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Verbenagrove Limted v Evans and Anor (Approved)
Factual and Procedural Background
This supplemental judgment concerns the allocation of legal costs in landlord and tenant proceedings. The Tenant claimed a statutory right to a new tenancy, while the Landlords relied on purported re-entry and forfeiture. [1][2][3]
The Circuit Court conducted a modular trial. The High Court rejected the Landlords’ defence in the first module, and the terms of the new tenancy were subsequently fixed in the second module without appeal. [3]
The High Court held that the Tenant was entirely successful in the first module but considered whether the Tenant’s pursuit of certain alternative issues justified a costs adjustment. [4][5]
Legal Issues Presented
- Whether the Tenant was presumptively entitled to costs as the entirely successful party. [6][3][4]
- Whether the Tenant’s pursuit of alternative arguments and the equitable set-off claim justified reducing its recoverable costs. [7][8][5]
- Whether the Landlords’ appeal and the source of the decisive legal point justified departing from the ordinary costs position. [9][10][11]
- Whether the Tenant’s costs should be adjudicated on a legal practitioner and client basis. [12][13][14]
Arguments of the Parties
Landlords’ Arguments
- The Tenant should not receive full costs because it was unsuccessful on several issues and the decisive point was identified by the court rather than initially advanced by the Tenant. [5][11][15]
- The Tenant’s equitable set-off claim was weak, unsuccessful, and materially increased the Circuit Court hearing and costs. [16][17][18]
- The Landlords argued that the Tenant succeeded on the narrow service issue, while the peaceable re-entry issue was unnecessary and disproportionate to pursue. [19][20][21]
- The Landlords submitted that the Circuit Court’s reasoning differed from the High Court’s reasoning and that the Circuit Court costs order should therefore be adjusted. [22][23]
- The Landlords contended that they had no reasonable alternative but to appeal because the Circuit Court had not addressed important arguments and because the costs claim exceeded €400,000. [24][25]
- The Landlords argued that the point derived from Crofter Properties should not benefit the Tenant because it was initially raised by the court. [15][26]
Tenant’s Position
- The Tenant pursued the alternative arguments to protect its statutory right to a new tenancy against the Landlords’ pleaded defence of re-entry and forfeiture. [27][28]
- The Tenant sought costs on a legal practitioner and client basis. [12][29]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Little v. Chief Appeals Officer [2024] IESC 53 | Whether a party is “entirely successful” identifies the party entitled to the statutory costs presumption. | The court used the practical outcome of the proceedings to identify the Tenant as the successful party. [30][3] |
| In the matter of M.V. Lady Magda [2021] IECA 51 | “Reasonableness” requires more than good faith and does not require correctness on the issue. | The court assessed whether the Tenant had an objective basis for pursuing alternative issues. [31][32] |
| In the matter of the MV Lady Magda [2021] IECA 51 | An unsuccessful appellant may face liability for both sets of costs even where the appeal was brought in good faith. | The principle supported maintaining the Tenant’s presumptive entitlement to costs at both levels. [33][34] |
| Crofter Properties Ltd v. Genport Ltd [2007] IEHC 80, [2007] 2 I.L.R.M. 528 | The legal character of statutory occupation between expiry of a tenancy and determination of a new-tenancy application. | The decision was central to holding that the purported re-entry could not defeat the Tenant’s statutory claim. [35][36][37][38] |
| Casey v. Minister for Housing, Planning and Local Government [2021] IESC 42 | A judge may invite submissions on an unargued or incompletely addressed legal point to ensure a correct and fair result. | The court relied on this principle in explaining why it raised the Crofter Properties point. [39] |
| Trafalgar Developments Ltd v. Mazepin [2020] IEHC 13 | The former distinction between party-and-party and solicitor-and-client costs. | The court required further submissions because the current statutory regime may apply the same reasonableness requirements to both bases of adjudication. [29][40][13] |
Court's Reasoning and Analysis
The court began with the statutory default that an entirely successful party is ordinarily entitled to costs, subject to reasons for departing from that position. “Entirely successful” is determined by the substantive and practical outcome, not by success on every issue. [6][41][42]
Because the Tenant obtained the new tenancy it sought, it was entirely successful in the first module and presumptively entitled to the costs of both the Circuit Court proceedings and the High Court appeal. The different reasoning adopted by the two courts did not alter that conclusion. [3][43][44][45][46]
The court accepted that costs may be allocated by reference to distinct issues where an issue is separable, materially affects costs, and was not unreasonably pursued. Minor issues should not ordinarily be separately priced through a granular accounting exercise. [47][48][49][50]
The equitable set-off claim was a distinct issue supported by substantial evidence and occupied approximately 40% of the Circuit Court hearing. Given its weakness, lack of prior ascertainment, and abandonment on appeal, the court attributed 30% of the Circuit Court costs to it and directed, through a broad-brush set-off, that the Tenant recover only 40% of its Circuit Court costs. [51][18][52][53][54]
No separate adjustment was made for the Landlords’ limited preparation on the repairs issue before the High Court because the resulting costs were de minimis in the context of the six-day appeal. [55][56]
The court rejected the argument that the Landlords’ criticisms of the Circuit Court justified an appeal-related costs reduction. The Landlords received a full rehearing and remained unsuccessful on the merits; an excessive costs bill could instead be challenged through statutory costs adjudication. [57][58][34][59]
The fact that the court raised the Crofter Properties point did not reduce the Tenant’s entitlement. After the point was raised, the Tenant pursued it and the Landlords contested it, making the issue necessary to determine the proceedings and causing additional costs. [36][26][60][61][62]
The Tenant’s alternative arguments concerning service, peaceable re-entry, and VAT invoices were reasonable to pursue. The narrow service issue took minimal time; the broader service issue was relevant to whether the Landlords sought to contrive a forfeiture; the peaceable re-entry argument was a reasonable complementary answer to the pleaded defence; and the VAT issue had potential to affect the alleged arrears and took immaterial time. [63][64][65][66][28][67][68][69][70]
The court reserved determination of the Tenant’s application for costs to be adjudicated on a legal practitioner and client basis and directed further written submissions on the practical and legal differences between that basis and ordinary party-and-party adjudication. [40][13][71][72]
Holding and Implications
ORDERED: The Tenant was entirely successful in the first module and was presumptively entitled to costs for both the High Court appeal and the Circuit Court proceedings. [73][74]
The Tenant was awarded the costs of the High Court appeal and 40% of the Circuit Court costs relating to the first module. The costs are to be measured by the County Registrar under the Legal Services Regulation Act 2015. [75][76]
The application for adjudication on a legal practitioner and client basis was reserved for a further judgment, with further submissions directed. [77][72]
The direct consequence is that the Tenant recovers substantial costs, subject to the specified reduction for the equitable set-off claim and the subsequent determination of the costs-measurement basis. [78][79][80]
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