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1. This
judgment is concerned with four applications by the Applicant pursuant to Order
99, Rule 38(3) of the Rules of the Superior Courts, 1986 (the Rules) to review
the taxation of certain items allowed by the Taxing Master on the taxation of
the following costs, namely:-
2. All
of the foregoing costs were taxed by the Taxing Master pursuant to two Orders
dated 29th July, 1994 made by the Tribunal of Inquiry, which has come to be
known colloquially as the Beef Tribunal, which was established by Order of the
Minister for Agriculture and Food made on 31st May, 1991 pursuant to the
resolution of Dail Eireann passed on 24th May, 1991 and a resolution of Seanad
Eireann passed on 29th May, 1991.
3. By
an Order dated 29th July, 1994, having recited,
inter
alia
that on 21st June, 1991 the Companies had been granted authorisation under
Section 2(b) of the Tribunals of Inquiry (Evidence) Act, 1921 (the Act of 1921)
by the Tribunal to be represented before it by counsel instructed by solicitor,
and the effect of Section 6 of the Act of 1979, the Tribunal ordered as follows:-
4. An
Order in similar terms, but subject to one variation, was made in favour of Mr.
Goodman who had also been granted representation before the Tribunal on 21st
June, 1991. The variation was that the Order in favour of Mr. Goodman provided
that his costs of employing a solicitor and two counsel should be taxed on a
party and party basis.
5. During
the course of the Tribunal objection had been taken on behalf of the State to
the firm of solicitors retained by the Companies and Mr. Goodman, A&L
Goodbody, acting for the Companies and Mr. Goodman in connection with
allegations which the Tribunal was investigating in relation to export credit
insurance. Following that objection, another firm of solicitors, Rory
O'Donnell & Co. was retained in connection with export credit issues and
that firm instructed the same team of barristers as had been instructed by
A&L Goodbody in connection with general issues. A consequence of the
splitting of representation was that separate bills of costs were presented and
there were separate taxations in relation to representation in connection with
export credit general issues and the other issues which arose before the
Tribunal.
6. The
taxation of the two bills of costs presented by the Companies and Mr. Goodman
in connection with general issues commenced before the Taxing Master on 24th
October, 1995. It was interrupted by an Application for judicial review in
this Court entitled "The Minister for Finance, Applicant v. Taxing Master James
Flynn, Respondent and Goodman International and Laurence Goodman, Notice
Parties (Record No. 292 J.R. of 1995)" (the Judicial Review proceedings) in
which judgment was delivered by Carroll J. on 9th February, 1996. The taxation
was resumed on 8th May, 1996 and continued until 13th June, 1996. The Taxing
Master ruled on the taxation in a comprehensive Report running to 206 pages on
30th July, 1996.
7. The
taxation of the two bills of costs in connection with export credit issues
commenced before the Taxing Master on 17th June, 1996 and he gave his ruling on
30th July, 1996 in a Report of that date.
8. Objections
to allowances made by the Taxing Master on both taxations were carried in by
the Minister for Finance (the Minister) pursuant to Order 99, Rule 38(1) of the
Rules. The objections were supported by written submissions, to which the
Companies and Mr. Goodman responded in written replies. The hearing of the
objections commenced before the Taxing Master on 30th January, 1997 and
concluded on 4th February, 1997. The Taxing Master ruled on the objections on
18th April, 1997 in two Reports of that date in which he disallowed all of the
objections and affirmed his allowances.
9. On
the taxation, the Companies and Mr. Goodman were represented by two legal cost
accountants, Arnold Lowe and Paul Behan, instructed by solicitors, and the
Minister was represented by a legal cost accountant, Peter Fitzpatrick,
instructed by a solicitor. No
viva
voce
evidence was adduced on the taxation. However, the Taxing Master had before
him the bills of costs and the documentation and other data generated by the
legal teams and other advisers in connection with the representation of the
Companies and Mr. Goodman before the Tribunal. Some
viva
voce
evidence was adduced on the hearing of the objections and, in so far as it is
necessary, I will refer to it later.
11. Rule
38(4) provides that the application shall be made by motion on notice and
further provides as follows:-
13. The
disbursements other than by way of counsels' fees were apportioned between the
general issues bills and the export credit issues bills on a 70:30 basis.
14. In
the course of the hearing of the review, a number of issues of principle arose
on some of which the parties offered very divergent views. The issues which
arose related to:-
15. On
the issue of the proper scope and the standard of the review, it was submitted
on behalf of the Companies and Mr. Goodman that the proper approach for the
Court to adopt on the review is as follows:-
16. The
jurisdiction of this Court to review the determination of the Taxing Master on
objections carried in before him to the taxation is derived from Order 99, rule
38(3), which I have already quoted in part. The nature and range of costs
allowable on taxation, whether by the Taxing Master or by the Court on review,
is also governed by Order 99. In the case of taxation on a party and party
basis, Order 99, rule 10(2) provides that on a taxation on that basis:-
18. The
provisions of the Rules, which I have quoted, replicate the corresponding
provisions of the Rules of the Superior Courts, 1962. Over the past 30 years,
a consistent line of authority has emerged as to the proper approach to be
adopted by this Court in applying those provisions.
19. Kenny
J. then went on to consider the statutorily prescribed qualification for office
of Taxing Master in the following passage at page 133-4:-
20. The
observations of Kenny J. were considered in
Dunne
-v- O'Neill
,
[1974] I.R. 180. At issue in that case was the disallowance by the Taxing
Master of disbursements made by the plaintiff's solicitor for fees to counsel.
On the changes wrought by the 1962 rules, Gannon J. stated as follows (at page
191):-
21. It
was submitted on behalf of the Companies and Mr. Goodman that, not only do the
changes introduced in the 1962 Rules not warrant such a conclusion, but that
Kenny J. at no point in his judgment expressly stated that the pre-existing
requirement of an error in principle had been abrogated.
22. While
it is true that the in passage from the judgment in
Lavan
-v- Walsh (No. 2)
which I have quoted above, Kenny J. did not expressly state that, on an
application to review since the 1962 Rules were introduced, the Court is
obliged to consider and adjudicate upon the amounts allowed by the Taxing
Master, for any item irrespective of whether the Taxing Master erred in
principle or not, in my view, it is beyond question that that was what he
intended to convey. He had embarked on his comparison of the 1962 Rules and
the earlier Rules having stated that the many cases in Ireland on the earlier
Rules established that the Court would not interfere with the amounts allowed
by the Taxing Master on the taxation of a bill between party and party or
between a solicitor and own client "unless it were shown that he had made a
mistake in principle" and he cited the relevant authorities.
23. Earlier
in his judgment, at page 189, Gannon J. had stated that it is not part of the
function of the Taxing Master on taxation, or of the Court on review, to
examine the nature or quality of the work done by or required of counsel or to
assess, by measurement of fees, the value of counsel's work.
24. The
next landmark decision in the formulation of the modern jurisprudence on
taxation of costs was the decision of Hamilton J., as he then was, in
Kelly
-v- Breen
,
[1978] I.L.R.M. 63. Both solicitor's disbursements by way of fees to counsel
and the solicitor's general instruction fee were at issue on that review. In
the context of the review of the general instruction fee, Hamilton J.
considered the judgment of Parke J. in
Irish
Trust Bank Limited -v- Central Bank of Ireland
,
[1976-7] I.L.R.M. 50, the decision of Kenny J. in
Lavan
-v- Walsh (No. 2)
and the decision of Gannon J. in
Dunne
-v- O'Neill
and he stated as follows (at page 71):-
25. In
the context of the review of counsel's fees, Hamilton J. stated that the
general principles laid down by Gannon J. in
Dunne
-v- O'Neill
were correct and he went on to set out nine principles applicable to the
taxation of counsel's fees, stating as follows in the ninth (at page 69):-
26. Prior
to the enactment of the Act of 1995, the principles enunciated in
Dunne
-v- O'Neill
and
Kelly
-v- Breen
were consistently followed and, indeed, approved by the Supreme Court. In
The
State Richard F. (Gallagher Shatter & Company) -v- De Valera
,
[1991] 2 I.R. 198, Finlay C.J. stated that those decisions had accurately and
to a very large extent comprehensively set out the principles which were
applicable to the function of the Taxing Master in relation to disbursements
made by a solicitor on behalf of his client by way of counsel's fees. While
the authorities have continued to acknowledge the special knowledge and
experience of the Taxing Master in relation to costs, there has been no
suggestion that under the Rules now in force the Court is only entitled to
intervene where the Taxing Master proceeded upon a wrong principle.
27. Recent
authorities in relation to taxations which pre-dated the Act of 1995 have
emphasised the different function of the Taxing Master, and of this Court on
review, in relation to the solicitor's general instruction fee and solicitor's
disbursements. In the case of the solicitor's general instruction fee the
function of the Taxing Master is to determine the appropriate fee (
Best
-v- Wellcome Foundation Limited
,
[1996] 1 I.L.R.M. 34;
Smyth
-v- Tunney
,
(No. 2) [1993] 1 I.R. 451). In the case of all solicitor's disbursements, not
just disbursements by way of counsel's fees, the function is to determine
whether no solicitor acting reasonably carefully and reasonably prudently,
based on his experience in the course of practice, would have made the
disbursement in question (
Staunton
-v- Durkan
,
[1996] 2 I.L.R.M. 509).
28. Up
to the enactment of the Act of 1995, Order 99 of the Rules and its precursors
and judicial decisions on the provisions of the Rules comprised a comprehensive
and self-contained code and body of jurisprudence on taxation of costs. It was
submitted on behalf of the Companies and Mr. Goodman that the Court should have
regard to recent authorities which manifest judicial restraint in relation to
the decisions of expert administrative tribunals, for example, a chief appeals
officer under the social welfare code (
Henry
Denny & Sons (Ireland) Limited -v- Minister for Social Welfare
,
[1998] 1 IR 34) or an expert statutory regulator, for example, the
Competition Authority (
M&J
Gleeson & Company & Ors. -v- Competition Authority
,
[1999] 1 I.L.R.M. 401) or the Director of Telecommunications (
Orange
Communications Limited -v- Director of Telecommunications
,
[1999] 2 ILRM 81). Where, as in the case of reviews of taxation under
Order 99, rule 38(3), there is an established body of jurisprudence directly in
point, in my view, it is unnecessary and, indeed, it would be inappropriate, to
apply principles extrapolated from a novel and developing jurisprudence which
is founded on a variety of statutory appeals from decisions of statutory
tribunals and statutory regulators.
29. I
can see no basis in principle and I am not satisfied that there is any
pertinent authority for the proposition that on review under Order 99, Rule
38(3) the Court should only interfere with the decision of the Taxing Master if
satisfied that he acted unreasonably in the sense of being clearly wrong. The
alternative proposition, that the Court should only interfere if satisfied that
the Taxing Master has erred in principle, is contrary to the established
jurisprudence of this Court which has been approved of by the Supreme Court.
Rejection of the two propositions advanced on behalf of the Companies and Mr.
Goodman as to the scope of the power of the Court to conduct a review does not
amount to an assertion that the Court has a complete and untrammelled power to
substitute its view as to the proper level of costs for that of the Taxing
Master. Nor is it an assertion that the standard to be applied is no more
exacting than that the Court does not agree with the Taxing Master's
conclusions. Nor is it difficult to reconcile with the concept of curial
deference and the requirements that this Court have due regard to the superior
knowledge and experience of the Taxing Master in matters of costs.
30. On
the authorities, it is clear that the Court is entitled to review, in the sense
of alter, the Taxing Master's determination if it is shown that he has erred in
principle or, alternatively, that, although applying correct principles, he has
arrived at the incorrect amount for any item in the bill. It is in considering
whether error has been shown, whether error of principle or error of
quantification, that judicial restraint comes into play. However, if, applying
the standard of proof applicable to civil matters, proof on the balance of
probabilities, the Court is satisfied that error has been shown, it must
intervene and, as required by Order 99, rule 38(3), substitute for the decision
of the Taxing Master an order which achieves a just result.
31. It
is common case that, as pursuant to the Orders of the Tribunal the costs were
being taxed on a party and party basis, at the taxation the onus was on the
Companies and Mr. Goodman to establish that the costs and expenses claimed were
necessary or proper for the attainment of justice or for enforcing or defending
their rights and were not otherwise excluded by the provisions of Order 99.
However, it is acknowledged on behalf of the Minister that on this review the
Minister bears the burden of disturbing the decision of the Taxing Master as to
the appropriate allowances.
32. At
the commencement of the review the Minister sought leave to adduce oral
evidence on the review. Counsel for the Companies and Mr. Goodman strenuously
opposed the reception of oral evidence on the review. Having reserved judgment
I ruled on the application on 19th May, 1999. In my ruling, in which I have
summarised the submissions made by the parties and in which I set out the
reasons for the course I proposed to adopt, I ruled that the Minister should be
allowed to call Mr. Fitzpatrick to testify and that the Companies and Mr.
Goodman would be entitled to call the evidence of a legal cost accountant in
response. On the resumption of the review, Mr. Fitzpatrick testified on behalf
of the Minister and Mr. Behan testified on behalf of the Companies and Mr.
Goodman.
33. On
the hearing of the review the Minister sought to argue that the Taxing Master
had misinformed himself as to the nature of the proceedings before the Tribunal
and as to the content of the significant portion of the solicitors' workload as
described in the bills of costs. For instance, the Minister sought to argue
that the evidence disclosed that time had been devoted to matters ordinarily
allowable in the taxation of party and party costs in conventional litigation
but which were not necessary or proper in a tribunal context, matters which in
the special circumstances of the Tribunal served merely to duplicate the task
of the Tribunal itself and which were, therefore, surplus, and, by definition,
not necessary for the vindication of the rights of the Companies and Mr.
Goodman. The Minister sought to argue that on the review the totality of hours
recorded by A&L Goodbody should be subject to a disallowance of 20% to
account for all unnecessary expenditure, including unnecessary expenditure
which I am satisfied was not contended for before the Taxing Master.
34. Counsel
for the Companies and Mr. Goodman objected to these grounds, which had not been
advanced before the Taxing Master on the hearing of the objections in support
of the contention he had erred, being advanced on the review and relied on the
decision in
In
re. Kevin J. Walshe
,
(1962) 96 I.L.T.R. 173 and the decision in
O'Sullivan
-v- Hughes
,
[1986] I.L.R.M. 555 in support of the objection.
35. There
is no discernible material difference between the sub-rules considered by Budd
J. and the corresponding provisions of the current Rules. For instance, as was
the case in the pre-1962 Rules, Order 99, rule 38 (1) requires the party
carrying in objections before the Taxing Master to produce objections in
writing "specifying therein by a list in a short and concise form the items, or
parts thereof, objected to and the grounds and reasons for such objections",
which is a
verbatim
replication of the corresponding provision of the pre-1962 rules.
36. In
the course of the hearing of the review I ruled that the arguments sought to be
advanced, which were grounds and reasons which had not been advanced before the
Taxing Master could not be entertained on the hearing of the review.
38. In
his Report on the taxation of the bills of costs in relation to the general
issues, the Taxing Master recorded that it had been submitted to him on behalf
of the Minister that, as the Act of 1995 came into effect after the
commencement of the taxation, it did not apply to the taxation. The Taxing
Master accepted this submission and went on to say:-
40. The
Taxing Master adopted a different approach in relation to the application of
the Act of 1995 to the taxation of the bills of costs in relation to export
credit issues. In his Report on the taxation he stated as follows:-
42. The
Taxing Master did not allude to the Act of 1995 in his Report on the objections.
43. Counsel
for the parties were only able to point to two cases in which Section 27 has
been judicially considered and in both cases the focus was on sub-section (3)
of Section 27. In
Smyth
-v- Tunney
[1999] 1 ILRM 211, McCracken J., having quoted sub-section (3), stated as
follows at page 213:-
44. While
this point was not addressed by Counsel, it seems to me that sub-sections (1)
and (2) of section 27 have introduced a fundamental change in relation to the
function of the Taxing Master in the taxation of solicitor's disbursements,
including counsel's fees. Before the coming into operation of the Act of 1995
it was no part of the function of the Taxing Master to make a value judgment as
to what the disbursements should be. However, by virtue of sub-section (1) it
is part of his function to examine the nature and extent of work to which
disbursements relate and to determine the value of the work done or the service
rendered. By virtue of sub-section (2) his function is to assess what he
considers in his discretion to be a fair and reasonable allowance for the work
done or service rendered.
45. The
Minister's position on the review was that to apply section 27 to a taxation
which commenced before the section came into force, and which was conducted on
foot of orders for costs made almost eighteen months before the section came
into force, would be to give retrospective application to section 27 and would
disrupt the respective rights, liabilities and expectations of the parties and,
that being the case, sub-section (3) of section 27 ought not to be applied to
the review. It was further argued that, in any event, as a matter of
construction of sub-section (3), that sub-section only applies to the review of
a decision of the Taxing Master which has been made by the Taxing Master in the
exercise of his powers under section 27. Moreover, it was argued, as a matter
of principle, that a review can only be based upon rules that were applicable
at the time the decision which is being reviewed was made. Therefore, it was
submitted that this Court should conduct the review without regard to section 27.
46. Suggesting
that the burden on the Minister of disturbing the determination of the Taxing
Master would be more onerous if the Act of 1995 was applied, Counsel for the
Companies and Mr. Goodman indicated that they were not prepared to take a
stance on the interpretation of section 27 adverse to the Minister's stance
lest on an appeal from this Court it should be decided that the wrong standard
was applied. They agreed to the Minister's proposition that the court should
approach the review on the basis that the Act of 1995 does not apply.
47. It
should perhaps be noted that the Minister's position is that, in any event, he
has discharged the acknowledged more onerous burden imposed by section 27(3),
whereas the position adopted by the Companies and Mr. Goodman is that the
Minister has not even discharged the lesser burden imposed by the pre-Act of
1995 regime. Neither this approach nor the submissions made by the parties
resolve the dilemma with which I am faced, namely, that the Taxing Master has
stated that he did not apply the Act of 1995 in the taxation of the bills of
costs in relation to the general issues, but he did in the taxation of the
bills of costs in relation to the export credit issues. Having said that, as a
matter of common sense and practicality, it would be absurd to adopt a
different approach to the taxation of the disbursements in the bills relating
to general issues and the bills relating to export credit issues. Although
Counsel's fees were allocated between the bills in absolute terms rather than
on a percentage basis, I infer from the evidence that what were charged were
composite fees for the totality of the work undertaken by Counsel in
representing the Companies and Mr. Goodman before the Tribunal. The solution,
it seems to me, is to adopt the pragmatic approach that the same regime applies
to the totality of the disbursements and that the relevant regime is a pre-1995
Act regime contended for by the Minister and accepted by the Companies and Mr.
Goodman.
48. Before
considering the individual items in issue on this review, it is necessary to
comment on some general matters raised by the parties on the review.
49. First,
the underlying rationale in the constitutional context of section 6 of the Act
of 1979 was explained as follows in
Goodman
-v- Hamilton
(No.1)
[1992] 2 I.R. 542 in the following passage in the judgment of McCarthy J. at
page 605:-
50. On
the taxation of costs awarded under section 6, it is wholly irrelevant what the
outcome of the Tribunal was. It is wholly irrelevant whether the party for the
costs "won" the Tribunal, in the sense that allegations in which he was
implicated were not established, or "lost" the Tribunal, in the sense that he
was the maker of allegations which were not established.
51. Secondly,
there was some debate as to the role of a lawyer appearing for a party who has
been granted representation before a Tribunal. It was suggested by Counsel for
the Minister that the Taxing Master wrongly placed emphasis on assumed "duality
of purpose" of representation before the Tribunal which it was assumed involved
preparing the client's case and also assisting the Tribunal in its work.
Counsel for the Company found support for the proposition that such "duality of
purpose" exists in the judgment of Gavan Duffy J. in
In
re Greene & Sons and Dublin Corporation
[1940] I.R. 484, a case involving the taxation of the costs which Dublin
Corporation had agreed to pay on a solicitor client basis to parties who had
been represented before a Tribunal of Inquiry established under the Act of
1921. In holding that the costs in issue were properly incurred Gavan Duffy J.
stated (at page 493) that they were properly incurred:-
52. The
costs awarded to the Companies and Mr. Goodman were awarded pursuant to the
provisions of section 6 of the Act of 1979. They were awarded because the
parties had been granted representation by solicitor and counsel before the
Tribunal and for the reasons stated in the following passage from the Report of
the Tribunal:-
53. The
Companies and Mr. Goodman were granted representation by the solicitor and
counsel before the Tribunal because it was necessary to do so in order to
vindicate their rights. The role of the lawyers appearing for them was to
ensure that their rights were protected and vindicated and that they were
properly apprised of their obligations under the law. The role of the lawyers
in representing their clients before the Tribunal was no different to the role
they would perform in representing the client before a court. In my view, it
is a misconception to perceive a lawyer representing a party before a tribunal
as having some particular function of assisting a tribunal in carrying out its
remit.
54. Thirdly,
it is well established that, while on a party and party taxation the party for
the costs is not entitled to a full indemnity in respect of all costs and
expenses which have actually been incurred by him, the basis of party and party
costs is one of indemnity [
A.G.
(McGarry) -v- Sligo County Council
(No.2) [1989] I.L.R.M. 785;
Kelly
-v- Breen
[1978] I.L.R.M. 63).
55. Fourthly,
in applying the Rules as far as practicable, as the Orders of the Tribunal
require, in the taxation of the costs of the Companies and Goodman, it is
proper to take account of the differences between the process in a court in a
lis
inter partes
and the Tribunal process. In the former, the issues are normally well defined
by the pleadings and by interlocutory applications before the trial begins and
the relevant documentation has normally been identified through the discovery
process. Once a trial begins, it is not normally punctuated by non-sitting
days. Counsel for the Companies and Mr. Goodman contended that, unlike the
position which prevails in a conventional action in Court, the legal teams
acting for the Companies and Mr. Goodman before the Tribunal found themselves
in a process which was without precedent or parallel and the framework for
which was broad terms of reference which resulted in a multiplicity of
allegations. They had to deal with allegations which arose for the first time
during the course of the proceedings and 90% of the documentation which
affected them was produced after the hearings commenced. The difficulties
which the legal teams encountered were magnified, it was submitted, because of
pressure of time and the rapid pace at which the proceedings moved and the
indeterminate length and the indeterminate focus of the Tribunal, both of which
changed during its course. It is not controverted by the Minister that the
legal teams representing the Companies and Mr. Goodman had a uniquely difficult
task. At issue is how the uniquely difficult task translates into costs in
accordance with the Orders of the Tribunal and the law.
56. In
the bills of costs presented the amount claimed in respect of the general
instruction fee for A&L Goodbody was £3,250,000. The total amount
allowed on the taxation was £3,197,975 which comprised the following
components:-
57. In
his ruling on the objections the Taxing Master disallowed the Minister's
objection and affirmed the allowance he had made on taxation. On this review a
disallowance of £1,550,000 was sought by the Minister which, if granted,
would have the effect of roughly halving the Taxing Master's allowance. I find
it necessary to consider in some depth the proceedings in relation to this item
before the Taxing Master, both on the taxation and on the hearing of the
objections, by reference to the transcript of the proceedings.
58. Before
doing so, I think it appropriate to quote Order 99, rule 37(22)(ii) which gives
guidance to the Taxing Master as to the manner in which he should exercise his
discretion in relation to solicitor's items and provides as follows:-
59. In
relation to the instruction fee of A&L Goodbody the case for the Companies
and Mr. Goodman on the taxation was presented by Mr. Lowe over four days
straddling May and June 1996. At that stage the scheduled items had already
been dealt with and Mr. Behan had presented the case on behalf of the Companies
and Mr. Goodman in relation to counsels' fees, so that the Taxing Master has
already acquired a considerable amount of knowledge of the volume of work on
the part of A&L Goodbody which was being claimed for.
60. Before
outlining the manner in which the case for the Companies and Mr. Goodman was
presented to the Taxing Master I should perhaps record that I have noted Mr.
Lowe's caveat at the outset addressed to "anybody else who may be reading the
transcript" that his shortened summary did not give a full picture of what was
involved and that it would be necessary to read the bills of costs and possibly
even look at the documentation itself to gain any sort of insight, rather than
just read the transcript in isolation.
61. Mr.
Lowe went through each of the topics headlined in the bills of costs. These
topics, which numbered 135, are listed by the Taxing Master in his Report on
the taxation. In relation to each topic, Mr. Lowe summarised the tasks which
A&L Goodbody had to undertake and he identified the main fee earners
involved in those tasks.
62. Having
gone through all of the topics, Mr. Lowe then gave the Taxing Master the total
number of recorded hours for each fee earner involved, although he had
indicated at the outset that it was not possible to indicate the time any
particular fee earner had been involved in connection with any particular
topic. The total number of recorded hours was set out by the Taxing Master in
his Report on the taxation and the breakdown according to category of fee
earner is as follows:-
67. As
I understand it, the amount of £3,250,000 claimed in the bills of costs
for A&L Goodbody's general instruction fee was the assessment of Mr. Lowe,
as a very experienced legal cost accountant, of the appropriate fee measured on
a party and party basis for the work carried out by A&L Goodbody, the
recorded hours, which Mr. Lowe suggested were "on the low side", being only one
factor. However, Mr. Lowe submitted that the recorded hours were a real basis
for attempting to begin to assess what he suggested was "a real and proper
instruction fee". Acknowledging that the Rules do not provide for an hourly
rate basis for remunerating solicitors, Mr. Lowe submitted that he was able to
demonstrate the reasonableness of the instruction fee by reference to
professions of roughly equal standing. Specifically, Mr. Lowe referred the
Taxing Master to cases in which the costs of firms of accountants making
non-part discovery had been taxed and in which rates equivalent to charge out
rates for mergers and acquisitions work had been allowed. In
Mercantile
Credit Company of Ireland Limited -v- Heelan
,
the hourly rates allowed were: £200 for a partner master, £150 for a
director and £96 for a manager. In
Dunne
-v- Fox
a partner had been allowed £200 an hour. It was submitted that the task
of a firm of accountants in making discovery did not come anywhere near the
level of responsibility, complexity, novelty and importance which A&L
Goodbody bore in relation to the Beef Tribunal, which it was submitted merited
a considerably higher hourly rate than £200. Mr. Lowe concluded his
submission on the appropriate hourly rate as follows:-
68. On
behalf of the Minister, Mr. Fitzpatrick submitted that all of the work
undertaken by A&L Goodbody and manifested in the bills of costs was not
necessary or proper within the meaning of Order 99, Rule 10(2). He gave some
examples, for instance, he suggested that information gathering for the
purposes of cross-examination was excessive. However, he did not dispute that
the recorded hours were actually worked and he accepted that the recorded hours
were correct. He put the following hourly rates to the Taxing Master:-
70. Applying
those rates to the recorded hours he came up with a figure of £2,343,135.
However, on the basis of his belief that there was a certain amount of work
which was neither necessary nor proper and was due to over-caution, he drew
back from that figure to the figure of £2,000,000, which he submitted was
the appropriate fee for all the work done by A&L Goodbody on behalf of the
Companies and Mr. Goodman. Mr. Fitzpatrick made it clear to the Taxing Master
in his submissions on the taxation that he considered that using the "hourly
system" was the proper approach. As to the hourly rate he proposed, he stated
that he had telephoned his own accountant to get some idea of what
"professional people charge". Mr. Fitzpatrick stated that his understanding of
the hourly rate was that it was based on the cost of running the office and on
getting some profit. He then submitted as follows:-
71. Mr.
Fitzpatrick submitted that there was nothing wrong with his hourly rate and
that it took into consideration "all the extra factors". Later Mr. Fitzpatrick
stated that his hourly rate was not "picked out of the sky" but was based on
his experience and the information he got from his accountant.
72. In
reply, Mr. Lowe submitted that under Order 99 the entitlement of A&L
Goodbody would not be fairly or properly met by assessing the hourly rate of
£200 an hour for a partner, despite the fact that the work related to the
years 1991 to 1993.
73. In
ruling on the taxation the Taxing Master, in arriving at the appropriate amount
for the work done, broke the work down into three components, namely:-
75. In
relation to time, he took an hourly rate which he applied to all of the
recorded hours. He did not expressly address Mr. Fitzpatrick's submission that
some of the time recorded was neither necessary nor proper. In relation to the
hourly rate he stated as follows:-
77. In
relation to the skill, knowledge, complexity and difficulty component, having
outlined the nature of the task borne by A&L Goodbody, the Taxing Master
concluded as follows:-
78. The
Taxing Master described the effort required of A&L Goodbody as "mammoth"
and the responsibility which rested on that firm as "enormous". In relation to
valuing the responsibility and effort component he stated as follows:-
79. In
relation to the totality of the instruction fee, the Taxing Master stated that
he was convinced that it was appropriate and sufficient to remunerate the
Solicitors for the extent, level and volume of work which the case required and
which was in fact rendered and that his total figure, £3,197,975,
represented "a fair and reasonable remuneration for the work done".
80. The
Minister's objections to the Taxing Master's allowance in respect of the
instruction fee of A&L Goodbody and the grounds and reasons advanced for
the objections on the review before the Taxing Master may be summarised as
follows:-
81. During
the course of the hearing of the objections the Taxing Master required that a
member of the firm of A&L Goodbody give evidence pursuant to Order 99, Rule
25 of the Rules, which,
inter
alia
,
empowers the Taxing Master to summon and examine witnesses, concerning the
amount of the instruction fee. He stipulated that the appropriate person
should be a senior member of the firm with the requisite knowledge. By letter
dated 28th February, 1997 to Mr. Lowe the Taxing Master outlined the questions
that needed to be answered.
82. Pursuant
to the requirement of the Taxing Master, Mrs. Caroline Preston, the partner in
A&L Goodbody, who had overall charge of the representation of the Companies
and Mr. Goodman at the Beef Tribunal, testified. The questions set out in the
letter were put to Mrs. Preston by the Taxing Master and she was then
cross-examined by Mr. Fitzpatrick.
83. Mrs.
Preston testified that the purpose of the time recording by her firm was to
enable the firm to make a judgment as to what was the appropriate amount of
funding that was required on an interim or cash-flow basis throughout the very
long case in issue. It also allowed the firm to assess what grade or
experience of solicitor was doing what work and that would be pertinent in
drawing the final bill on a solicitor/client basis ultimately. The basis on
which personnel were chosen at the outset was to have a mix of experience so
that more junior solicitors could deal with more mundane work, leaving the more
complicated or experienced work for those with greater experience. While the
firm anticipated that the Tribunal would be over a lot earlier than it was, the
arrangement the firm came to with the client in relation to interim on account
funding was not in any way affected by the firm's anticipation of the time that
the case would take. The team which was involved in servicing the Companies and
Mr. Goodman could not indulge in any other work whatever and the firm
undoubtedly lost custom to competitors as a result. In relation to the quantum
of the internal rates of charge applied to each of the personnel covered by the
bills of costs, Mrs. Preston stated that the rates used for the on account
funding were £180 in the case of a partner, £138 in the case of an
associate, £98 in the case of an assistant and £52 in the case of an
apprentice. She stressed that the rates applied in the first instance were
average rates. They were "not cast in stone". They were a guide. She
suggested that in the circumstances they were probably not relevant to the
assessment of party and party costs. The rates in question took no account of
the intangible profit element that the firm was entitled to, nor did they take
account of the extraordinarily unsociable hours worked, the disruption to the
office or the loss of other clients. She suggested that those issues amongst
others set out in the Rules were not included in the internal accounting rate.
The reason the firm did not charge a specific rate was that for this sort of
work the costs would always be assessed by legal cost accountants. Her view
and that of her colleagues was that an hourly rate was not appropriate for that
type of litigation.
84. The
Taxing Master ruled out a question Mr. Fitzpatrick sought to put to Mrs.
Preston as to the manner in which the partner rate of £180 was arrived at,
on the ground that to allow it would put the firm at an unfair disadvantage in
the market place. In relation to the rate of £180 per hour, Mrs. Preston
stated that it was the effective rate that made up the firm's on account
payments throughout the Tribunal. It was never fixed nor, indeed, ever agreed
upon as such. Subsequently, she stressed that the rate in question was an
internal management and budgetary rate. It was not an hourly rate which was
charged to the client.
85. The
only other evidence adduced on the hearing of the objections which is of
interest in relation to the quantification of the instruction fee is that Mr.
Damien McCarthy, a partner in Craig Gardner/Price Waterhouse who testified in
connection with one of the items in relation to experts and advisers which is
in issue on this review. He testified that his firm's charge-out rate for him,
as a partner, in 1991 was £180 per hour and that rate would have gone up
to £190 per hour in the price review by 1992/1993.
86. In
his Report on the objections, the Taxing Master stated that the bills of costs
were an adequate and convincing summary of the work that was done.
Furthermore, he had examined in detail the other material presented, which
included counsels' advices on proofs, which demonstrated the extent and
amplitude of the work that had to be done. Despite the Minister's objection,
he considered that the recorded hours were proper and necessary in ensuring an
adequate and proper representation for the Company and Mr. Goodman. The Taxing
Master stated that he considered the use of an hourly rate to be the most
appropriate method in arriving at a fair and reasonable sum in the case under
consideration. He stated:-
87. In
relation to the rates given in evidence by Mrs. Preston, the Taxing Master
stated as follows:-
89. He
was satisfied that the appropriate categories of fee earners had been employed
in the work. It had not been demonstrated why some of the hours should be
determined to be excessive and, in his opinion, the time expended was just and
reasonable and was allowable in total on a party and party basis.
90. The
Taxing Master rejected the argument that the inclusion of the "uplifts" in the
instruction fee amounted to duplication. The "uplifts" were not applied to the
instruction fee but to the time element of the instruction fee. The Taxing
Master observed that the "uplifts" (£200,000) represented 0.5% of the time
factor (£2,997,975), which was not correct, the correct percentage being
6.7%.
91. The
only evidence adduced on behalf of the Minister on this review was the evidence
of Mr. Fitzpatrick, which was confined to the instruction fee properly payable
to A&L Goodbody and, in the main, addressed two topics, the proper hourly
rates to be applied in the quantification of the instruction fee and the
appropriateness of the determination of the Taxing Master in
Bula
Limited (in receivership) -v- Tara Mines Limited & Others
as a comparator. In relation to the Bula taxation, the Court was informed that
Master Flynn gave his Ruling on the taxation on 25th March, 1998. Objections
were carried in by the paying parties to the allowances made by the Taxing
Master but, by a written ruling dated 9th July, 1998, the objections were
disallowed save in respect of a small number of disbursements which are not
material. Subsequently, the paying parties applied to this Court for a review
of taxation pursuant to Order 99, Rule 38(3). These applications have not yet
being determined. In addition, certain of the Defendants have instituted
judicial review proceedings challenging the determination of the Taxing Master,
so far as it relates to the allocation of the "costs of trial". This Judicial
Review application is also pending in this Court. No challenge to the sums
allowable by the Taxing Master has been taken by Tara Mines Limited and,
accordingly, his allowances, if varied, would be varied downward rather than
upward.
92. In
relation to the hourly rate of £150 for a partner which he had suggested
to the Taxing Master as an appropriate rate, Mr. Fitzpatrick testified that
that rate was based on his experience of dealing with solicitors and with cost
issues over almost 30 years, over which period he got to know what the market
forces were and what was happening in the market place. On the basis of his
experience, £150 per hour would have been reasonable remuneration at the
relevant time.
93. In
relation to the Bula taxation, the instruction fee of McCann Fitzgerald, the
firm which represented Tara Mines Limited, was assessed not on the basis of an
hourly rate but as a lump sum. The Taxing Master had allowed the claim,
£1,513,650 in full. Mr. Fitzpatrick gave some details of the Bula case.
It had been initiated by plenary summons on 17th November, 1986 and the final
order in the High Court was made on 24th February, 1997. It had been at
hearing for 277 days from 14th December, 1993 to 29th November, 1996. By
contrast A&L Goodbody were in attendance at the Tribunal for 147 days over
a period of just over 2 years. There was a huge amount of documentation in the
Bula case, almost as much as in the Beef Tribunal. The trial was preceded by
interlocutory and procedural applications in relation to discovery and
interrogatories, some of which were appealed to the Supreme Court. Mr.
Fitzpatrick acknowledged that the scheduled items in A&L Goodbody's bills
taxed at £108,845, whereas the scheduled items in the bill of Tara Mines
Limited taxed at only £8,250 and, as a general proposition, up to the time
of the Goodman taxation scheduled items, even in a big case, would not have
taxed at any more than £2,000. He also acknowledged that the duration of
the taxation of the costs of Tara Mines Limited before the Taxing Master, three
days, was considerably shorter than the taxation of Goodman's costs, which
lasted for 19 days.
94. The
only evidence adduced on behalf of the Companies and Mr. Goodman on the review
was that of Mr. Behan and his evidence was confined to the appropriateness of
the Bula taxation as a comparator. The basis of his opinion seems to have been
primarily a comparison of the preparation of the bills of costs and the
taxation process in the two cases. He alluded to the disparity in the
allowances for scheduled items and in the length of the taxation and he made
the point that on the taxation Tara Mines Limited was opposed by two plaintiff
factions. He also pointed to the difficulties created in the Goodman case by
the lack of pleadings, the broad terms of reference and the vastness of the
documentation.
95. On
the review, Counsel for the Minister challenged the appropriateness of the
instruction fee allowed by the Taxing Master on four fronts: the hours allowed;
the hourly rate applied; "uplifting" the time element to account for skill,
knowledge, complexity, difficulty and for responsibility and effort; and as to
its overall level. The objections and supporting submissions made to the
Taxing Master on the hearing of the objections were reiterated and the
following additional submissions were made:-
96. As
I have stated, the Minister translated his case that the Taxing Master's
assessment of the instruction fee should be altered into money terms on the
basis that £1,550,000 of the instruction fee allowed should be disallowed
comprising the following elements:-
97. Counsel
for the Companies and Mr. Goodman submitted that the instruction fee allowed by
the Taxing Master was the appropriate fee for the task, that it properly
reflected all of the considerations which the Taxing Master was required to
have regard to under the Rules and on the basis of the authorities. In
relation to the Minister's specific challenges it was submitted as follows:-
98. What
the Taxing Master did in the instant case, it was urged, was to compensate
separately in respect of each of the three core criteria identified by Barron
J. in the foregoing passage and in doing so he avoided duplication or double
accounting. As to the Minister's contention that the matters covered by the
"uplifts" were already included in the assessment of the hourly rate and the
hours worked, the uplifts did no more than reflect the reality and the
overwhelming task imposed on the Companies and Mr. Goodman by the Tribunal and,
in particular, the specific skill involved in fulfilling the solicitor's role
of "stage managing" all of the aspects of representing the clients in
proceedings in which there were more disputed issues of fact cumulatively than
in any single action to have ever come before the Courts in this jurisdiction.
99. Before
dealing with the Minister's specific challenges to the Taxing Master's
determination of the instruction fee there are a number of general comments to
be made. In
Smyth
-v- Tunney,
[1993] 1 I.R. 451, Murphy J. highlighted the difficulties inherent in the
determination of a solicitor's instruction fee in the following passage in his
judgment (at page 473):-
100. The
difficulties are magnified manifoldly in the instant case, which it is common
case is unique and unprecedented. That very uniqueness has created
difficulties for everyone involved in the process: for Mr. Lowe and Mr. Behan
in drawing the Bills of Cost and in costing the various elements in the bills
and, in particular, in putting structure on and evaluating the amorphous body
of work which is reflected in the instruction fee, which they did meticulously;
for Mr. Fitzpatrick, who on behalf of the paying party, the Minister, has had
to assess whether all of the work claimed for was necessary or proper or due to
overcaution in the unique task of representing the Companies and Mr. Goodman
before the Beef Tribunal; for the Taxing Master who has had to adjudicate
between the hugely disparate positions adopted by the Companies and Mr.
Goodman, on the one hand, and the Minister, on the other hand. That very
uniqueness has also resulted in Mr. Fitzpatrick, on behalf of the Minister,
advocating that the Taxing Master adopt an unusual approach to the
quantification of the instruction fee, by applying hourly rates to hours
properly allowable and the Taxing Master incorporating that approach in his
quantification. Given the uniqueness and the difficulty of the process of
quantifying the appropriate instruction fee, it is legitimately a matter for
comment that is remarkable that only £52,025 of the claim of
£3,250,000, or 1.6%, was not established by the parties for the costs.
101. It
is not in issue that the hours recorded were worked by the solicitors in
connection with the representation of the Companies and Mr. Goodman before the
Tribunal. What the Minister has put in issue is whether all of the work
reflected by the recorded hours was necessary or proper or reflected
over-caution so as not to be recoverable on a taxation on a party and party
basis. As a matter of common sense, it would seem likely that, given the scope
and enormity of the task undertaken by the solicitors, there would be some
element of non recoverable work, of luxury, involved and some element of
allocating work to fee earners at too senior a level. On the taxation, the
Taxing Master was obviously satisfied that the Companies and Mr. Goodman had
discharged the onus of proof in relation to all of the hours claimed and he
rejected the Minister's objections on the review before him. The question
which must be addressed on this review is whether the Minister has, either in a
general way or as regards specifics, discharged the onus of disturbing that
finding.
102. On
the hearing of the objections, Mr. Fitzpatrick gave some examples of matters
that might not be regarded as being necessary or proper within the meaning of
Order 99, Rule 10(2). The examples were the following:-
103. If
one were to accept the foregoing as examples of work which was neither
necessary nor proper (and I am of the view that the work at (b) is not
recoverable as legal costs on taxation on a party and party basis) or,
alternatively, which amounted to over-caution, while there is no scientific
basis on which one could conclude that there should be a disallowance on the
instruction fee of the order reflected by the "drawback" from £2.343m to
£2m which Mr. Fitzpatrick suggested, nonetheless, regard must be had to
Mr. Fitzpatrick's expertise. In relation to the reduction in the order of 20%
suggested on this review, there is no evidence on which one could justify a
percentage reduction of that magnitude in terms of money or hours and the
suggestion that such a reduction, which would be arbitrary, should be made
lacks credibility, particularly in the light of the stance adopted by the
Minister at the hearing of the objections, even allowing that the 20% reduction
was intended to encompass unnecessary expenditure not contended for before the
Taxing Master. Nonetheless, in view of the fact that 93.5% of the recorded
hours were recorded at partner or associate level, it must be reasonable to
infer that there was some significant degree of over-caution.
104. While
Mr. Lowe initially suggested the use of the hourly rate as a guide, it is my
understanding that there is general consensus that it is appropriate to adopt
the hourly rate approach. The dispute between the parties is as to the
appropriate hourly rate in the circumstances of this case.
105. Having
regard to the authorities, in my view, the appropriate instruction fee, if it
is to be quantified on the basis of an hourly rate for allowable work, must be
based on a fair and reasonable market rate for work of the type undertaken in
representing the client, if there be such, or for work of comparable urgency,
complexity, difficulty, importance and responsibility at the time the work was
performed. Unfortunately, neither side adduced evidence before the Taxing
Master or on the review as to the going rate charged by solicitors for work of
the type in issue here or comparable work in the period from May 1991 to July
1993. While there is evidence to suggest that it was not usual to time-cost
litigation work, it can hardly be the case that in that period the bigger firms
of solicitors practising in Ireland did not charge on a time basis for heavy
commercial work, for instance, company flotation work or mergers and
acquisitions work.
106. The
evidence available from which one has to deduce the appropriate hourly rate is
anything but helpful. First, the analogy of the hourly rate of £200
allowed to accountants on taxation under Order 31, Rule 29 is not helpful
because, as Counsel for the Companies and Mr. Goodman acknowledged, the basis
of taxation under Order 31, Rule 29 is different from the party and party
basis. No details were given of when the work taxed in
Mercantile
Credit Company of Ireland Limited -v- Heelan
was performed. In relation to
Dunne
-v- Fox
,
the work in question was done in October/November 1994, much later than the
work in issue here and the evidence of Mr. McCarthy casts doubt on the
reliability of this comparison as a measure of accountants' hourly charge-out
rate in 1991. Secondly, while I have Mr. Lowe's expert opinion that the
appropriate hourly rate for a partner in a solicitor's office doing work of the
nature in issue here at the time was considerably higher than £200, on the
other hand, I have Mr. Fitzpatrick's expert opinion that it was only £150.
It is difficult to understand how there should be such a yawning gap between
two experts on such a basic matter. Thirdly, between the two extremes there is
evidence of the internal management rates on the basis of which at the time
A&L Goodbody billed the clients on account. It is difficult to determine
what weight, if any, should be attached to this evidence. On the one hand,
there was an unjustifiable reticence as to the "make-up" of those rates, which,
in my view, was a proper subject of enquiry by Mr. Fitzpatrick. On the other
hand, there was the emphasis in Mrs. Preston's testimony that the internal
management rate took no account of the intangible profit element or other
factors to which she referred. That, in my view, misses the point. The issue
is not what the firm considers subjectively to be the appropriate remuneration.
It is what hourly rates reflect the appropriate remuneration judged
objectively.
The
only other evidence which emerged before the Taxing Master or on the review
which throws some light on the question of the appropriate hourly rate is the
evidence of Mr. McCarthy. While emphasising that the issue in the instant case
is the appropriate hourly rates for solicitors, not for accountants, Mr.
McCarthy's evidence is interesting because it indicates that, at partner level,
the specialised expertise in relation to EC and domestic law on customs and
excise controls bought in by the Companies and Mr. Goodman cost on an hourly
basis the same amount as the solicitors' internal rate at that level.
107. If
the hourly rate applied in the computation of the appropriate fee represents
the reasonable and fair "going" rate for work of the type undertaken or
comparable work, the factors which the "uplifts" allowed by the Taxing Master
were designed to reward - skill, knowledge, complexity, difficulty,
responsibility and effort - are already remunerated by the application of the
hourly rate. It seems to me that the argument advanced on behalf of the
Minister that these factors must be adequately compensated for by the combined
effect of the quantum of the hourly rates, the mix of personnel involved in the
work and the total number of hours allowed is unanswerable. The exercise which
the Taxing Master did in applying what I think can fairly be described as
premium hourly rates to all of the hours claimed and for the categories of fee
earners claimed is not at all the same exercise as is done in the normal
taxation of a solicitor's instruction fee for conventional litigation. In the
latter situation, the cost of time is measured "in the round", not by costing
ever hour or portion of an hour worked per fee earner, and the other Order 99,
rule 37(22)(ii) components are factored in.
108. As
to the overall level of the instruction fee, in my view, the taxation of the
costs of Tara Mines Limited in the
Bula
case
is not an appropriate comparator for the representation of the Companies and
Mr. Goodman in relation to the general issues by A&L Goodbody before the
Tribunal. By reason of the multiplicity of allegations and issues in which the
Companies and Mr. Goodman were implicated which were the subject of
investigation by the Tribunal, the representation of the Companies and Mr.
Goodman before the Tribunal on the general issues must be considered as being
sui generis.
109. An
option open to the Court on this review is to remit the instruction fee items
in the Bills to the Taxing Master for re-taxation. The Minister did not
advocate this course. While I have considered it, with some degree of
diffidence, I have decided not to adopt it.
110. Instead,
I am reducing the allowance made by the Taxing Master to £2,500,000. I
have arrived at that figure by the following process:-
111. On
the totality of the evidence, I consider that, applying an objective standard,
those hourly rates represent fair and reasonable rates in the market place in
1991 for the work having regard to its urgency, complexity, difficulty,
importance to the clients and the responsibility borne by the solicitors.
112. While
I have been constrained, because of the paucity of evidence, to adopt a more
crude and unscientific approach than I would have wished, nonetheless, I
believe that approach produces a just outcome as between the Minister, as the
paying party, and the Companies and Mr. Goodman.
113. In
the bills of costs presented, the amount claimed in respect of the general
instruction fee for Rory O'Donnell & Company was £630,000. The total
amount allowed on taxation was £554,000. In his ruling on the objections
the Taxing Master disallowed the Minister's objection and affirmed the
allowance he had made on taxation.
114. Export
credit insurance was dealt with as a separate topic by the Tribunal. It is not
in issue that it was the single most difficult and onerous topic dealt with by
the Tribunal. Two hundred pages of the Tribunal's report are devoted to it.
Rory O'Donnell & Co. were first instructed in October 1991. The Tribunal
hearings in relation to export credit insurance commenced on 9th March, 1992.
The documentation, which was vast, started coming from the Tribunal in January
1992 and documentation continued to be delivered throughout the hearings.
There were 57 days of hearings between the 9th March, 1992 and 9th July, 1992.
Thereafter there were 20 common days, that is to say, days on which the
Tribunal dealt with both general issues and export credit issues. There was a
concentration of 15 common days in September 1992, one in December 1992 and the
rest in January 1993 with the final common day being 2nd February, 1993.
Accordingly, it would appear that the involvement of Rory O'Donnell &
Company in the Tribunal was spread over 16 months.
115. Mr.
Behan presented the bills of costs at the taxation. The scheduled items taxed
at £34,000. In relation to the instruction fee of £630,000, my
understanding is that that was the assessment of Mr. Behan, a very experienced
legal cost accountant, of the appropriate fee measured on a party and party
basis in accordance with the principles stipulated in the Rules and in the
authorities.
116. On
the taxation Mr. Fitzpatrick suggested that £2,000 per day was the
appropriate daily rate for Messrs. O'Donnell in respect of the hearing days on
which the Tribunal was dealing exclusively with export credit insurance. He
suggested that in relation to common days the appropriate daily rate would be
the lesser rate of £1,500 per day. For the other elements in the
instruction fee, the preparatory work, skill, specialised knowledge etc. he
suggested a figure of £165,000 bringing the total general instruction fee
to £311,000. Mr. Behan accepted that £2,000 per day was a fair rate
for the hearing days but contended that reducing the rate for the common days
was wrong. He also contended that an additional figure of £165,000 would
not properly reimburse Messrs. O'Donnell for the work they had put in.
117. In
his ruling on the taxation the Taxing Master pointed out that Messrs. O'Donnell
did not time cost their work as A&L Goodbody had done. The Taxing Master's
approach was to allow a daily rate for the hearings and then to allow a sum for
the other factors provided for in Order 99, Rule 37(22)(ii). He allowed a
daily rate of £2,000 for all of the hearing days, including the common
days, which came to a total of £154,000. In relation to preparatory work,
the Taxing Master said that it was clear from the documentation and the
material involved and the time scale that quite an amount of preparatory work
was undertaken. He determined that £200,000 was a reasonable sum to
remunerate the Solicitors for the preparatory work. In relation to the Order
99, Rule 37(22)(ii) factors he allowed the sum of £100,000 for complexity
and difficulty and a further sum of £100,000 for skill, specialised
knowledge and responsibility. Accordingly, the total allowance was
£554,000.
118. The
Minister objected to the Taxing Master's determination on the taxation on the
following grounds:-
119. No
evidence was adduced on the hearing of the objections and, in essence, both
sides reiterated the positions they had adopted on the taxation. In ruling on
the objections, the Taxing Master reiterated the approach he had adopted in
ruling on the taxation, he disallowed the Minister's objections and he affirmed
the allowance of £554,000.
120. On
this review, the Minister adopted the same position as he had adopted hitherto.
However, it was suggested that the appropriate allowance for preparatory work
was on the basis of an equivalence to 77 days work, not 100 days work.
121. Counsel
for the Companies and Mr. Goodman submitted that the investigation of the
export credit insurance topic was one of the more sensitive and important
issues from the perspective of the Companies because the investigation was
taking place against a background of a pending the civil action by the
Companies against the State claiming £200 million arising out of their
export credit insurance policy. It was submitted that the allowance made by
the Taxing Master was the appropriate fee and that the Minister had not
discharged the burden of proof on him to displace the allowance as the
appropriate fee. If the Court were to disturb the Taxing Master's finding
without any evidential basis, this would not be a proper exercise by the Court
of its power to review taxation. The Court must conclude that the burden of
proof had not been discharged by the Minister for a variety of reasons: the
Tribunal process was unique and exceptional; there was no relevant comparator;
the Taxing Master is an expert and his determination is entitled to curial
deference; the Taxing Master had evaluated the instruction fee in accordance
with the Rules and had arrived at a figure which reflected time at hearing and
in preparation, skill and specialised knowledge, responsibility and effort as
he was enjoined to do; and his conclusions were supported by the evidence, that
is to say, the documentary evidence and the expert opinion of Mr. Behan and Mr.
Lowe. Interference by the Court would be arbitrary or capricious or mere
clipping.
122. Earlier
in this judgment I pointed out that the established jurisdiction of this Court
is that on a review such as this the Court is entitled to alter the Taxing
Master's determination if it is shown that, although he applied the correct
principles, he arrived at an incorrect amount for any item in the bill. This
is a case in point. While I have not seen the physical evidence, the
documentation generated in connection with the export credit insurance issues,
including Counsels' directions, I have read the transcript of the proceedings
on the taxation and the proceedings on the hearing of the objections. I have
also had regard to the material in relation to the investigation of the export
credit insurance allegations contained in the Report of the Tribunal. On the
basis of the totality of the evidence, I consider that the allowance made by
the Taxing Master, £554,000, is excessive and is not the appropriate fee
and that it is excessive to a degree that is unjust to the Minister.
123. The
clear picture which emerges is that the Solicitors' involvement was limited to
16 months at the outside and within that time span there was a period or
periods of intensity of seven or eight months and no more. They had the
assistance of five counsel during that period. It is common case that the
daily rate of £2,000 is the appropriate rate for the sitting days. No
rational basis for reducing the daily rate has been advanced and, in my view,
it is not good enough for the Minister to say that he is paying A&L
Goodbody for the same days. The fact that both firms were required to attend
the Tribunal on certain days is not the fault of either firm or their clients.
Therefore, as the Taxing Master did, I start with an allowance of £154,000
for attendance at the Tribunal. The Taxing Master added to that figure
£400,000 to cover the work done outside the Tribunal, the preparatory
work, and to cover overall the other factors which he is enjoined by Order 99,
rule 37(22)(ii) to have regard to, namely, complexity, skill, responsibility
and so forth. It is difficult to rationalise the inclusion in that figure of
£400,000 of £200,00 to cover complexity, skill and responsibility
factors to "uplift" an amount of work valued by the Taxing Master
£354,000, when in his assessment of the instruction fee of A&L
Goodbody he applied "uplifts" of a similar order of magnitude where he had
valued the work done at almost £3,000,000, even allowing for the fact that
he stated that the hourly rate he applied accounted for some element of those
factors. In my view, the appropriate addition to the starting figure of
£154,000 to arrive at an appropriate instruction fee is £275,000 to
bring the total fee to £429,000. The sum of £275,000 in my view,
properly reflects the preparatory work and properly rewards overall for the
other relevant factors - complexity, skill, responsibility and so forth. I
reject the argument advanced by the Minister that the latter factors are
already rewarded through the daily rate. Unlike the application of an
appropriate hourly rate to the appropriate number of allowed hours in respect
of the appropriate cadre of personnel, the application of a flat daily rate
without regard to actual time worked or by whom worked does not reflect those
factors. I think it is immaterial how one analyses the sum of £275,000 to
reflect the various elements encapsulated in it, whether as representing
£175,000 for the preparation time and £100,000 for the other factors
or otherwise. What is important is that the overall fee is the appropriate fee.
124. Although
admittedly not a true comparator, it seems to me that the taxation of the costs
of Tara Mines Limited in the
Bula
case
is indicative of the appropriate level of instruction fee for Rory O'Donnell
& Company, that firm being concerned with a single topic before the
Tribunal, albeit one which had a number of facets. That the fee I have
suggested as an appropriate fee for Rory O'Donnell & Co. is somewhat in
excess of 25% of the fee allowed to Tara Mines Limited is indicative, in my
view, that the former is an appropriate fee, or, at any rate that it is
certainly is not too low.
125. The
orders of the Tribunal allowed for the employment of three counsel in the case
of the Companies and two counsel in the case of Mr. Goodman. A senior counsel,
Dermot Gleeson, and two junior counsel, Ian Finlay and Michael Collins, were
retained on behalf of the Companies; one senior counsel, Seamus McKenna, and
one junior counsel, Donal O'Donnell, were retained on behalf of Mr. Goodman.
The same teams were instructed in relation to the general issues and the export
credit issues, by A&L Goodbody in relation to the former and by Rory
O'Donnell & Company in relation to the latter.
126. In
drawing the bills of costs and in the submissions before the Taxing Master and
on the review, counsels' fees were considered under four sub-headings, namely:-
127. The
bills were drawn on the basis that the brief fee, in accordance with the usual
practice, covered all work up to and including the first day of the hearings,
the refresher fees, also in accordance with the normal practice, were payable
in respect of each hearing day after the first hearing day, and the fees for
non-sitting or preparatory days were payable in respect of days during the
legal term when the Tribunal was not sitting but counsel were engaged
exclusively in preparatory work in connection with the Tribunal.
129. The
total amount allowed on the taxation and on the hearing of the objections for
counsels' fees was £3,000,795. For ease of reference and comparison I
have set out in tabular form the fees allowed for each counsel under each
sub-heading in Table I in Appendix A annexed to this Judgment. I propose now
considering the submissions made by the parties in relation to each sub-heading
in greater depth.
130. Looking
at the basis on which the Minister objects to the quantum of counsels' brief
fees in greater depth, it was contended that the Taxing Master erred in
attaching the weight he did to the fact that counsels' fees were discussed and
agreed between solicitor and counsel. Such an agreement could not give rise to
any presumption that the fees claimed were allowable on a party and party
basis, it was contended in reliance on
Best
-v- Wellcome Foundation Ltd
[1996] 1 I.L.R.M. 34. On the contrary, it was suggested that the fees had been
agreed on a solicitor and client basis and ought not to have been allowed on a
party and party taxation.
131. The
principal plank in the Minister's objection to the brief fees was what it was
suggested was an unjust and an unacceptable disparity between the fees allowed
and the fees paid to counsel for the Tribunal and counsel for the State and the
failure of the Taxing Master to address this disparity on hearing of the
objections. In his Report on the objections, the Taxing Master acknowledged
that a "significant difference" existed but he stated that he could not and did
not intend to explain why a huge disparity existed. It was submitted that this
was not an appropriate approach to the discharge of the Taxing Master's
function. The Taxing Master, and the Court on a review, must attempt to
"reconcile the irreconcilable", as is to be inferred from the decision of the
Supreme Court in
The
Commissioners of Irish Lights -v- Maxwell
[1997] 3 I.R.474 and must provide a proper basis for the allowances involved.
Specifically, it was argued that the Taxing Master was wrong in concluding that
counsel for the Companies bore a heavier burden than counsel for the Tribunal
or counsel for the State. He was also wrong in surmising that the possible
explanation for the disparity in the brief fees was that counsel for the State
were prepared to accept brief fees below the "going rate" because of the volume
of briefs in civil litigation which the State is in a position to dispense.
This argument might have some validity in the case of ordinary litigation, but
not in the case of a "one off" proceeding such as the Tribunal. Nor did the
possible explanation that the fees payable by the State were guaranteed stand
up on the facts, given that on the evidence it was clear that counsel for the
Companies and Mr. Goodman were paid as the matter progressed.
132. In
relation to both the brief fees and the refresher fees counsel for the Minister
relied, in particular, on the decision of the Supreme Court in
The
Commissioners of Irish Lights -v- Maxwell
,
which was delivered on 1st December, 1997 after the ruling of the Taxing Master
on the objections. While the Minister's extreme position that the brief fee
should be equivalent to the brief fee allowed to counsel for the State,
£8,400, was not advanced in the context of the decision of the Supreme
Court, when pressed as to what the Minister's position was as to the
appropriate brief fee in the light of that decision, counsel for the Minister
indicated that it was that the brief fee allowable to senior counsel for the
Company should not be significantly higher than the highest brief fee referred
to in the comparisons considered by the Supreme Court in that case, a brief fee
of £31,500.
133. I
should, perhaps say for the avoidance of doubt, that while counsel for the
Minister referred to the brief fees allowed to counsel for Tara Mines Ltd on
the Bula taxation in the Taxing Master's ruling given on 25th March, 1998, when
counsel for the Companies and Mr. Goodman objected to Mr. Fitzpatrick giving
evidence in relation to the brief fees taxed, the matter was not pursued.
Therefore, I have had no regard to the brief fees allowed on taxation in the
Bula case.
134. Counsel
for the Companies and Mr. Goodman submitted that in making the allowances in
relation to the brief fees the Taxing Master had properly applied the test laid
down in
Kelly
-v- Breen
.
There was no evidence to support and no basis for alleging that no solicitor
acting reasonably carefully and reasonably prudently would have agreed the
brief fees. The nature of the case necessitated and justified brief fees of
the order of magnitude allowed. The proceedings were not in the nature of a
lis
inter partes
where the issues have been carefully distilled by pleadings and necessary
interlocutory applications before the matter comes to hearing. On the
contrary, from the outset, the scope of the enquiry was constantly changing.
It soon became obvious that counsel would be required to possess and display
familiarity with diverse areas of law and a level of commitment and skill which
is not commonly found or required. Large amounts of documentation were
received from the Tribunal on an ongoing basis and against a background of time
constraints. It was submitted that the size of the task required by counsel is
reflected in the fact that leading counsel spent £70,000 on computer
hardware, software and technical assistance solely to cope with the Tribunal
and his manual filing system involved the employment of one full-time and one
half-time secretary for the duration of the Tribunal. Any solicitor acting
reasonably carefully and reasonably prudently would envisage that counsel would
incur significant overheads if he was to display the skill necessary to manage
the documentation.
135. The
task undertaken by counsel in relation to the brief in issue in
The
Commissioners of Irish Lights -v- Maxwell
was not at all comparable with the task of counsel representing the Companies
and Mr. Goodman at the Tribunal. None of the briefs under consideration by
the Supreme Court in that case was a valid comparison either. The commitment
required by counsel representing the Companies and Mr. Goodman at the Tribunal
was particularly relevant. It was open-ended and of necessity it was
exclusive, with the exclusivity extending for an indeterminate period. The
exclusive attention was necessary in order that the clients' interests be
properly protected and it could not be properly regarded as a luxury.
136. It
was argued that the case advanced by the Minister on the basis of the disparity
between the brief fees paid to counsel for the Tribunal and counsel for the
State and the brief fees allowed to counsel for the Companies and Mr. Goodman
on taxation fee well short of evidence that the instructing solicitors failed
to act reasonably carefully and reasonably prudently. A number of factors were
relief on in support of this argument. First, reference was made to the
traditional disparity between fees paid to counsel acting on behalf of the
State and those paid in the market place. One explanation suggested for this
disparity is a
pro
bono publico
tradition at the Bar. Another is the volume of work which the State generates.
Both factors have been recognised by the Courts in the past (
Crotty
-v- An Taoiseach
[1990] I.L.R.M. 617;
State
(Gallagher Shatter) & Co. -v- DeValera
[1987] I.R. 55). In the case of the Tribunal, it was suggested that there may
have been other considerations - political or public relations considerations.
In any event, it was argued that counsel do not agree fees with the State; they
are paid fees determined by the State. Secondly, the brief fees paid to
counsel for the State were determinated at a very early stage, whereas counsel
for the Companies and Mr. Goodman negotiated their fees at a time when the
magnitude of the brief was more obvious. Thirdly, it was suggested that
counsel for the State and the Tribunal were paid for preparatory non-sitting
days during the long vacation and up to the first day of the Tribunal, whereas
no preparatory fees were paid to counsel for the Companies and Mr. Goodman
until the law term resumed. On this point, it seems to me that the analysis of
the preparatory days for which Mr. Hickey and Mr. Maguire were paid by contrast
to the fees for preparatory days allowed to Mr. Gleeson on the taxation is not
correct because it overlooks the fact that Mr. Gleeson was allowed fees for 117
preparatory days in total when one takes into account the allowance in relation
to the export credit issues. The analysis is on surer ground in relation to
the second senior counsel for the Tribunal, David Byrne. The total fees paid
to Mr. Byrne on the brief and for preparatory days were £214,725,
comprising a brief fee of £8,400 and 196.5 preparatory days at £1,050
per day. The proper comparison with this amount is the total amount allowed to
Mr. Gleeson for brief fees and preparatory days, which is £322,420,
comprising £175,000 on the two briefs and £147,420 in respect of
preparatory fees at the rate of £1,260 for 117 days.
137. Before
considering the detailed submissions made by counsel in relation to the quantum
of the refresher fees, and, in particular, before attempting to contrast the
allowances made to counsel for the Companies and Mr. Goodman with the refresher
fees paid to Counsel for the State, I think it is proper to point out that the
factual situation in relation to the allowance is made by the Taxing Master is
more complicated than the submissions made by counsel would suggest. This
arises primarily because in his Reports on the bills in relation to the general
issues, the Taxing Master gave a breakdown of the refresher fees allowed to
each counsel by reference to the number of days in question and the amount
allowed in respect of each day, whereas no such breakdown was contained in the
Reports on the bills in relation to the export credit issues. In any event, it
appears to me that the true position is as follows:-
138. The
refresher fees were paid to the two senior counsel who represented the State at
the daily rate of £1,890 each for the duration of the Tribunal and the two
junior counsel, who were briefed with them, were paid refresher fees at the
daily rate of £1,260 each for six days and thereafter for the duration of
the Tribunal at the daily rate of £1,200 each.
139. The
gravamen of the Minister's case in relation to the refresher fees is that the
Taxing Master should have allowed only daily rates which achieved parity with
the daily rates paid to counsel for the State, who were the appropriate
comparators. It was submitted that the daily rates allowed were not only out
of line with the two comparators but were out of line with the going rates even
for heavy commercial cases which, it was suggested, on the evidence afforded by
The
Commissioners of Irish Lights -v- Maxwell
was in the region of £2,000 per day. It was submitted that, in view of
the fact that the amount of the refresher fees in that case, which related to
work done in June/July 1994, was not in issue before the Supreme Court in
The
Commissioners of Irish Lights -v- Maxwell
,
this Court could not safely attach much weight to the fact that a concession
was made by the legal cost accountant for the paying party, coincidentally Mr.
Fitzpatrick, at the hearing in the High Court that a refresher fee at the daily
rate of £3,150 was not unreasonable or the
obiter
dictum
of Barron J. in his judgment that the concession was correctly made. The
Minister's objection to the refresher fees is not, however, confined to the
daily rate and it was emphasised that the global amount of the refreshers
having regard to the number of days to which they relate is unjustified.
140. On
the last point, counsel for the Companies and Mr. Goodman submitted that the
number of refreshers was determined by the life span of the Tribunal and the
extent of counsels' involvement before it. They referred to Order 99, Rule
37(28) of the Rules which provides that it shall be in the discretion of the
Taxing Master to allow reasonable refreshers to counsel in proper cases. The
State had not discharged the burden of disturbing the Taxing Master's rulings
that the refresher fees claimed were allowable. In particular, counsel for the
State were not valid comparators of market fees, because of the traditional
disparity in relation to fees paid by the State. In addition, they suggested
that on the taxation of the costs of Mr. Spring and Mr. Desmond, who had
limited representation before the Tribunal, Mr. Fitzpatrick had accepted that a
refresher fee of £1,890 per day for 84 days was appropriate which, it was
suggested, established that counsel for the Tribunal and counsel for the State
were not paid market rate refresher fees since the responsibility borne by them
on any analysis must be regarded as greater than that borne by counsel for Mr.
Spring and Mr. Desmond.
141. There
was nothing unusual or untoward about the refresher fees which were allowed by
the Taxing Master. Reference was made to
The
Commissioners of Irish Lights -v- Maxwell
and, in particular, to the fact that it was recorded in the judgments in the
High Court and Supreme Court that in
Howard
-v- The Commissioners of Public Works
,
the case concerning the Interpretative Centre at Mullaghmore, Co. Clare, the
representative of the Chief State Solicitor agreed a refresher fee of
£3,150 for senior counsel in an action which was instituted in 1992. It
was also submitted that the refresher fees allowed by the Taxing Master were
reasonable having regard to the level of responsibility which counsel for the
Companies and Mr. Goodman bore, the vast amount of material which had to be
analysed and assimilated by them on a daily basis, 90% of which arrived after
the Tribunal hearings commenced, the length of the working day, the fact that
no additional charges were levied by counsel for consultations, advices on
proofs, dealing with emergencies and so forth. The fact that Mr. Collins was
not paid refresher fees for the duration of the Tribunal was indicative of
reasonableness and prudence on the part of the instructing solicitors.
142. In
relation to the relationship of the refresher fees allowed to Mr. McKenna and
Mr. O'Donnell, it was submitted that there is no "two-thirds rule" although
there is a convention applicable to High Court cases which generally results in
junior counsel being allowed a refresher fee which is equivalent to two-thirds
of that allowed to senior counsel. Mr. O'Donnell was paid refreshers which
were in excess of two-thirds of those paid to Mr. McKenna because of the amount
of work and responsibility Mr. O'Donnell was carrying. Mr. McKenna himself
recognised the level of input that was required by him by charging refresher
fees which ranged from £2,500 to as low as £500. It was submitted
that the Taxing Master is no more entitled to reduce junior counsel's fees so
that they are equivalent to two-thirds of the fees marked by senior counsel
than he is entitled to increase senior counsel's fees so they represent 1.5
times the fees that he has held were properly agreed with junior counsel. The
point was also made that the reduced fee charged by junior counsel for the
Companies, £1,500, was less than two-thirds of the corresponding fee,
£2,500 charged by senior counsel for the Companies.
143. As
in the case of the refresher fees, in his Reports on the bills in relation to
the export credit issues, the Taxing Master did not give a breakdown of the
fees for non sitting or preparatory days allowed by reference to the number of
days in question and the daily rate applicable. As I understand it, the
breakdown is as follows:-
144. Counsel
for the Tribunal and counsel for the State were paid fees for non sitting days.
In the case of counsel for the State, the daily rate for senior counsel was
£1,050 and the daily rate for junior counsel was £700. In the case
for counsel for the Tribunal, there was no differentiation between senior and
junior counsel and each counsel was paid a daily rate of £1,050 for non
sitting days.
145. The
Minister's fundamental objection to the fees allowed for non sitting or
preparatory days is that there was and is no precedent for allowing such fees
on a party and party taxation. Preparatory work, in many instances, very
substantial preparatory work is necessary for all litigation and counsel is
remunerated for that work through the medium of the brief fee and the refresher
fees. The decision of the English High Court in
Loveday
-v- Renton
(No.2) [1992] 3 All E.R. 184 was cited in support of that proposition. In any
event, if work which is normally rewarded as part of the brief fee is taken
out and charged as a separate item, there must be a "knock-on" effect, a
reduction of the brief fee. Billing as a separate item cannot add to the
overall quantum of the bill; it can only add to the categorisation of items
within the bill.
146. It
was submitted on behalf of the Minister that the payments made in respect of
preparatory days were made so as to retain the exclusive attention of counsel
on days when counsel would otherwise have been free to take on other work and,
as such, were either "special fees" to counsel within the meaning of Order 99,
Rule 37(18) and/or retainer fees within the meaning of Order 99, Rule 37(29)
and, in either event, were not properly allowable on a party and party taxation.
147. The
payment of preparatory fees to counsel for the State and for the Tribunal did
not provide any basis for allowing such fees on this party and party taxation
because it is a fundamental principle of taxation that the fact that the paying
party has made certain disbursements on a solicitor and client basis does not
imply that similar disbursements made by the party for the costs are to be
recovered on a party and party basis.
148. The
Minister's alternative submission, that the quantum of the fees for non sitting
days allowed was excessive, was based on arguments that the number of
preparatory days claimed was excessive, that the level of fees claimed and
allowed was excessive and represented an unjustifiable disparity between those
fees and the fees actually paid to counsel for the State and counsel for the
Tribunal and that it was wrong in principle to allow preparatory fees to junior
counsel in an amount which exceeded the fees allowed to senior counsel. It was
submitted that the Taxing Master failed entirely to address any of these issues
on the hearing of the objections.
149. Predictably,
counsel for the Companies and Mr. Goodman submitted that payment of preparatory
fees was not without precedent. The precedent had been set by the State in
agreeing to pay counsel for the State and counsel for the Tribunal fees in
respect of preparatory days. It was also pointed out that in respect of an
important witness who was residing in Canada, Patrick McGuinness, the Tribunal
had authorised payment to secure his attendance before the Tribunal and the
payments included legal costs. Mr. McGuinness was represented by a firm of
Canadian barristers and solicitors and the legal costs authorised included
charges in respect of preparatory work and consultations at the rate of $250
(Canadian) per hour for Queen's Counsel and $95 (Canadian) per hour for a
junior counsel. The fact that counsel for the State and counsel for the
Tribunal were paid fees for preparatory days and that the Tribunal itself
authorised payment of fees for preparatory work, it was submitted, of itself
indicated that the preparatory work was necessary and could not be categorised
as a "luxury". Moreover, it was re-emphasised that no fees were levied by the
Goodman team in respect of consultations, advices, advices on proofs, preparing
memoranda on legal issues, or vacation or weekend work.
150. In
relation to the Minister's submission that the fees claimed for preparatory
days were in the nature of special fees or a retainer for exclusive retention,
it was submitted on behalf of the Companies and Mr. Goodman that the essence of
a retainer for exclusive attention is a payment simply for being available -
not for doing any work. The fees claimed for preparatory days were claimed in
respect of work done during those days. It was submitted that in agreeing fees
for preparatory days, the solicitors did what a careful and prudent solicitor
would have done in the circumstances. They agreed that there would be payment
for preparatory days if and when they occurred during term time. Work engaged
in outside term time and at weekends was to be subsumed in the brief.
151. In
relation to what they referred to as a perceived breach of the "two-third
rule", counsel for the Companies and Mr. Goodman submitted that counsel were
paid the fees that were reasonable having regard to the amount of work and the
responsibility borne by them.
152. The
Minister's objection in principle to the Taxing Master's allowance of
£75,000 to senior counsel for the Companies for the written final
submissions submitted to the Tribunal is that no additional fee should have
been allowed in respect of the work involved, it being, in any event necessary
for the proper presentation of the Companies' case to the Tribunal. The work
in question, it was submitted, was work which is normally rewarded through the
medium of the brief fee and the refresher fees paid to counsel. The decision
of the English High Court in
Loveday
-v- Renton
(No.2) was cited in support of this proposition. In the alternative, it was
submitted that the fee allowed was wholly excessive and that the proper fee
should be measured by reference to the practice prevailing in the Superior
Courts of allowing one refresher, which practice was followed by McCracken J. in
Smyth
-v- Tunney
[1999] 1 ILRM 211. It was pointed out that the fee allowed was equivalent
to 25 refresher fees at a daily rate of £3,000.
153. Counsel
for the Companies and Mr. Goodman submitted that the principle of charging
separately for written submissions is well established in this jurisdiction and
that the only issue was what was the appropriate fee in the particular case.
It was acknowledged that the practice has developed of a fee equivalent to one
refresher fee being marked and that this amount is usually allowed on taxation.
However, it was submitted that this practice reflects an arbitrary approach and
that a different fee may be merited in a particular case. It was submitted
that the instant case was a case in which a different fee was merited having
regard to the nature of the written submissions, which comprised a number of
volumes containing,
inter
alia
,
a synopsis and appraisal of the oral evidence topic by topic, submissions on
evidential and procedural issues, the isolation of selected exhibits which were
of particular importance, and the isolation of selected facts. It was
submitted that the fee allowed was a proper fee having regard to the volume of
material which had been before the Tribunal and the number and the breadth of
the issues involved, which rendered the production of the final submissions a
"Herculean task".
154. In
considering the scope and the standard of the review undertaken by this Court
on a review under Order 99, Rule 38, I have set out the test which the Taxing
Master was required to apply in taxing Counsels' fees before the coming into
operation of the Act of 1995 - whether no solicitor acting reasonably carefully
and reasonably prudently based on his experience in the course of his practice
would have determined such fees. That is the test posited in
Kelly
-v- Breen
and, as I have stated, it is the ninth principle in a list of nine principles
enunciated in the judgment of Hamilton J. which have been approved of time and
again during the past 20 years. Three of the other principles enunciated at
pages 68-9, are particularly apposite in the current context, namely:-
155. The
application of the test posited in
Kelly
-v- Breen
envisages a hypothetical solicitor determining a proper and reasonable fee for
a hypothetical counsel. The hypothetical solicitor is assumed to be familiar
with the matters referred to in the fourth principle. The hypothetical counsel
for whom he is determining the fee is the "hypothetical counsel competent to do
the case and not being in a position to expect a special or fashionable fee" (
per
Barron J. in
Best
-v- Wellcome Limited
,
[1996] 1 I.L.R.M 34, 48) or "the hypothetical counsel capable of conducting the
present case effectively (but unable or unwilling to insist on the particular
high fee sometimes demanded by counsel of pre-eminent reputation)" (
per
Murphy J. in
Smyth
-v- Tunney
,
[1993] 1 I.R 451, 468).
156. One
of the factors which the hypothetical solicitor is assumed to know is the
amount of the fees paid to the opposing counsel in the same matter, subject to
whatever factors might be special in the case. In considering the significance
of this factor in
Crotty
-v- An Taoiseach
,
[1990] I.L.R.M. 617, Barr J. stated as follows (at page 627):-
157. The
decision of the Supreme Court in
Commissioners
of Irish Lights -v- Maxwell
is the most recent decision of the Supreme Court cited in which counsel's fees
were in issue. While the brief fee at issue in that case was subject to
taxation on a solicitor and client basis, the approach adopted by the Supreme
Court is particularly instructive. The brief fee related to the representation
of the applicants at an oral hearing of an appeal brought by them to An Bord
Pleanala arising out of the refusal of Clare County Council to grant planning
permission for the construction of a mast. The appeal was heard in Ennis and
lasted for nine days. The Taxing Master had allowed the brief fee marked,
£31,500 and was upheld on the review in this Court by Barron J. Dealing
with the evidence available in that case, Keane J., with whom the other judges
of the Supreme Court agreed, stated at page 482:-
158. The
brief fees allowed in the cases of "the first constitutional importance" to
which reference had previously been made were in the range of £9,500 to
£15,750. Keane J. continued at page 483:-
159. The
refresher fee was £3,150. Keane J. concluded that, having regard to the
evidence of other brief fees in cases of, at the very least, comparable
magnitude, the applicants had discharged the onus that it would not have been
reasonable for a reasonably careful and reasonably prudent solicitor to have
agreed a brief fee of £31,500 and he found that, on the evidence, a
reduction to £15,000 was necessitated.
160. The
decision in
Loveday
-v- Renton (No.2)
,
which was relied on by Counsel for the Minister in support of their objection
in principle to any part of the fees in respect of the non-sitting days or of
the fee in respect of the written final submissions being allowed, is of
limited assistance only because it involved the taxation of the costs of an
unsuccessful Plaintiff who was legally aided and the taxation was a legal aid
taxation. However, the following passage in judgment of Hobhouse J., at page
190-191, as to the proper basis on which counsel are entitled to charge for
work, is of interest:-
161. In
relation to the issue of written submissions, Hobhouse J. took a similar line
in the following passage in page 192:-
162. It
is clear from the report of
Loveday
-v- Renton
that the trial Judge had indicated during the course of the trial that he would
expect written submissions.
163. In
my view, the Minister's objection in principle to the allowance of fees for
non-sitting or preparatory days on the party and party taxation of the
Companies' and Mr. Goodman's costs of representation at the Tribunal is not
sustainable. Counsel for the Tribunal and Counsel representing the State were
paid fees for non-sitting days, presumably with the concurrence of the
Minister. It must be assumed that the Minister, as the effective paymaster,
was satisfied that the payment of such fees was necessary having regard to the
nature of the process which the Tribunal was to be. Apart from the Tribunal
itself and the State the other major players in the process were the Companies
and Mr. Goodman. The old adage that 'what is sauce for the goose is sauce for
the gander' springs to mind. It is surely reasonable to infer that, in the
context of the Tribunal, what was necessary and proper for counsel for the
Tribunal and counsel for the State was also necessary and proper for counsel
representing the Companies and Mr. Goodman. Apart from this, it was argued
that counsel for the Companies and Mr. Goodman had done precisely what Hobhouse
J. envisaged counsel in a privately funded case doing: they had negotiated a
special arrangement for the payment of fees for non-sitting days. Both sides
seemed to agree that the allowance or non allowance of the fees for non-sitting
days must impact on the quantum of the brief fee, but they were not agreed as
to the impact in the instant case. Given that 90% of the documentation
delivered was delivered following the commencement of the Tribunal hearings and
that the process was one in which additional material was constantly being
delivered and constantly being sourced, if fees for non-sitting days were
disallowed, counsel for the Companies and Mr. Goodman argued that the brief fee
would have to be adjusted upwards.
164. The
Minister's objection in point of principle to the allowance of a fee for
written final submissions is not sustainable either. Indeed, the Minister's
counsel accepted, properly in my view, that fees for written submissions are
allowable on a party and party taxation in this jurisdiction but he argued that
in the instant case account had to be taken of the fact that part of the work
which went into the written submissions falls to be rewarded in the brief fee.
165. As
to the correct overall approach to the review of counsels' fees in the context
of the unusual process which the Tribunal was, it seems to me that the
non-refresher items, that is to say, the brief fee, the fees for non-sitting
days and the fee for the written final submissions should be considered
together first, the refreshers should then be considered and finally all the
elements should be considered together. The test on each consideration is what
a reasonably careful and a reasonably prudent solicitor would offer counsel in
the light of the knowledge which the criteria laid down in
Kelly
-v- Breen
require to be imputed to him. The Taxing Master, in his Report on the
taxation, considered how historically counsels' fees had been agreed and he
quoted at length from the correspondence from Mr. Gleeson to Mrs. Preston and
the submissions of Mr. Behan, which illustrated how the agreement on counsels'
fees had evolved. On the basis of this evidence one could not conclude that
Mrs. Preston acted other than in a careful and prudent manner in the matter of
counsels' fees. However, the test is not how Mrs. Preston acted; it is how a
reasonably careful and a reasonably prudent solicitor armed with the knowledge
which the
Kelly
-v- Breen
test imputes to him would have acted in the circumstances.
166. In
the application of the objective standard in this case, in my view, the
important factors are the fees paid to the counsel representing the State at
the Tribunal and such evidence as there is of the "going rate" which was
payable to counsel in important constitutional actions and heavy commercial
cases in the period from 1991 to 1993.
167. In
comparing the fees paid to counsel for the State and the fees allowed on this
taxation, in my view, some account must be taken of the traditional disparity
between fees paid by the State to the counsel it briefs in civil litigation and
fees which historically have been allowed on party and party taxation for the
opposing counsel, although I do not consider this factor to be as significant
in the Tribunal context as it would be in ordinary litigation. As the
"package" under which counsel for the State were remunerated included provision
for fees for non-sitting days, the timing of the fixing of their brief fees at
an early stage, in my view, is not as significant as was contended for on
behalf of the Companies and Mr. Goodman. The important factor in comparing the
fees paid to counsel for the State and the fees allowed on this taxation, in my
view, is a comparison of the respective burdens borne by counsel for the State,
on the one hand, and counsel for the Companies and Mr. Goodman, on the other
hand. Having regard to the Report of the Tribunal published in July 1994 and,
in particular, the list of allegations in Appendix 1, the majority of which
were investigated by the Tribunal, and chapters 5-23 inclusive, I have no doubt
that the task undertaken by counsel for the Companies and counsel for Mr.
Goodman was immeasurably more onerous than the task undertaken by counsel for
the State, who had the apparatus of the State behind them. Even without doing
a scientific analysis, it is patently obvious that the vast majority of the
allegations investigated by the Tribunal affected the Companies and Mr.
Goodman. Some of the allegations were very serious indeed in that they alleged
fraudulent practices, tax evasion, abuse of E.C. subsidy schemes, contravention
of the terms of the Companies' export credit insurance policy, breaches of
company law and so forth. It is true that the allegations implicated organs of
the state, for instance, the Department of Agriculture, the Revenue
Commissioners, the Customs and Excess Authority and the Gardai in some of the
alleged wrong doing in varying degrees of complicity. However, the potential
gravity of an adverse finding of fact by the Tribunal for the Companies and Mr.
Goodman and the potential for damage to the reputation, business and goodwill
of the Companies and Mr. Goodman's reputation far outweighed the potential for
damage to the organs of the State and the individuals represented by counsel
for the State. By this comparison it is not intended to detract from the
diversity, difficulty and complexity of the issues in which counsel for the
State were involved or the seriousness of the accusations which the parties
whom they represented were facing or the sensitivity of their position, in that
persons that they were representing in an official capacity were also accusers
before the Tribunal; it is simply to highlight the heavier burden borne by the
Goodman team. A further factor which, in my view, it is appropriate to have
regard to in the comparison is the overall fees paid to the full team of four
counsel representing the State and the overall fees allowed to the team of
three counsel covered by the Order of the Tribunal in favour of the Companies.
168. The
issue for the court is whether the factors which I have just outlined justify
the disparity between the fees in respect of non refresher items paid to Mr.
Gleeson (£397,420) and the corresponding fees paid to Mr. Hickey
(£126,000) and Mr. Maguire (£128,655) or indeed, the corresponding
fees paid to Mr. Byrne (£214,725) and whether they justify the disparity
between the totality of fees in respect of non refresher items paid to the
companies team of counsel (£873,470) and the totality of the corresponding
fees paid to the State's full team of two senior counsel and two junior counsel
(£422,655). While I have stated that the burden on Companies' legal team
was immeasurably more onerous than the burden on the State's legal team,
nonetheless, on the authorities I must attempt to measure the immeasurable. I
have come to the conclusion that in the context of a party and party taxation
the disparity cannot be justified objectively.
169. I
think that the hypothetical reasonably careful and reasonably prudent solicitor
armed with the knowledge imputed to him under the
Kelly
-v- Breen
criteria would have offered a daily rate for non-sitting days commensurate with
the daily rate paid to counsel for the Tribunal, that is to say, £1,050
for both senior and junior counsel. I think he would have offered a total
brief fee of £125,000 to Mr. Gleeson and he would have adjusted the brief
fees of Mr. Finlay, Mr. Collins and Mr. O'Donnell downwards
pro
rata
.
In relation to the fee for the written final submission, the evidence
indicates that the Tribunal sought final submissions in writing. I think the
hypothetical solicitor would be cognisant of the importance of the written
submissions having regard to the Tribunal's request and of the additional
burden opposed on counsel in having to reduce the submissions to written form.
Having seen the written final submission, I think the hypothetical solicitor
would conclude that one third of the fee allowed by the Taxing Master,
£25,000, fairly represents the time, effort and outlay in producing the
submissions in written form and would offer that sum.
170. I
have set out in tabular form in Table II in Appendix A the alterations which I
consider appropriate to the allowances made by the Taxing Master in respect of
non refresher items. The total amount of the fees for non refresher items as
altered allowable to the Companies' full legal team is £593,700 in
contrast to the total fees for non refresher items paid to the state's full
legal team of £422,655. I believe that the disparity which remains is
objectively justified by the factors I have outlined. If one analyses the
altered fees allowed to Mr. Gleeson for the brief and non-sitting days,
£272,850, the total represents roughly sixteen times the brief fee allowed
by the Supreme Court in
Commissioners
for Lights -v- Maxwell
.
It is almost eight times the size of the largest fee referred to in the
Judgment of Keane J. in that case. While it would be clearly absurd to suggest
that a brief to represent the Companies before the Tribunal was equivalent to
sixteen important planning appeals or eight heavy commercial cases, I think the
analysis does not reveal any unreasonable disproportion particularly in the
light of the
dictum
of Keane J. in
Commissioners
of Irish Lights -v- Maxwell
that Counsel properly protect themselves against a case running for longer than
anticipated by stipulating for the payment of appropriate refresher fees.
171. At
their lowest the daily rates of refresher fees paid to the four Counsel on the
State team aggregated £6,180. At their highest the daily rates of
refresher fees allowed by the Taxing Master to the three Counsel on the
Companies' team aggregated £7,000 and at their lowest, after approximately
70 days, they aggregated £5,500. The highest daily rate of refresher fee
allowed to Mr. Gleeson, £3,000, compares favourably with the refresher fee
which, in his judgment in
Commissioners
of Irish Lights -v- Maxwell
,
Keane J. considered was not excessive in the circumstances and at the same time
was not unfair to Counsel. In my view, the hypothetical reasonably careful and
reasonably prudent solicitor, knowing the level of refresher fees being paid to
Counsel for the State and knowing what the "going rate" was, as evidenced by
the authorities, would not have balked at the refresher fees allowed to Counsel
for the Companies' by the Taxing Master and would have offered refresher fees
at those rates. The Minister's objection to the global quantum of all of the
refresher fees allowed, in my view, is not sustainable. It was submitted that
the refresher fee, on a day to day basis, does not reflect the burden of a
particular day. There are hard days and easy days, it was suggested, and
in-built into the market or going rate is a "swings and roundabouts" effect. I
do not see how the duration of the process and the increase in the number of
refresher days occurring would justify tinkering with the daily rate unless
they were demonstrably more easy days than hard days or
vice
versa
.
172. In
global terms the respective amounts allowed by the Taxing Master for refresher
fees for Mr. McKenna and Mr. O'Donnell were £374,950 and £322,250.
The Minister's objection that these allowances reflect a departure from the
normal practice of junior counsel's refresher representing two-thirds of senior
counsel's refresher has been met with the response that the respective amounts
reflect the amount of work and responsibility borne by the respective counsel.
The authority of the Taxing Master to tax the fees of counsel representing Mr.
Goodman derives from the Order of the Tribunal which provided for the taxation
of the costs of two counsel on a party and party basis. The obligation of the
Minister to pay the fees of Mr. Goodman derives from the same Order. In my
view, the hypothetical reasonably careful and reasonably prudent solicitor
considering the appropriate refresher fee for junior counsel representing Mr.
Goodman, on an objective appraisal, would have concluded that the burden which
would fall on him would be less onerous than the burden which would fall on
junior counsel for the Companies and would not have offered a daily rate
equivalent to the appropriate refresher for junior counsel for the Companies.
In my view, he would have offered a refresher rate which approximately
reflected the traditional link between the refresher rate of junior counsel and
the senior counsel leading him. Accordingly, I consider that the refreshers
allowed for Mr. O'Donnell should be altered to reflect a rate of £1,700
per day for 70 days and a rate of £1,300 per day for 122 days which
aggregate at £277,660. It could be contended legitimately that there is
illogicality inherent in altering the refresher rate allowable to Mr.
O'Donnell, while not altering the brief fee allowed to him save for the
reduction
pro
rata
with the reduction in Mr. Gleeson's fee. However, it seems to me that the
total of the altered allowances for non-refresher items in relation to the
representation of Mr. Goodman, £277,300, which is less than 50% of the
corresponding amounts allowed for the representation of the Companies meets the
objective standard, whereas the total amount of refresher fees allowed by the
Taxing Master in the representation of Mr. Goodman, which represents 67% of the
total amount of refresher fees allowed in the representation of the Companies,
would not meet the objective standard. The additional work reflected by the
higher refresher rate claimed by Mr. O'Donnell is to the account of his client,
not to the account of the Minister.
173. Viewed
as a whole, the fees in respect of non-fresher items and refreshers which I
have allowed in respect of each counsel I believe satisfy the criteria
stipulated in
Kelly
-v- Breen
.
174. In
her judgment in the Judicial Review proceedings, Carroll J. interpreted the
order of the Tribunal and, in particular, paragraphs (c) and (d) of the order
and set out the following principles at page 12-13:-
175. In
relation to the other disbursements in issue on this review, it was submitted
on behalf of the Minister that if the beneficiary of such a disbursement was
not a witness or a potential witness, but was rather an adviser or consultant,
the question whether his costs are recoverable falls to be decided by ordinary
principles of taxation. It was further submitted that, as a matter of
principle, such items fall into the category of luxury and are not recoverable.
It was further submitted that, subject to one qualification, there is no
precedent for the allowance of costs of advisers on a party and party taxation.
The qualification relates to
Northern
Bank -v- Charleton
.
It was suggested that in that case the High Court expressly directed that the
costs of the successful defendant should include the costs of a named adviser
who had assisted that party but who had not given and had not been engaged to
give evidence at the trial.
176. Counsel
for the Companies and Mr. Goodman submitted that the correct position is that
if the costs, charges and expenses of the various advisers come within Order
99, Rule 37(18) they are allowable. Reference was made to the following
passage of Butler J. in
Kelly
(an infant) -v- Hoey
,
(18th December 1973, High Court, unreported), which, as part of a longer
passage, was quoted as being helpful in the judgment of Gannon J. in
Crown
Chemicals Company (Ireland) Limited -v- Cork County Council
,
[1984] I.L.R.M. 555:-
177. It
seems to me that in reviewing the determination of the Taxing Master in
relation to the disbursements other than Counsels' fees I should apply the
principles enunciated by Butler J. My interpretation of those principles is
that the costs, charges and expenses which are allowable provided they come
within Order 99, rule 37(18) are those incurred in retaining persons who do not
become witnesses but who give opinions, advice and information of an expert or
technical nature. This interpretation is consistent with section 27(2) of the
Act of 1995 which empowers the Taxing Master on a party and party taxation to
allow the costs of "any expert engaged by a party".
178. This
disbursement relates to a total sum of £76,000 paid by A&L Goodbody to
Craig Gardner/Price Waterhouse in respect of support provided by the
accountancy firm in the area of customs law and procedures particularly in
relation to the common agricultural policy. This disbursement was allowed in
full by the Taxing Master. The Minister's position is that it should be
disallowed in totality.
179. I
have no doubt that the Taxing Master correctly categorised the accountancy firm
as advisers. However, the advice given was in the nature of legal advice and,
indeed, the evidence is clear that the members of the firm involved in giving
the advice saw their role as part of Goodman's legal team giving specialist
advice in relation to customs and excise law.
180. The
only issue which arises on this item, it seems to me, is whether, as submitted
on behalf of the Minister, the costs of employing a solicitor and counsel
provided for in the orders of the Tribunal encompass all the legal expertise
necessary, so that the Solicitor was not entitled to buy in legal expertise at
the cost of the paying party on a party and party bill. As a matter of
fundamental principle, it seems to me that the submission made by the Minister
must be correct and that, if a Solicitor out-sources legal expertise, even if
as in the instant circumstances it is cost effective to do so, the cost of
doing so must be to the account of the client and is not properly allowable on
a party and party taxation. To hold otherwise in the instant case would
effectively negative the numerical limitation on lawyer representation
contained in the Orders of the Tribunal.
182. This
item relates to fees totalling £162,361.83 charged by Mr. Heneghan, a
public relations consultant, for services rendered to the Companies and Mr.
Goodman in connection with the Tribunal. The Taxing Master allowed this item
in full. The Minister's position is that it should be disallowed in totality.
183. The
nature of the services rendered by Mr. Heneghan, who was described as falling
into the category of expert advisor, were described as follows in the following
passage from the Report of the Taxing Master on the taxation, which he repeated
in his Report on the objections:-
184. It
was not suggested on behalf of the Minister that there was anything
inappropriate in the retainer by the Companies and Mr. Goodman of a public
relations consultant to protect their interests. On the contrary, it was
acknowledged that it was an entirely legitimate call to make in relation to a
matter where there was undoubtedly going to be significant publicity and where
there was a realistic fear that it might be adverse. The Minister's objection
to this item is that it does not come within the ambit of the Orders of the
Tribunal at all.
185. The
costs awarded to the Companies and Mr. Goodman were the "costs of appearing
before the said Tribunal" taxed on a party and party basis. What they are
entitled to recover from the paying party are the costs which were necessary or
proper for the attainment of justice or for enforcing or defending rights. As
was argued on behalf of the Minister, the manner in which a party who is
allowed representation at a Tribunal attains justice and vindicates his rights
is by being in a position, with the assistance of a legal team, to test
evidence adduced which may be adverse to his interest, to call evidence which
may be favourable to his interest and to make submissions to the Tribunal. As
was submitted on behalf of the Minister, Mr. Heneghan's role was not to assist
in the appearance and representation of the Companies and Mr. Goodman before
the Tribunal; it was to assist in influencing the image projected through the
media to the public of the events taking place before the Tribunal. No doubt
the services rendered by Mr. Heneghan were valuable in protecting the
reputation of the Companies and of Mr. Goodman. However, in my view the
submission made on behalf of the Minister that such services do not come within
the concept of legal costs at all is correct and the cost of such services is
not recoverable on a party and party taxation.
187. This
item relates to fees aggregating £116,503.47 claimed by Stokes Kennedy
Crowley for services rendered in connection with taxation and Section 84 loans
issues. The Minister's position is that they should be totally, or,
alternatively, partially disallowed.
188. The
fees claimed were allowed in full by the Taxing Master. Stokes Kennedy Crowley
were the auditors and tax advisers to the Companies for many years. The
accountancy firm was granted limited representation before the Tribunal in its
own right. It was conceded on behalf of the Minister that the costs claimed on
this item do not overlap with the costs incurred by Stokes Kennedy Crowley in
connection with their own representation before the Tribunal.
189. Sean
Mooney, a partner in the firm, gave evidence before the Taxing Master on the
hearing of the objections. I have read the transcript of Mr. Mooney's evidence
in conjunction with the six page document headed "Tribunal Work" put in
evidence. In my view the evidence does not establish, save to a very
insignificant extent, that the services rendered were in the nature of legal
services or legal expertise. The services rendered were largely information
retrieval, verification and presentation of information, which, although
predominantly historical, was also current, in an accessible form. The
significant factor, in my view, is that the information related to taxation and
section 84 loans, areas of considerable complexity in respect of which Stokes
Kennedy Crowley were and had been expert advisers to the Companies and Mr.
Goodman. I reject the Minister's objection that this item should be disallowed
on the same basis that item referable to Craig Gardner/Price Waterhouse was
disallowed.
190. There
is an argument that to some extent Goodman personnel should have produced the
necessary information for the legal team. Mr. Mooney dealt with this argument
in his evidence and he explained the then prevailing situation in the Goodman
group which had gone into examinership a year earlier. In the light of the
evidence, I think it was reasonable for the companies and Mr. Goodman to retain
the services of Stokes Kennedy Crowley to do this work, which I consider in the
main to be of an expert or technical nature and I think the work was necessary
and proper within the meaning of Order 99, Rule 10(2).
191. The
Minister specifically objects to part of this item amounting to £28,000
which relates to attendance at the Tribunal to be available to assist the legal
teams on days when taxation and Section 84 loan issues were being dealt with.
It was submitted that on the authority of the decision of this Court (Kelly J.)
in
Tobin
& Twomey Services Limited -v- Kerry Foods Limited
,
[1999] 1 ILRM 428 the attendance of Mr. Mooney at the Tribunal was in the
nature of a "luxury" and does not properly fall within the ambit of party and
party costs. The factual situation in the instant case is wholly
distinguishable from the factual situation which arose in
Tobin
& Twomey Services Limited -v- Kerry Foods Limited
,
where the proceeding in issue was an interlocutory application heard on
Affidavit. In my view it was reasonable for Mr. Mooney to attend the hearings
of the Tribunal when evidence was being adduced on taxation and Section 84 loan
issues to assist the Goodman legal team should then acquire assistance. The
situation would not have been met by perusal of the overnight transcript.
192. I
consider that Stokes Kennedy Crowley are properly categorised as expert
advisers and that the costs for their services are allowable against the
Minister.
193. This
item relates to fees aggregating £118,157.66 in respect of services
rendered by Somers & Associates, a firm of chartered accountants. These
fees were allowed in full by the Taxing Master. The Minister's position is
that they should be disallowed in totality.
194. The
evidence indicates that the principal of the firm, Bernard Somers, was the
liaison financial director of Goodman International Limited. On the taxation
Mr. Behan told the Taxing Master that the firm was "too close to the company to
be ever witnesses because of that relationship". Mr. Behan described the task
undertaken by the firm as follows:-
195. Michael
Flynn, a chartered accountant with Somers & Associates, who was involved in
the task, testified before the Taxing Master on the hearing of the objections.
I have read the transcript of his testimony carefully. The exercises which he
and his colleagues were involved in were the assembling and collating of data
for the purpose of briefing the legal team and other experts. Some of the data
was sourced from the Companies, some from public sources such as the Central
Statistics Office. In my view, the Minister's submission that the work could
have been done internally within the Companies is borne out by the evidence. I
am not satisfied that it required the expertise of a firm of chartered
accountants. It seems to me that the nature of the work was accurately
described by Mr. Behan at the taxation on 11th June, 1996 when he stated:-
196. In
my view the costs of the services rendered by Somers & Associates are not
recoverable on party and party taxation.
198. The
item relates to a claim for travelling expenses and fees aggregating
£37,953, which was allowed in full by the Taxing Master. The Minister's
position is that it should be totally disallowed.
199. Mr.
Britton was the former group financial director of the companies. He resigned
on 22nd September, 1990. He incorporated Britton Consultants Limited in
January 1991 and through the medium of that company he provided consultancy
services and project management services and such like.
200. It
is clear from the evidence that Mr. Britton had a pivotal involvement in the
Tribunal. Shortly after the establishment of the Tribunal he was contacted by
the leading Senior Counsel for the Tribunal and asked to furnish a statement,
which he did from memory in August 1991. His main statement, which was
requested by the Tribunal, was submitted on 3rd March, 1993. He testified
before the Tribunal between 4th March, 1993 and 9th March, 1993. Mr. Britton
was granted representation by the Tribunal on 8th September, 1992 and on 29th
July, 1994 an Order for costs was made by the Tribunal allowing him the costs
of employing a solicitor and one counsel. The taxation of Mr. Britton's costs
had not commenced when the hearing of the objections in this matter were before
the Taxing Master at the end of January, 1997.
201. As
to his involvement in Tribunal matters for the Companies, Mr. Britton testified
that he had been asked to assist because the Tribunal had requested the
Companies to allow him access to files and records to enable him to prepare a
statement specifically on the IDA five year plan and export credit insurance.
It suited the Companies that Mr. Briton would assist them in preparing the
disclosure documents, which I assume means discovery, on export credit
insurance, the IDA five year plan and on Section 84 and "the overall view of
Goodman's". As to the Companies' instructions to him, Mr. Britton testified
that he was asked to co-operate with them and to meet their professional
advisers and assist on the issues of export credit insurance, the five year
plan and other issues to do with taxation matters, Section 84 and financing
matters.
202. On
Mr. Britton's evidence, his total involvement in relation to the Tribunal "time
wise" was 600 hours. This included his contacts with the leading counsel for
the Tribunal, preparing statements, dealing with his own legal team in relation
to his own legal representation, testifying, monitoring the testimony of other
witnesses and giving the assistance sought to the Companies. The hourly rate
of charge which Britton Consultants Limited charged for his services at the
time was £150 per hour. His involvement in relation to the Tribunal took
him away from his professional work and the time he gave to the Tribunal was
time for which he would normally be charging clients.
203. The
claim on this taxation for the sum of £35,000 in respect of fees is based
on an invoice dated 18th March, 1993 issued by Britton Consultants Limited
claiming that sum for "professional services rendered by Brian Britton between
May 1991 and March 1993 in connection with the Beef Tribunal". Apparently, the
invoice was discharged in March 1993. On the hearing of the objections, Mr.
Britton testified that his overall claim for remuneration for his time
involvement with the Tribunal was £92,345. As to the circumstances in
which the Companies paid him the sum of £35,000, he testified as follows:-
204. The
Taxing Master in his Ruling on the objections stated that Mr. Britton's
function was to give factual evidence and that he was entitled to his
reasonable costs for preparation of his statements, for attending the Tribunal
and for travelling and subsistence. This statement echoes paragraph (d) of the
Tribunal Order. The Taxing Master allowed the sum of £2,953 claimed for
travelling and subsistence on the basis that it was reasonable. Counsel on
behalf of the Minister made a legitimate, if somewhat trivial in the overall
context of this review, point that the sum of £2,953 was not vouched.
Having quoted the submission made by Mr. Behan in relation to "fees for
preparation and attending the Tribunal" on the taxation and having referred to
the decisions of the High Court and the Supreme Court in
Staunton
-v- Durkan
,
[1996] 2 I.L.R.M. 509 the Taxing Master in his Report on the review before him
went on to say:-
205. The
main thrust of the Minister's objection to the allowance of this item is that
the Taxing Master erred in principle in that he remunerated Mr. Britton on the
basis that he was an expert witness and not merely a witness of fact. A
witness of fact, it was contended, is not entitled to charge for preparation
for and attendance at the trial unless he can establish that he has actually
incurred a loss and the decision of Blayney J. in
Staunton
-v- Durkan
was cited in support of that proposition. It was contended that Mr. Britton
had not established a loss before the Taxing Master.
206. However,
the claim advanced on behalf of the Companies was not a claim to recover the
remuneration of Mr. Britton in relation to the preparation of his statements
for and his attendance at the Tribunal. It was a claim to cover his
remuneration for the assistance he gave to the Companies in relation to various
historic matters and it was submitted that the work he carried out was
necessary for the Companies to enforce or defend their rights.
207. Under
the Orders of the Tribunal, the costs awarded to the Companies and Mr. Goodman
include the costs of witnesses who actually testified before the Tribunal "on
the proposal of the applicants". As I understand the evidence, Mr. Britton was
the Tribunal's witness and he was not called on the proposal of the Companies
and Mr. Goodman. That being the case, the Companies and Mr. Goodman are not
entitled to include his charges as witnesses' expenses entitled to be recouped
under paragraph (d) of the Order in their bills of costs. In my view, the
Taxing Master misconceived the nature of the claim in treating it as a claim
for witnesses' expenses. It is a claim for services rendered in assisting the
Companies and Mr. Goodman in the preparation of their case.
208. No
doubt Mr. Britton's services were valuable to the Companies and Mr. Goodman and
he is clearly entitled to be remunerated for them. However, the issue here is
whether, under the Orders of the Tribunal, the Minister is obliged to indemnify
the Companies and Mr. Goodman in respect of their payment to Britton
Consultants Limited for Mr. Britton's services at the rate of £150 per
hour. Even assuming that £35,000 worth of the overall services rendered
by Mr. Britton is properly ascribable to his involvement on behalf of the
Companies and Mr. Goodman, in my view, the Minister is not. Mr. Britton's
services were valuable to the Companies, not because of his professional
expertise or technical ability, but because of his historic connection with the
Companies. In relation to this taxation he is not properly classifiable as an
expert. His expenses in connection with his role as a witness before the
Tribunal must be dealt with in the taxation of his own costs.
210. This
item relates to a sum of £33,906.17 paid by the Companies and Mr. Goodman
for the provision of catering services between 5th July, 1991 and 21st May,
1993. It represents a charge of £80 per day for the availability of the
catering service in Arran Court, the office complex used by the Companies for
the duration of the Tribunal, not with the provision of food. While no doubt
the availability of a catering service was convenient, it has not been
established that it was either necessary or proper within the meaning of Order
99, Rule 10(2). In so holding, I am taking judicial notice of the fact that in
1991 there was no shortage of establishments providing food and beverages in
the environs of Arran Court and Dublin Castle.
212. In
Appendix B annexed to this judgment, I have summarised in tabular form the
effect of the foregoing judgment. The Order will be in the terms of Column 2
of the Table.