[2017] IEHC 249
THE HIGH COURT
[2012 No. 12484 P.]
MICHAEL DARDIS
PLAINTIFF
DEFENDANT
JUDGMENT ON COSTS of Mr. Justice Barr delivered on the 28th day of April, 2017
The Application for Costs
1. This application for costs arises out of a judgment which was given in favour of the plaintiff on 1st March, 2017, whereby he was awarded damages of €84,688.52 against the defendant in respect of injuries arising out of a road traffic accident on 21st October, 2009.
2. Subsequent to the delivery of the judgment, a short hearing was held in relation to costs. Counsel for the plaintiff submitted that as the plaintiff had succeeded in obtaining judgment against the defendant, the usual rule that costs follow the event, should be applied and the plaintiff should be awarded his costs of the action.
3. In support of his application for costs, counsel for the plaintiff referred to the decision in Godsil v. Ireland and the Attorney General [2015] IESC 103 and in particular to the following paragraphs from the judgment of the Supreme Court delivered by McKechnie J.:-
“Costs in our Legal System:
19. Inter partes litigation for those unaided is, or can be, costly: certainly it carries with it that risk. It is therefore essential in furtherance of the high constitutional right of effective access to the courts on the one hand and the high constitutional right to defend oneself, having been brought there, on the other hand, that our legal system makes provision for costs orders. This is also essential as a safeguarding tool so as to regulate litigation and the conduct and process thereof, by ensuring that it is carried on fairly, reasonably and in proportion to the matters in issue. Whilst the importance of such orders is therefore clearly self-evident, nevertheless some observations in that regard, even at a general level, are still worth noting.
20. A party who institutes proceedings in order to establish rights or assert entitlements, which are neither conceded nor compromised, is entitled to an expectation that he will, if successful, not have to suffer costs in so doing. At first, indeed at every level of principle, it would seem unjust if that were not so, but it is, with the “costs follow the event” rule, designed for this purpose. A defendant’s position is in principle no different: if the advanced claim is one of merit to which he has no answer, then the point should be conceded: thus in that way he has significant control over the legal process including over court participation or attendance. If however, he should contest an unmeritorious point, the consequences are his to suffer. On the other hand, if he successfully defeats a claim and thereby has been justified in the stance adopted, it would likewise be unjust for him, to have to suffer any financial burden by so doing. So, the rule applies to a defendant as it applies to a plaintiff.”
4. Counsel for the plaintiff also referred to the following statement of principle set out at para. 23 of the same judgment:-
“23. The general rule is that costs follow the event unless the court otherwise orders: O. 99, r. 1(3) and (4) of the Rules of the Superior Courts (“RSC”). This applies to both the original action and to appeals to this Court (Grimes v. Punchestown Developments Co. Ltd & Anor [2002] 4 IR 515 (“Grimes”) and S.P.U.C. v. Coogan & Ors (No.2) [1990] 1 I.R. 273). Although acknowledged as being discretionary, a court which is minded to dis-apply this rule can only do so on a reasoned basis, clearly explained, and one rationally connected to the facts of the case to include the conduct of the participants: in effect, the discretion so vested is not at large but must be exercised judicially (Dunne v. The Minister for the Environment, Heritage and Local Government & Ors [2008] 2 IR 775 at 783-784) (“Dunne”). The “overarching test” in this regard, as described by Laffoy J. in Fyffes plc v. DCC plc & Ors [2009] 2 IR 417 (“Fyffes”) at p. 679, is justice related. It is only when justice demands, should the general rule be departed from. On all occasions when such is asserted the onus is on the party who so claims.”
5. Counsel for the plaintiff further submitted, that in a case such as this, which was an assessment, the defendant could protect itself in relation to costs by making a tender or making an offer pursuant to s. 17 of the Civil Liability and Courts Act, 2004.
6. In response, counsel for the defendant pointed out that the defendant had in fact attempted to protect itself by making a tender on 17th January, 2017, the day before the action came on for hearing, in the sum of €60,001.00. He conceded that where the plaintiff went on to beat the tender, as had been done in this case, he would prima facia be entitled to his costs.
7. However, counsel for the defendant submitted that when this case had been called on at the call-over of cases, it was indicated that the case would take approximately two days at hearing. He stated that, shortly before the action commenced, the defendant was given a schedule setting out the plaintiff’s claim for past and further loss of earnings, amounting to €620,042.00. Counsel submitted that while this very large claim had been made by the plaintiff, the court in its judgment had effectively disallowed the entire of the claim for past loss of earnings and future loss of earnings, describing such claim as being “totally unrealistic” and had instead, allowed a modest sum of €20,000.00 for loss of opportunity on the job market. It was submitted that in these circumstances, the plaintiff had effectively lost the issue in relation to his loss of earnings claim.
8. Counsel for the defendant submitted that the court should have regard to the dicta of Clarke J. in Veolia Water U.K. plc v. Fingal County Council (No. 2) [2007] 2 IR 81 and in particular to paras. 12, 13 and 14, wherein the learned judge set out the appropriate principles to be applied where a party who is successful in the overall action, did not succeed in relation to certain discrete issues which arose in the course of the hearing:-
“12. … Where the winning party has not succeeded on all issues which were argued before the court then it seems to me that, ordinarily, the court should consider whether it is reasonable to assume that the costs of the parties in pursuing the set of issues before the court were increased by virtue of the successful party having raised additional issues upon which it was not successful.
13. Where the court is so satisfied, then the court should attempt, as best it can, to reflect that fact in its order for costs. Where the matter before the court involved oral evidence and where the evidence of certain witnesses was directed solely towards an issue upon which the party who was, in the overall sense, successful, failed, then it seems to me that, ordinarily, the court should disallow any costs attributable to such witnesses and, indeed, should provide, by way of set off, for the recovery by the unsuccessful party of the costs attributable to any witnesses which it was forced to call in respect of the same issue. A similar approach should apply to any discrete item of expenditure incurred solely in respect of an issue upon which the otherwise successful party failed.
14. Similarly, where it is clear that the length of the trial of whatever issues were before the court was increased by virtue of the raising of issues upon which the party who was successful in an overall sense, failed, then the court should, again ordinarily, award to the successful party an amount of costs which reflects not only that that party should be refused costs attributable to any such elongated hearing, but should also have to, in effect, pay costs to the unsuccessful party in relation to whatever portion of the hearing the court assesses was attributable to the issue upon which the winning party was unsuccessful.”
9. Counsel noted that in the course of his judgment in the Veolia Water case, Clarke J. referred to his decision in O’Mahony v. O’Connor [2005] 3 IR 167, where, in a subsequent costs ruling, he determined that the plaintiff should pay the defendant one day’s costs to reflect the fact that the defendant had been unnecessarily, put to the cost of an additional day’s hearing by virtue of the plaintiff having raised unmeritorious issues. Clarke J. went on to note that he had made a similar ruling in Arklow Holidays Ltd. v. An Bord Pleanála [2006] IEHC 15. However, the references given referred to the substantive judgments. There is no written record of the costs rulings made in either case.
10. Based on the fact that the action had taken eight days at hearing, rather than the two days indicated at the call-over, the defendant sought his costs for six days, being the period by which the trial had been prolonged in dealing with the issue in respect of loss of earnings, on which the plaintiff was ultimately unsuccessful. Counsel further submitted that the court should disallow the costs incurred by the plaintiff in retaining an accountant and an actuary, to give evidence and an actuarial report in relation to the calculation of the loss of earnings claim, which had been rejected by the court in its judgment.
11. In reply, counsel for the plaintiff stated that the fact that the case had ran longer than two days, was due partially, if not entirely, to the fact that there had been a preliminary motion in relation to discovery, which had been determined in favour of the plaintiff. Thus, it could not be said that the entire of the extra six days was taken up with the disputed loss of earnings claim. He submitted that cases often lasted longer than the period which was initially indicated by plaintiff’s counsel when calling the matter on for hearing. In this case it was submitted that a significant proportion of the time had been taken up in relation to the examination of medical witnesses. The plaintiff had not sought to prolong the hearing and had agreed the admission of the actuary’s report and the vocational assessor’s report in evidence without formal proof. It was submitted that the evidence of the respective accountants, Mr. Stephens and Mr. Grant, did not take six days.
12. Counsel submitted that the decision in the Veolia Water case, was a decision of the Commercial Court. The judge was dealing there with the costs implications that arise in “complex litigation”, which was litigation of a different type to that involved in an ordinary personal injuries action. Counsel submitted that there was no decision in the area of personal injury litigation, where a costs order of the type sought by the defendant had been made.
13. Counsel referred to the decision of the English Court of Appeal in Re Elgindata Ltd (No. 2) [1993] All ER 232. where, in the course of his judgment, Nourse L.J. had set down the following principles in relation to the awarding of costs:-
“(1) Costs are in the discretion of the court.
(2) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made.
(3) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs.
(4) Where the successful party raises issues or makes allegations improperly or unreasonable, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.”
14. Counsel submitted that the court should not lightly depart from the general rule that costs follow the event. It was submitted that to do so, would only encourage the defendant to engage in a minute analysis of the findings contained in a judgment in an effort to avoid paying costs. It would also be a disincentive to defendants to properly engage with the tender process, or the procedure provided for in s. 17 of the Civil Liability and Courts Act 2004, because they would anticipate that they would have a further bite of the cherry in relation to costs at the conclusion of the case.
15. Counsel submitted that in this case the court had awarded damages to the plaintiff for pain and suffering. The court had found that if the plaintiff had engaged in a pain management programme earlier than he did, he would have made a full recovery earlier in time. However, the court did not accept the defendant’s characterisation of the plaintiff’s injury as being minor in nature.
16. Counsel further submitted that the court had allowed some amount for loss of earnings, in the form of an award of €20,000.00 for loss of opportunity on the job market. Thus, the time spent on the loss of earning issue was not totally wasted.
17. Counsel pointed out that while the plaintiff had been criticised for the delay in furnishing full particulars of his loss of earnings claim, the court had found that the defendant had been put on notice of a substantial claim well in advance of the hearing. The main problem for the defendant was due to his failure to seek and obtain discovery of the plaintiff’s accounts and bank records well in advance of the trial of the action. Thus, insofar as there was any delay in the actual conduct of the hearing, this was not caused solely by the plaintiff’s actions. Counsel submitted that in all the circumstances, this case did not warrant a departure from the usual rule that costs should follow the event.
Conclusions
18. I propose to deal firstly with the general provisions that are applicable in relation to a consideration of an application for costs, where a plaintiff has been successful at the trial of the action, but has not been successful in establishing certain issues at the trial itself. I will then go on to apply these principles to the application for costs in this case.
19. In a judgment delivered on 1st March, 2017, the plaintiff was awarded damages of €84,688.52 against the defendant in respect of injuries and losses suffered by the plaintiff arising out of a road traffic accident on 21st October, 2009.
20. A tender was made by the defendant on 17th January, 2017, being the day before the opening of the hearing, in the sum of approximately €60,001.00. Counsel for the plaintiff has submitted that as the plaintiff had succeeded in obtaining an award of damages against the defendant and had beaten the tender, the normal rule that costs follow the event, should be applied. Accordingly, he submitted that the plaintiff should be awarded the costs of the action.
21. The defendant submitted that as the plaintiff had put forward a loss of earnings claim in the sum of €620,042.00, but had only been awarded the sum of €20,000.00 in respect of loss of opportunity on the job market, the plaintiff should not receive any costs connected with that issue. Furthermore, counsel submitted that the defendant should be paid his costs in respect of the time spent at the hearing dealing with the loss of earnings claim.
22. Having considered the submissions of counsel as outlined earlier in this judgment, I am satisfied that the principles in relation to the award of costs in inter partes litigation can be stated as follows; the general rule which is provided for in O. 99 of the Rules of the Superior Courts, is that while the court has a discretion in relation to awarding costs, costs should follow the event. This means that whoever wins the case should get their costs.
23. However, it is clear from the case law that this is not an absolute rule. The judge can depart from it, when the justice of the case so demands. This principle was clearly stated in the judgment of McKechnie J. in Godsil v. Ireland and the Attorney General [2015] IESC 103, at para. 23 thereof.
24. In the past, the courts have exercised their discretion to award costs to the unsuccessful party in cases which were seen as being “test cases” and also in cases which were seen to have a considerable element of “public interest”; see F. v. Ireland (Supreme Court 27th July, 1995), Curtin v. Dáil Éireann [2006] IESC 27, Cork County Council v. Shackelton [2007] IEHC 334, McEvoy v. Meath County Council [2003] 1 IR 208 and Kerins v. McGuinness and Ors. [2017] IEHC 217. See also Dunne v. Minister for the Environment, Heritage and Local Government [2008] 2 IR 775, where the Supreme Court considered the issue, but ultimately declined to depart from the general rule that costs should follow the event.
25. In Veolia Water U.K. plc. v. Fingal County Council (No. 2) [2007] 2 IR 81, Clarke J. in the High Court set out the relevant principles to be applied where a party who has been ultimately successful in the action, was unsuccessful in relation to one or more discrete issues which arose for determination in the course of the hearing. These principles have been set out earlier in this judgment. However, it should be noted that Clarke J. went on to caution that the principles which he was applying in the case before him, may not be suitable for application in other cases. In particular, he stated as follows at para. 18 of the judgment:-
“… Before leaving the general principle I should, however, add that it seems to me that an approach such as that which I applied in O'Mahony v. O'Connor [2005] IEHC 248, [2005] 3 IR 167, and Arklow Holidays Ltd. v. An Bord Pleanála [2006] IEHC 15, (Unreported, High Court, Clarke J., 18th January, 2006) and which I propose applying in this case, may not be appropriate in more straightforward litigation, notwithstanding the fact that some element of a plaintiff's case or a defendant’s defence may not have succeeded. The fact that such an additional issue was raised should only affect costs where the raising of the issue could, reasonably, be said to have effected the overall costs of the litigation to a material extent.”
26. Applying these general principles to an application for costs in a personal injuries action, it seems to me that the following is the approach which should be adopted by a court when considering an application for costs at the conclusion of the hearing:-
(i) The general rule which should be applied is that costs follow the event. However, the court has a discretion to depart from this rule when the justice of the case so demands. If there was a discrete issue on which the plaintiff was unsuccessful, he may be denied his costs in respect of that issue, notwithstanding that he was successful in the action overall.
(ii) However, just because the plaintiff’s evidence may not have been accepted by the trial judge on one aspect of the case, does not necessarily mean that he should be deprived of any portion of his costs. There will be many issues on which there will be opposing evidence from each party. Just because the judge decides in favor of the defendant on a particular issue, does not mean that the plaintiff should necessarily be penalised in costs. As long as the claim made by the plaintiff was reasonably stateable on his evidence, he should not be penalised just because the judge preferred the defendant’s evidence on that issue. For example, there may be a dispute between the medical experts in relation to the level of the plaintiff’s disability into the future. The plaintiff’s doctors may have given the opinion that the plaintiff would be unfit for anything other than very light work, while the defendant’s doctors may have reached the opinion that the plaintiff would be capable of light/medium work, but not for heavy manual work. Even if the trial judge finds with the defendant’s doctors and as a result, rules out a portion of the plaintiff’s claim for future loss of earnings, or future care costs, the plaintiff should not be deprived of his costs, as long as there was some medical evidence on which he was justified in advancing the claim at the trial.
(iii) Where a plaintiff puts forward a distinct and separate claim, on which he loses completely, such as putting forward a totally unsustainable loss of earnings claim, then it may be appropriate to deny the plaintiff his costs for the time spent at the hearing dealing with the discrete issue on which he has lost. If that is appropriate, he should also be denied the costs of his witnesses, who were called to establish that aspect of his claim.
(iv) It seems to me that the distinction between these two levels is essentially one of degree. If a plaintiff had a stateable case on the issue, he should not be penalised just because the trial judge found in favour of the defendant. However, if the plaintiff has put forward a particular head of claim, that was ultimately held to be unstateable, then it would be appropriate that he should be deprived of his costs in respect of the time spent trying to establish such head of claim at the trial. Thus in order for the plaintiff to be deprived of his costs, there must be a discrete issue which the plaintiff looses completely and the hearing of that issue must have led to a definite elongation of the hearing of the action.
(v) The question then arises as to the circumstances in which it will be appropriate for the trial judge to go further and actually award the defendant some of his costs in dealing with the particular issue. Again it seems to me to be a question of degree. In Veolia Water U.K. plc. v. Fingal County Council, Clarke J. suggested at para. 14, that where the trial was prolonged by an appreciable amount due to the fact that the plaintiff put forward a particular claim on which he was ultimately unsuccessful, then it would be appropriate not only to deny the plaintiff his costs for that portion of the trial, but also to grant the defendant his costs of dealing with that claim for the period by which the hearing was unnecessarily prolonged.
(vi) It seems to me that the approach of Clarke J. in the Veolia case, is a logical and sensible approach to the consideration of whether it is appropriate to award the defendant some of his costs in dealing with a discrete issue. Where a trial has been prolonged by an ascertainable amount and where the defendant has had to incur extra expense in dealing with that head of claim, on which the defendant was ultimately successful at trial, it is appropriate that he should be given his costs in respect of that discrete issue. Thus the defendant would have to establish that he had incurred definite extra expenditure, such as calling witnesses, to deal specifically with that particular issue. In order to recover the witnesses’ expenses, it would have to be shown that those witnesses were retained solely to deal with the discrete issue on which the defendant succeeded and were not going to be called to give evidence on other issues in the trial.
(vii) These principles apply in the same way to the converse situation where the defendant is ultimately successful in the overall action, but where the plaintiff succeeds on one or more discrete issues.
Application of these Principles to this Case
27. Applying these principles to the present application, as the plaintiff has beaten the tender, he is prima facia entitled to his costs. However, one cannot ignore the fact that the plaintiff put forward a very substantial loss of earnings claim in the sum of €620,042.00. This head of claim was found by the court to be “totally unrealistic” for three reasons. Firstly, the medical evidence did not come near to supporting the conclusion that this plaintiff would never be fit for gainful employment due to the injuries sustained in the accident. Secondly, the plaintiff had never tried to obtain work of a non-manual nature, such as working as an engineer, for which he was perfectly qualified. Thirdly, the court did not accept the evidential basis underlining the calculation of the figures claimed for loss of earnings. The court did allow a modest sum of €20,000.00 for loss of opportunity on the job market. Thus, the plaintiff all but totally failed on this issue.
28. When the defendant was faced with a very substantial loss of earnings claim, the defendant’s legal team had to expend considerable time and resources dealing with this aspect of the plaintiff’s case. Counsel for the defendant had to cross-examine the plaintiff at some length in relation to his medical condition since the accident and his ability to work, both up to the trial and into the future. He also had to spend time going through the plaintiff’s pre-accident work history and earnings record. This was done in a thorough and forensic manner. The defendant’s counsel also had to carry out a detailed cross-examination of the plaintiff’s accountant, Mr. Stephens. Finally, he had to bring the defendant’s accountant, Mr. Grant, through his evidence in some detail. Having regard to the size of the loss of earnings claim put forward by the plaintiff, I am satisfied that the defendant’s legal team did not unnecessarily prolong the hearing of the action. Put simply, they had to spend considerable time subjecting this portion of the plaintiff’s claim to detailed analysis.
29. This action was heard over eight days. Some portion of that time was taken up with a discovery motion, the costs of which have already been awarded to the plaintiff. The defendant has submitted that as the case was originally called on by the plaintiff’s counsel for two days, but ultimately lasted eight days, they should be granted their costs for six days of the hearing. I do not think that that submission is sustainable. The issue in respect of the loss of earnings claim, while substantial, did not take six days at hearing. Having reviewed my notes of the evidence, I am satisfied that the hearing was prolonged by approximately two days by virtue of the loss of earnings claim made by the plaintiff. Not only was the hearing extended by this amount of time, but the defendant was put to extra expense in dealing exclusively with this aspect of the case. Accordingly, I make the following orders in relation to costs in this case:-
(a) The plaintiff is entitled to the costs of the discovery motion, which was heard as a preliminary matter prior to the hearing of the action.
(b) If the plaintiff had adopted a realistic approach to the loss of earnings claim, this case would have been easily dealt with in six days. Accordingly, the plaintiff is entitled to his costs for six days at hearing before the High Court.
(c) I refuse the costs incurred by the plaintiff in respect of Mr. Stephens and Mr. Tennant, who were both retained in relation to the loss of earnings claim.
(d) As I am satisfied that the hearing was extended by two days due to the unstainable loss of earnings claim, I award the defendant his costs in respect of two days at hearing before the High Court.
(e) The defendant is also entitled to recover from the plaintiff the fees paid by the defendant to Mr. Grant, the defendant’s accountant.
(f) The costs awarded to the plaintiff and to the defendant are to be taxed in default of agreement.
(g) When the respective costs have been ascertained, either by agreement or after taxation, the defendant may set off his costs against the costs which he must pay to the plaintiff.
