiver for conspiracy, negligence, and breach of duty related to the marketing and sale of a minority shareholding. The conspiracy claims were withdrawn by the plaintiffs during the trial, and the negligence and breach of duty claims were subsequently compromised by agreement. The trial judge made no order as to costs between the plaintiffs and the Receiver, effectively setting off the costs each party would have been entitled to recover against each other. The appeal challenges aspects of this costs order.
Legal Issues Presented
- Whether the High Court judge was correct in finding that the plaintiffs were entitled to their costs against the Receiver in respect of the negligence and breach of duty claims, particularly whether the letter dated 20th February 2015 constituted "the event" resolving those claims for the purpose of costs under Order 99 of the Rules of the Superior Courts.
- Whether the High Court judge erred in declining to award the Receiver his costs on a solicitor and own client basis in respect of the conspiracy claims withdrawn by the plaintiffs.
- Whether the High Court judge was correct to set off the costs awarded to each party against each other, resulting in no order as to costs overall.
Arguments of the Parties
Appellant's Arguments (Receiver)
- The Receiver contended that the costs of the withdrawn conspiracy claims should have been awarded on a solicitor and own client basis, as these claims were unmeritorious and ought never to have been brought.
- The Receiver argued the trial judge erred in deciding the letter of 20th February 2015 was "the event" for costs purposes and that the negligence and breach of duty claims were compromised on that basis.
- The Receiver submitted that the costs of the conspiracy claims on a solicitor and own client basis would exceed the plaintiffs' costs on the negligence claims, and thus the trial judge erred in exercising his discretion by making no order as to costs.
- He requested this Court to set aside the costs order and award him costs in respect of both claims, with the conspiracy claim costs on a solicitor and own client basis.
Respondents' Arguments (Plaintiffs)
- The plaintiffs argued that the costs order was correctly balanced, pointing out that their costs included those of a successful application for interim and interlocutory injunctive relief to restrain the Receiver from marketing and selling the shares.
- They contended that the trial judge was correct in concluding that the justice of the case was met by making no order as to costs, effectively setting off the competing costs claims.
- The plaintiffs submitted that the letter dated 20th February 2015 constituted a reasonable basis for the discontinuance of the negligence claims and that the Receiver could have sent such a letter earlier, but did not.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Spencer v. Kinsella [1999] IESC 16 |
Discretion of trial judge in awarding costs and appellate reluctance to interfere absent clear error. |
The Court emphasized the wide discretion of the trial judge in costs matters and the reluctance of appellate courts to interfere with that discretion. |
| Geaney v. Elan Corporation plc [2005] IEHC 111 |
Basis for awarding solicitor and own client costs as a mark of court's displeasure for unmeritorious conduct. |
The Receiver relied on this case to argue for solicitor and own client costs due to the plaintiffs' unmeritorious conspiracy claims, but the Court did not find it warranted here. |
| Ruby Property Co. Ltd and McNally v. Kilty and Superquinn (unreported High Court 31st January 2003) |
Conditions under which breach of duty claims against a Receiver may succeed. |
The trial judge considered this authority but rejected the Receiver's submission that the negligence claim must fail absent a binding sale at undervalue. |
| Dunne v. National Maternity Hospital [1989] I.R. 91 |
Principles governing professional negligence. |
The Court explained that the question of negligence is one of law for the judge and applied the Dunne principles to assess the Receiver's conduct. |
| Nash v. DPP (unreported Supreme Court 24th October 2016) |
Limits of appellate interference with trial judge's costs discretion. |
The Court cited this case to affirm that appellate intervention is only appropriate where there is an error of principle or clear abuse of discretion. |
| Shell E&P Ireland Ltd v. McGrath (No.3) [2007] 4 I.R. 277 |
Costs on discontinuance under Order 26 of the Rules of the Superior Courts. |
Referenced to explain that costs on discontinuance are to be determined on what is just between parties, not by applying Order 99. |
Court's Reasoning and Analysis
The Court first addressed the trial judge's application of Order 99 of the Rules of the Superior Courts to determine costs based on "the event." It found that this was an error of principle because the discontinuance of the claims by the plaintiffs required leave of the Court under Order 26, which governs discontinuance and the associated costs. The proper approach was to consider what costs order was just between the parties under Order 26.
Despite this error in legal approach, the Court noted that the trial judge effectively performed the balancing exercise required under Order 26 by weighing the competing costs claims arising from the withdrawal of the conspiracy claims and the discontinuance of the negligence and breach of duty claims.
The Court examined the circumstances surrounding the claims, including the plaintiffs' withdrawal of the conspiracy claims after discovering no evidence of dishonesty or mala fides, and the compromise of the negligence claims following a letter from the Receiver proposing a new marketing strategy without admission of wrongdoing.
The Court accepted the trial judge's view that the plaintiffs were entitled to their costs of the negligence and breach of duty claims given the limited marketing campaign by the Receiver and the evidence of Mr. Luby, who, while not concluding negligence, indicated he would have acted differently.
Regarding the conspiracy claims, the Court recognized the Receiver's argument for solicitor and own client costs due to the unmeritorious nature of those claims but upheld the trial judge's discretion to award costs on a party and party basis, noting the wide margin of appreciation afforded to the trial judge.
The Court also agreed with the trial judge's decision to set off the costs awarded to each party against each other, resulting in no order as to costs overall, as a just outcome in all the circumstances.
The Court declined to definitively decide whether the letter dated 20th February 2015 could have been sent earlier as a Calderbank letter but noted that the Receiver had sight of the expert report before the hearing and might have done so.
In sum, the Court concluded that although the trial judge erred in applying the wrong procedural rule, the ultimate costs order was a proper exercise of discretion and just between the parties, thus warranting affirmation.
Holding and Implications
The Court DISMISSED the appeal against the costs order made by the High Court.
The effect of this decision is that the costs order whereby the plaintiffs and the Receiver bear their own costs in respect of their competing claims is upheld. The Receiver is not entitled to solicitor and own client costs for the withdrawn conspiracy claims, and the plaintiffs are entitled to their costs of the negligence and breach of duty claims, but these are effectively set off against each other resulting in no order as to costs. No new precedent was established; rather, the Court reaffirmed the broad discretion of the trial judge in costs matters and the application of Order 26 to discontinuance costs.