Ashdrum Lodge Ltd [Trading as Kiernan Homes] v Barbouti [No. 2] (Approved)

Factual and Procedural Background

This matter arose from a 28-day High Court trial between Plaintiff and Defendant, with proceedings also involving Third parties by way of a third party notice. Judge Stack delivered a principal judgment following the trial and this subsequent judgment addresses applications on costs made by the Defendant and the Third parties. The Defendant was unsuccessful on the vast majority of contested issues but obtained an award of €57,510.57 (50% of damages for defective haunching of garden walls) together with the full cost of underpinning the foundations to the Warehouse. The Defendant had earlier settled with the Contractor on Day 4. The Third parties conceded liability in relation to the two issues giving rise to the award before the trial. The Third parties made a Calderbank offer for €170,250 plus costs (and a waiver of professional fees) five days before the trial, open until the end of Day 2, which was not accepted. The Third parties applied for costs on the Circuit Court scale up to and including Day 1 and High Court costs from Day 2 onwards, together with a differential costs order; the Defendant sought 50% of her costs.

Legal Issues Presented

1. Whether s.17 of the Courts Act, 1981 (and in particular ss.17(1) and 17(5)) applies to third party proceedings and, if so, what its effect is on the scale and allocation of costs.
2. Whether the Calderbank offer made by the Third parties shortly before trial should be afforded weight in the exercise of the court's discretion on costs.
3. How the court should exercise its discretion under ss.168 and 169 of the Legal Services Regulation Act, 2015 in allocating costs between the Defendant and the Third parties (including the question of a differential costs order and the appropriate cut-off between Circuit Court and High Court costs).

Arguments of the Parties

Defendant's Arguments

• Section 17 of the Courts Act, 1981 does not apply to third party actions because of its language referring to "plaintiff" and "defendant".
• The Calderbank offer was made too late before trial to be given weight in the exercise of the court's discretion on costs.
• The Defendant sought an award of 50% of her costs of the lengthy trial.

Third parties' Arguments

• The Defendant's success was limited; she should be confined to costs on the Circuit Court scale up to and including Day 1 because the award falls within Circuit Court jurisdiction.
• Reliance on the Calderbank offer (€170,250 plus costs and waiver of fees) made five days before trial and open until end of Day 2; costs up to Day 1 largely incurred by then.
• Reliance on s.17(1) of the Courts Act, 1981 to limit recovery to Circuit Court costs and, alternatively, reliance on s.17(5) to make a differential costs order for the additional High Court costs incurred up to and including Day 1.
• Claim for High Court costs from Day 2 onwards and for the difference between High Court and Circuit Court costs for the period up to and including Day 1 (a differential costs order).

Table of Precedents Cited

Court's Reasoning and Analysis

Judge Stack reviewed the trial record and evidence and concluded the Defendant was unsuccessful on virtually all issues tried; only small concessions led to the limited award obtained. The court analysed statutory provisions: ss.168–169 of the Legal Services Regulation Act, 2015 (governing costs) and s.17 of the Courts Act, 1981 (and s.14 of the Courts Act, 1991 amendments). The court held s.17(1) is mandatory but directed at the choice of jurisdiction at the time of issue and was inapplicable because the principal claims required High Court issue (well in excess of Circuit Court jurisdiction). Section 17(5) is discretionary at the conclusion of proceedings but, because of language and the practicalities of third party procedure, its direct application to third party proceedings was doubtful. Accordingly the court preferred to exercise its discretion under s.168 of the 2015 Act.

The court assessed partial success under s.168(2)(d) and related factors in s.169, finding the Defendant recovered roughly 4% of claimed relief and succeeded only on issues conceded pre-trial. The Calderbank offer (€170,250 plus costs and waiver of fees), though made shortly before trial, was held to be material and relevant to the exercise of discretion because the Defendant's case had been unclear and some claims had crystallised late; the court distinguished authorities cited by the Defendant and gave weight to the offer. Balancing conduct, reasonableness, partial success, and the timing/terms of the offer, the court limited the Defendant's recoverable costs in a manner analogous to s.17(1) and made orders reflecting the Third parties' substantial overall success while allowing a modest discount to the Defendant for the conceded issues.

Holding and Implications

Order:

• That the Defendant be awarded her costs on the Circuit Court scale (with a certificate for Senior Counsel) up to and including Day 1 of the trial;
• That the Third parties be awarded their costs from Day 2 onwards;
• That the Third parties be granted a "differential costs order" analogous to an order pursuant to s.17(5)(a)(ii) in respect of the additional costs incurred by them up to and including Day 1 of the trial (the difference between High Court costs actually incurred and the Circuit Court costs which they ought to have incurred).

Implications: The decision allocates costs between the Defendant and the Third parties in accordance with the exercise of discretion under s.168 of the 2015 Act, giving effect to the Third parties' near-complete success while crediting the Defendant for conceded issues. The opinion does not purport to establish a novel precedent beyond the application of existing statutory principles and the court's factual assessment in this case.