THE HIGH COURT
[2009 No. 2354S]
ADM LONDIS PLC
RANZETT LIMITED, RAY DOLAN AND
ANNALIESE McCONNELL (NO.4)
JUDGMENT of Mr. Justice Gerard Hogan delivered on the 6th day of February, 2015
1. Where a defendant is awarded a sum of costs which, when taxed, are likely to reduce significantly (or, perhaps, even exceed) an award of damages made in favour of a plaintiff, is it appropriate that the award of costs and the award of damages should be mutually set off as against each other in accordance with O.99, r.4 of the Rules of the Superior Courts? This is the issue which now arises at the conclusion of these proceedings.
2. This issue arises in practice rather less often than might otherwise have been supposed. It really only arises in the present case because the plaintiff’s claim to a liquidated sum pursuant to certain invoices was relatively straight forward and did not take up a great deal of court time. The defendants’ counter claim, on the other hand, was heard for the better part of nine days and raised difficult questions both of law and fact. The plaintiff succeeded on its claim and the defendants substantially succeeded on its counter claim. This left a net award of some €97,284 (plus Courts Act interest running from 3rd June 2009) in favour of the plaintiff while the defendant had the better part of the costs order in as much as 7 days costs were awarded in its favour. The plaintiff was also awarded one half days’ costs which were set of as against that costs order.
3. There is, accordingly, a balance in favour of the plaintiff in terms of monetary award and a balance in favour of the defendant in costs. Quite obviously, as things stand, the defendants’ costs have not been taxed so that it is difficult at this junction to estimate what that sum might eventually be. These costs are, however, likely to be substantial and they may well approach the figure of €97, 284 awarded to the plaintiff and may even exceed that sum. The plaintiff submit that in these circumstances this court should exercise the right of set off provided for in O. 99, r. 4, RSC.
4. Rule 4 provides:-
6. Barrington J. acknowledged that this was a case which did not come within the scope of O. 99, r. 4 at all, because the while the parties were identical, the proceedings involving the arbitration award did not involve the same “cause or matter” as the proceedings in this Court. That, however, did not conclude the matter, because Barrington J. went on to say that the Court could permit a set-off pursuant to its inherent jurisdiction “if the interests of justice require it.” Barrington J. then continued ( 1 I.R. 461, 467):
It is sad when one has to decide which of two innocent people is to bear a loss. But it appears to be that the defendants have considerable merits in their present case. They may not have been completely happy with the arbitrator’s award but they were prepared to accept it. They were put to the expense of defending the award in the High Court proceedings in which they were successful and in which they got an order for costs. They have not chance of recovering their costs unless they can deduct them from the monies payable by them to the plaintiff on foot of the arbitration award. They owe no duty to the plaintiff’s solicitor and, in all the circumstances, it appears to be that it would be unjust to them not to allow them to set-off their costs, when tax has been ascertained, against the amount payable by them to the plaintiff on foot of the arbitrator’s award notwithstanding the plaintiff’s solicitors’ lien.”
8. The principle underlying the judgment in Larkin nevertheless remains the same. As Barrington J. pointed out in that case, the underlying problem remains the same in that this Court is unfortunately forced to choose which of two innocent parties is likely to bear a loss. As in Larkin, it seems likely that the plaintiff has little prospect of recovering its judgment against the defendants unless it can set-off that award as against the award of costs. Nor does the plaintiff owe any duty to the defendant’s solicitor and it does not seem to me that that solicitor’s lien over those costs can rank in priority to the plaintiff’s entitlement to set-off, even if in other circumstances that lien would protect the solicitor as against other third parties.