Judgment of Mr. Justice John MacMenamin dated the 23rd day of July, 2015
1. The cost and length of litigation in certain categories of family law cases is a matter of concern, not only to litigants, but to the public. Consequently, one recurring question which arises in family law, as in all other areas of law, is guaranteeing access to justice. Parties, and those affected by family or relationship break-up, are entitled, as a last resort, to have their rights determined by the courts. This is a right, not a privilege. It is understandable that certain cases will give rise to substantial costs. On the other hand, the time is long past when parties can be permitted to engage in litigation without time limitations, and without cost consequences. In the truest sense, time spent and lost in court, impacts, not only on the parties, and family members indirectly affected by such cases, but also on other waiting litigants and the public who resource the courts. None of these observations are new. As long ago as 2007, Carol Coulter, writing in “Family Law Matters” indicated that the prevalence, even then, of personal litigants constrained for financial reasons to present their cases without lawyers, was, in itself, an indicator of prohibitive costs. This problem has magnified in the intervening years. Family members, who have a real stake in the outcome, must bear the consequences of unreasonable conduct by either or both of the parties. Costs of litigation, and time spent in court, are clearly interlinked. In law, as elsewhere, time is money.
2. Because of these concerns, Clarke J. and I took the opportunity in the main judgment of 21st February, 2015, of outlining certain case-management procedures in order to curtail unnecessary time expenditure in family law cases. The effect will be to reduce time spent and costs incurred in ample resource cases. Indeed, there is much to be said for the adoption, by analogy, of full Commercial Court procedures and practices in such significant net-worth cases. I acknowledge that the vast preponderance of practitioners, endeavour, within the constraints available to them, to ensure efficiency and avoid time wastage. No criticism is laid at the door of the lawyers in this case, who acted on the basis of instructions.
3. However, the fact must be recognised - if it has not been accepted already - that if steps are not taken, by those directly involved, to address both time spent, and costs incurred, in all categories of family law cases, then it will not be surprising if outside agencies intervene. Judges have a key role in this. What is necessary to recognise is that costs and time expenditure, in some cases, have been grossly disproportionate, and impede access to justice. What is proposed in the main judgment is a coherent series of steps, which will permit allocation of time, and limit costs, where time can be of the essence, and can actually determine, or at least affect, outcomes. Appropriate case management, which in itself requires a degree of court time, will reduce costs, and avoid cases being unreasonably drawn out or unreasonably presented.
4. This judgment is, therefore, to be read in conjunction with the earlier judgment herein delivered on the 26th February, 2015. The central issue, now for consideration, is whether the trial judge was correct in awarding 80% costs of the main hearing in January, 2014. This hearing had a 5 day duration. A second question relates to the judge’s award of 80% of the residue of interlocutory orders, which had not been already addressed in previous orders of the High Court.
5. Costs are discretionary. The general rule is that they follow the event (per Denham J., Grimes v. Punchestown Developments Co. Ltd. [2003] I.R). One question which arises is how one defines the term ‘event’. Does this term relate only to the ultimate outcome, or should a judge look to his various determinations on each of the issues involved in the case before him?
6. The judgment now considers some of the main principles applicable in determining costs in family law matters, both on the “global outcome” basis and on the more narrow basis of identifying the Court’s decision on discrete issues, insofar as that is possible. For brevity, I will call the second “the Veolia approach”. Both approaches were adopted by the trial judge. They are not mutually exclusive, nor is the Veolia approach simply a matter of counting up the issues, the Court’s determination on each of them, and mechanically setting-off one against the other.
7. A global assessment in family law cases may, inter alia, involve consideration of the conduct of the parties:
First, their proposals and the reasonableness with regard to custody and access of children, and the conduct of the case in this regard;
Second, with regard to property, assets and pensions; a consideration of the extent to which the parties have acted in a manner so as to expedite the hearing; provide timely and full disclosure; engage constructively and realistically in the valuation of property and assets; and fully, and in a bona fide manner, complied with interlocutory and final court orders. This involves assessing how parties avoided unnecessary time expenditure in disputing issues which should not have been in dispute.
This case involves property, assets and pensions. The questions which arise in this appeal are, therefore:
The efforts made by parties to resolve the dispute, reflected in correspondence;
The amount or value of the properties involved;
The importance of the matter;
The complexity of the matter;
The extent to which the issues before the court required specialist knowledge or expertise;
In adopting the more “narrow”, Veolia approach, a court may, on the other hand, look to its determinations or conclusions on each issue. This too is discussed later.
8. Thus, in determining a costs award in family law matters where there are significant resources, a judge may view matters, both on a “global” or overall assessment of the outcome of the case, or on a more discrete “issue oriented”, segmented approach, or a combination of these approaches. In this process, a judge will be exercising his or her discretion applying a set of well recognised principles.
9. At the preliminary or direction stage of complex cases, there should be a clear and binding estimate of the length of time necessary for determining each issue in the case. That time should be allocated appropriately to an applicant and a respondent, allowing for cross-examination and re-examination. If matters run beyond the allotted time, a judge will be justified in drawing this fact to the attention of the parties and, if necessary, taking unnecessarily lengthy exploration of the issues into account in costs applications. As touched on earlier, in ample resource cases, there is surely now much to be said for the preparation of witness statements, and adoption of these as evidence in chief. Alternatively, it may be more efficient for a witness simply to adopt his or her expert report as direct evidence. This must be furnished well in advance to the other party’s advisers. For this process to be effective, disclosure will have to be complete and timely.
10. Of course, portraying litigation as a “project”, capable of advance costing, suffers one vital deficiency. A project, such as the construction of a building, does not involve the possibility it will be met by some other contesting party seeking to knock it down. This is one of the aspects of adversarial litigation. But there is a vital distinction between what is reasonable and what is unreasonable conduct by an opposing party.
11. A trial judge is in a particularly strong position to determine whether a particular party has engaged in conduct which goes beyond the reasonable parameters in the conduct of litigation. In such circumstances, if there is unreasonable conduct, for example, by setting sights too high, or by non-cooperation in disclosure, or by non-compliance with court orders, a court will be entitled to address this in costs applications. These observations apply, a fortiori, in the last category, that is, misconduct by one party involving obstructing or failing to comply with court orders. This last is a significant element in the factual background to this case.
Rule 99 R.S.C.
12. Reflecting the general observations on costs factors earlier in this judgment, Rule 99 of the Rules of the Superior Courts sets out the general provisions with respect to a party’s right to costs. Insofar as material, the Rule provides:
“1. Subject to the provisions of the Act and any other statutes relating to costs and except as otherwise provided by these Rules:
(1) The costs of and incidental to every proceeding in the Superior Courts shall be in the discretion of those Courts respectively.
(2) No party shall be entitled to recover any costs of or incidental to any proceeding from any other party to such proceeding except under an order or as provided by these Rules.
(3) The costs of every action, question, or issue tried by a jury shall follow the event unless the Court, for special cause, to be mentioned in the order, shall otherwise direct.
(4) The costs of every issue of fact or law raised upon a claim or counterclaim shall, unless otherwise ordered, follow the event.”
13. Again reflecting certain of the criteria outlined earlier, High Court Practice Direction 51 addresses costs in family law proceedings. It provides, inter alia:
“24. (1) Where the Court, either on the application of a party or of its own motion determines that any party
(i) has failed to comply with or observe any of the provisions of this Practice Direction,
(ii) has failed to comply with or observe any orders or directions given by the Court or any agreement entered into by the parties in the course of and in connection with the proceedings,
(iii) has been guilty of neglect or delay in respect thereof,
(iv) has caused unnecessary court appearances, work or the creation of documentary material or
(v) has otherwise been guilty of improper conduct either by way of act or omission,
resulting in costs being unnecessarily incurred, it may at any stage of the proceedings make an award as to and direct the payment of such costs to any party affected thereby.
(2) Where the Court determines any application of an interlocutory nature it ordinarily will, where having regard to the subject matter it can justly do so, also determine the question of costs relative to such matter.
25. The Court in determining whether or not to make an award as to the costs of the proceedings and if so in determining the manner in which it should exercise its discretion in respect thereof, shall, without prejudice, inter alia, to Order 99 of the Rules, take into account and give due and appropriate weight to:
(i) any offer made by the respondent either in open court or marked “without prejudice save and except as to costs”;
(ii) any demand or counter offer made by the applicant which is either open to the Court or marked “without prejudice save and except as to costs”;
(iii) the parties observance, compliance and implementation of the provisions of this Practice Direction; and
(iv) the general reasonableness of each party’s behaviour in the conduct of the litigation in question.
(v) The extent to which the substantive relief awarded by the Court was intended to place the parties in a position to discharge their own costs.” (emphasis added)
I emphasise parts of the practice direction because, to my mind, they again form a significant factor in the way the trial judge approached matters here.
Discretion
14. It goes without saying, that this Court will, in general, be slow to interfere with the exercise of a trial judge’s discretion in awarding costs. (See by way of illustration the judgment of this Court in WYYP v. PC [2013] IESC 12, Denham C.J., where this Court refused to interfere with the trial judge’s discretionary order refusing to award costs, even when there had been a degree of misconduct in the form of non-disclosure, but not amounting to mala fides). However, if a trial judge demonstrably departs from identified principles, an appeal court may intervene; (see In bonis Morelli, Vella v. Morelli [1968] 1 I.R. 11). If a costs award does not follow the event, a judge should state his reasons for making a special award (see Dunne v. Minister for Environment, Murray C.J. [2008] 2 IR 775 at p.783). In a recent judgment of this Court, Child & Family Agency v. OA [2015] IESC 52, Supreme Court 422/14, delivered 23rd June, 2015, MacMenamin J.; the point is made that in child law cases, a court, in considering costs applications, may helpfully have regard to the question of “outcome”, when what is in question may be an entire series of “events” or decisions. This observation also applies to interlocutory and substantive proceedings in the context of family law. If a court is going to make a specific order detrimental to one party regarding costs, the reasons must be made clear. It is, of course, true, as counsel for the husband here points out, that one can frequently say that there are “no winners or losers in family law”. But a court must have particular regard to the fact that in such cases there is a finite pool of assets, comprising both those of a respondent and an applicant. These will have to be used to make proper provision for spouses; for dependent members of the family; as well as for costs of the parties. As McCracken J., speaking for this Court, pertinently pointed out, in MK v. JPK (No 3) (Divorce: currency) [2006] IESC 4, [2006] 1 IR 283, at p. 291 para. 26, in family law, in contrast to many other forms of litigation:
“There is no question of either party having further assets which could be used to pay costs. In my view, therefore, the general rule does not necessarily apply in family law proceedings.”
In the circumstances, that judge pointed out that a court must necessarily look at the effect of the award of costs on both parties. It follows that the courts must take every possible step to avoid unnecessary appeals, which have the effect of further dissipating the funds available to the parties and their children.
15. More recently, in Roche v. Roche [2010] IESC 10, Murray C.J. stated:
“Litigation between spouses on issues related to the matrimonial relationship often give rise to particular circumstances in which the Courts consider it just and equitable to depart from the general rule of costs following the event.”
16. In giving expression to these views, the courts were recognising that the former practice of allowing a wife to have her costs against a husband in all circumstances was no longer justified. In each individual case it is the duty of the Court to make such order is just in the circumstances. In some circumstances, this may warrant a court ordering each party to bear its own costs. This may be particularly so where (in circumstances envisaged by the High Court Practice Direction), there has been a meaningful and constructive pre-trial engagement by way of Calderbank letters. In other cases, especially where there has been serious misconduct, obstruction or hindrance of court orders, as a result of which significant further proceedings are necessary, a full order for costs may be both just and fair without it becoming a sanction.
The ‘Veolia’ Approach
17. Having identified a series of broad principles, it is necessary to look at another ‘narrow’ approach which may also be fruitfully adopted. In Veolia Water UK Plc. v. Fingal County Council [2006] IEHC 240, [2007] 2 IR 81, Clarke J. (then in the High Court), had to consider the issue of costs in the context of complex litigation which involved a series of numerous interlocutory steps. The principle enunciated in that judgment is to the effect that where a court is satisfied that the successful party has increased the level of costs by virtue of raising issues on which it was not successful, the judge should attempt to reflect that fact in the order for costs. Speaking in the context of the Veolia judicial review proceedings, Clarke J. observed at p. 86, pars. 13 (2.9) and 14 (2.10):
“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.”
He continued:
“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.”
In considering the submissions in this appeal, I lay particular emphasis on how the trial judge’s discretion was exercised in this case. The questions which, primarily, arise are, first, did the judge depart from recognised principles in some significant way? Second, in the event of such departure from principle, is the extent of the departure, such that an appeal court should interfere with the trial judge’s exercise of his discretion, and, itself on the basis of available evidence, substitute some other order in relation to costs?
The History of the Case
18. The chronology of this case shows the need for clear management procedures so that assets are not needlessly dissipated. Since the case began, at least twenty full days have been expended in court involving both full hearings and interlocutory matters. The resources available to the parties (referred to in the main judgment) herein were significant, but not infinite. Admittedly, the nature of the assets might have posed logistical and other problems to making orders. But these were not insoluble, and were ultimately dealt with by court orders. However, any objective assessment of the history of the case presented to this Court demonstrates the extent to which, to my mind, matters went beyond the parameters of what is reasonable, or proportionate. In my view, this was an issue the trial judge legitimately took into account in his costs award.
19. The trial judge’s involvement began 7 years ago. The first substantive hearing took place as long ago as 2008. According to the relevant High Court order, this hearing had a 10 day duration. But, despite the length of that hearing, the range of issues was not extraordinarily complex. The husband appealed to this Court. Denham J. delivered a judgment on 29th June, 2011. This is referred to in the main judgment. However, thereafter, 15 interlocutory High Court applications and orders are then on record, either restraining the husband from actions to prevent the sale of assets, or addressing other issues in dispute regarding disposal or disposition of properties, pursuant to the Supreme Court order. The last High Court hearing itself (the subject of this appeal), had a duration of 5 full days in January, 2014. There were then other applications in March, May and July, 2014. While neither party may be entirely free from blame, these facts cannot simply be set to one side, or ignored, when it comes to determining what was the “outcome” of this case; a question to which I will return.
The Husband’s Submissions
20. It is now necessary to outline the broad submissions made by the husband’s counsel in some detail. First, it is said that the trial judge’s discretion as to costs must be based on articulated and rational grounds. There can be little disagreement on this point. Second, there is raised the interesting issue as to the extent to which the precept of costs following “the event” should be modified or adopted with respect to family law proceedings, and the extent to which “the event” can be determined in the context of family law proceedings. This is addressed in this judgment. Third, counsel raises the question as to whether the order for costs in this case, and particularly in regard to the substantive hearing in the High Court of January, 2014, should be determined by the narrow “Veolia approach”, i.e. the time spent on each of the main issues, and in respect of which one or other of the parties can be said to have “succeeded”.
21. The husband asks the Court to assess the way in which the parties existing and future financial position will be affected in determining the issue of costs.
22. I lay some emphasis now on this approach, because, in my view, there is a risk of overlap with, or impact upon, the prior determinations of this Court in relation to apportionment of property and assets. Costs in family law cases do not come from some other source removed from the case. It is submitted that this Court must consider whether there should be a differentiation in respect of the costs of the interlocutory applications, and the costs of the substantive hearing. It is said that the husband succeeded on some of the issues at the main hearing. Finally, the husband questions the extent to which the grounds given for the learned trial judge’s decision on the issue of costs are, in fact, sustainable. It is noteworthy that the husband’s case on costs focuses particularly on the parties’ financial circumstances.
The Nature of the Assets
23. Counsel for the husband submits that the wife’s assets are very largely liquid, being in the form of monies. By contrast, it is said, his assets consist almost entirely of his home and the company which he operates from the yard of the house, and upon which he is dependent for his income in the future. It is said that the wife is not dependent for her future income on her assets, and that the trial judge accepted that she is in a more secure financial position than the husband by virtue of her employment in the public sector.
24. Next, counsel submits the parties’ situation differs in respect of their outstanding liability for costs. The wife has very little indebtedness, because she had already discharged the large bulk of her legal costs. By way of contrast, the husband’s uncontroverted evidence in the High Court was that his outstanding costs were approximately €270,000 + VAT, as he had been in a position to discharge only in or about €120,000 of his legal costs previously incurred. These costs had been paid using the mechanism of the company and his farm accounts in a manner which allowed costs to be treatable as the husband’s income. Accordingly, it is contended that the wife’s liability for costs was now going to be significantly lesser than that faced by the husband.
25. Counsel laid particular emphasis on the fact that the wife, by virtue of her employment in the public sector, enjoys particular security in her pension. By way of contrast, his client has a pension fund of approximately €15,000, meaning that he will have no pension, save for his entitlement to a State contributory pension, an asset which is also available to the wife, in addition to her public service pension.
26. Counsel submits that the liquid assets available for distribution between the parties consist of proceeds of the sale of farm lands. This was in the sum of approximately €1,227,394. For the purpose of equalising assets, the wife has received the sum of €900,000. The appellant has received the sum of €100,000, which monies were needed for part repayment to the company of the monies he borrowed therefrom to make payment on account to the wife of €150,000. Even then, he will still need to repay the same again to repay the company when tax is factored in.
27. Counsel accepts that out of the monies she has received, the wife will have to purchase a home, having disposed of properties in which she held an interest in Dublin previously. Should the appellant husband succeed in this appeal, the wife may have to discharge her own costs of this appeal. If, on the other hand, the existing High Court order is upheld, she will not have to apply monies received on foot thereof to the payment of the costs, where those costs have already been paid.
28. However, against this, counsel for the husband submits that the appellant will have available to him only a residue of €227,000 from which he must pay his High Court costs and the costs of the appeal. Then he will have nothing to apply in trying to provide himself with any meaningful form of pension entitlement for his security into the future. If, on the other hand, the High Court order is upheld, he will not have liquid assets available to him to discharge both the costs he is liable to pay to the wife, with or without the costs of this appeal, and his own legal costs. The large bulk of the husband’s assets consist of his home and the attached yard, together with 22 acres, together with his shareholding in a company which he operates. It is said that the property would have to be sold as a unit, and as his company operates from the buildings in the farmyard, it would be difficult from him to relocate and maintain the business if he was forced to sell the home to pay his costs.
29. A number of these points relate back to the main judgment herein. However, it is noteworthy that many of these submissions relate primarily to the parties’ assets and financial circumstances, rather than to the principles in relation to an award of costs. The question of the disposition of property, assets, and pensions, formed part of the judgments of the High Court and this Court. An appeal court must have regard to the fact that an order as to costs will have knock-on consequences elsewhere, specifically on “assets” or “maintenance” matters which have already been determined by that Court. A trial court will also have this in mind in addressing how assets should be apportioned.
The Interlocutory Orders
30. As to the interlocutory orders, further consideration of the record is revealing. This Court delivered its earlier judgment apportioning the assets on the 7th June, 2011. The perfected order became available on the 30th July, 2011. As mentioned earlier, 15 orders were necessary from the High Court in the interim between the Supreme Court order and the remitted High Court hearing starting in January, 2014. In respect of one of such orders, an award of costs had already been made in favour of the wife on the 30th October, 2012. In respect of another application, (that the judge recuse himself), the trial judge expressly made no order on the 20th December, 2013. Both a broad, and narrow, consideration of those orders demonstrates that the vast preponderance, if not all, of those interlocutory orders were necessary in relation to the enforcement, or identification, of a mechanism for, the sale of the lands, in the context of non-cooperation by the husband. In respect of all the other interlocutory applications, costs were reserved, or there was no mention of costs in the High Court.
31. It is not in dispute that the trial judge was entitled to make orders in respect of those matters in which he reserved costs. However, counsel for the husband submits that if the order encompassed costs of those appearances where no order for costs of any sort was made, then it was not within the High Court judge’s jurisdiction, nor of this Court, to now make an order.
32. Counsel for the wife refers us to Gill on Costs 1937 (Sackville Press), wherein it is stated that it is the duty of a Taxing Master to include in the “costs of the action” all costs expressly disposed of in that way, and the costs of applications, which are not expressly reserved (How v. Winterton (5 NIJ 103)). The author goes on to state:
“From this it would appear that the costs of motions, the Order on which makes no mention of costs, but does not refuse the application, are covered by a subsequent Order giving costs in the matter”.
33. It is said also that the following general rule was laid down by Chancery judges in England:
“Where interlocutory applications have been ordered to stand to the trial and are not then mentioned to the Judge, the costs of such applications are to be treated as costs in the action and taxed accordingly, and need not be mentioned in the judgment. Where interlocutory applications have been disposed of, but the costs have been reserved, such costs are not to be mentioned in the judgment or order, or allowed on taxation, without the special direction of the Judge.” (British Natural Premium Provident Association v. Bywater [1897] 2 Ch 531)
34. From this I conclude that, where no order has been in relation to costs, it lies within the jurisdiction of this Court to make such order. To the same effect, Order 99 Rule 5 of the R.S.C. provides as follows:
“5(1) Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings; and an order for the payment of costs may require the costs to be paid forthwith, notwithstanding that the proceedings have not been concluded. …”
35. I turn now to a consideration of other submissions made in relation to the substantive High Court 5 day hearing in January, 2014. On the costs, counsel for the husband makes a number of additional points.
Submissions on the Main Hearing
36. First, it is urged that the trial judge appears to have effectively “taken as a starting point” that the wife was entitled to an order for her costs, and then considered whether there should be a reduction therein. It is accepted that, insofar as the hearing consisted of evidence in relation to the diminution in value of the lands in question, and the applicant’s pension, the trial judge decided in the wife’s favour. However, it is contended, these issues consisted a relatively lesser part of the time taken in the main hearing, and that a relatively greater part of the evidence related to matters in respect of which the trial judge’s conclusions favoured the husband. It is said these included evidence necessitated by the wife’s contention that capital gains tax payable on the lands could be offset by improvements carried out on the property in the early 1990’s; or later, as this point became unsustainable, evidence relating to the applicant’s legal costs in the proceedings. It is said that these proceedings could properly have been dealt with in a day. Counsel argues that the trial judge disregarded that the reasons the proceedings took 5 days was substantially contributed to by the issue in capital gains tax, and by the evidence of a number of witnesses on the valuation of the residual lands left to the husband in respect of which the trial judge, ultimately, found against the wife. This submission is of considerable significance. It makes the basis for an area where I unfortunately differ from my colleagues.
Discussion
37. In its judgment of the 26th February, 2015, this Court dealt with the conduct of the husband with regard to the order for sale. It is self-evident that an order for sale is market sensitive. This was particularly so having regard to the time at which the order was made, and the economic circumstances prevalent in the country. An obstruction, or hindrance, could, and did have, a critical effect, diminishing the obtainable price. In its main judgment Clarke J. and I observed (D. v D. [2015] IESC 16 at par 6.17):
“It is quite clear that, on the basis of these findings of fact, the trial judge was entitled to conclude that there had been obstruction or hindrance of the court order. There was more than sufficient evidence to allow the trial judge to come that conclusion. In reality, it was not our understanding that counsel for Mr. D submitted, on this appeal, that the finding of obstruction made by the trial judge was in any way unsustainable on the evidence.”
The judgment continued at par. 6.18:
“It seems to us, therefore, that the trial judge was, in the circumstances of this case, clearly entitled to have regard to the conduct of Mr. D. in relation to the sale of the farmlands. To do otherwise would be to permit Mr. D. to frustrate the order of the court by taking action designed either to prevent that order being put into effect, or to minimise the amount of monies which would properly be paid to Ms. D. in accordance with the terms of the order of this Court made on the First Appeal.”
We went on to say at par. 6.22:
“We are satisfied that this was an appropriate approach for the trial judge to adopt. It must be made clear that any party who acts in a way likely to diminish the value to be achieved in the sale of matrimonial assets in the context of matrimonial proceedings is exposed to the risk that the court will place any shortfall in the sale price achieved on their side of the ledger, as it were. To do otherwise would be to allow parties to benefit by their own wrongdoing, and to permit inappropriate interference with the orderly disposition of family assets.”
38. Further consideration of the trial judge’s findings and observations on the issue can be found in the main judgment, and do not require repetition.
39. Counsel for the husband submits that, while it is no where clearly articulated in his decision, it appears that the trial judge made the order for costs herein as a further consequence of his particular views of the appellant, namely, in relation to putting up signs at the boundary, and putting heaps of gravel in the laneway, or, more generally, in failing to co-operate in the sale of the lands, or failing to keep his unhappiness and opposition to the sale regarding the lands from becoming known.
40. Counsel says that the trial judge had already signalled his views on this matter when he made adjustments to the assets to be divided by ascribing to a notional assets to the appellant, arising firstly from a diminution of the price that the lands obtained, and secondly a price of €28,000 relating to the wife’s contention that she had to pay rent for an extended period due to the delay caused by the husband, and her further contention that account should be taken of the income that the husband had received for the lands during the period in which they were to be sold. In effect, counsel submits that if this was the rationale for the award of 80% of the costs, this does not constitute a proper basis for making such an order. He contends the primary basis on which the issue of costs should be decided was on the basis of whether the conduct of either party had resulted in costs being unnecessarily incurred. It is not in dispute that the trial judge was correct in granting the wife the reserved costs of the interlocutory applications, in light of their nature, and in the light of the conclusions therein. However, it is said, that if either party was the cause of costs being unnecessarily incurred at the substantive hearing, it was not, on balance, the husband. It is said that the evidence in relation to the capital gains tax was entirely unnecessary, and that, in any case, the outcome on that issue went against the wife.
41. I have outlined the husband’s submissions in some detail because, to my mind, they raise issues of importance. The points made are not insubstantial. They relate to factors which might, potentially, be taken into account in a costs award. There are, however, a number of reasons why I would not be disposed to interfere with the trial judge’s award.
Actions Creating the Necessity for Further Costs
42. An award of costs is not to be regarded as a sanction. However, this was a case where a substantial number of hearings, both interlocutory and substantive, were rendered necessary as a result of the actions of one party. The short description of the husband’s misconduct, set out earlier, could be put rather more dramatically. Referring back now to the main judgment, what was written on the sign which the husband placed at the entrance to the land was intended clearly to indicate his unhappiness that an order for sale had been made. The placing of gravel on the laneway was designed to prevent access. It might, inter alia, have had the effect of ensuring that potential purchasers, or other persons involved in the sale, would find it difficult, or not wish, to gain access to the property. While the husband sought to dissociate himself from what occurred later at the attempted auction, it is not possible to divorce the views which he made public with what occurred afterwards in a locality where feelings can run high, especially where if only one side of the story becomes known. This, again, is discussed in the High Court judgment and the main judgment of this Court. An award of costs for unnecessary hearings, as a consequence of such actions, is not to be characterised as a sanction.
43. To quote again what McCracken J. pointed out in MK v. JPK (No. 3) (Divorce: Currency) [2006] IESC 4, [2006] 1 IR 283, at p. 291:
“There is no question of either party having further assets which could be used to pay costs.”
The Veolia Based Approach
44. When the matter was remitted back to the High Court, the central issues in dispute were, in fact, 5 in number:
(a) Whether the sale price of the lands had been reduced by the conduct of the husband;
(b) If so, by how much?
(c) Whether, as a matter of law, the husband could be made responsible for such a reduction in the sale price by the attribution of the loss to him;
(d) Whether the public service pension of the wife formed part of the “assets” of the parties, and as such was to be taken into account in the equal distribution of such “assets” between them.
(e) The question of capital gains tax.
Additionally, there were two very net issues, as to whether the wife was entitled to deduct from her assets the rent which she incurred in residing in Dublin, and interest on payments on her accommodation. It cannot be said that these two points were issues which added significantly to the time, or to the costs. Consequently, consideration may be confined to the five central issues before the Court from the point of view of costs.
45. That these were the central issues can be inferred from the judgment itself, which deals with each. On four out of the five issues which were remitted back to the High Court (i.e. 80%), the husband was unsuccessful, as outlined in the main judgment.
46. On the fifth, (e) above, I do not discount that the husband made significant headway in relation to the wife’s case on the capital gains liability. Where the difficulty lies is as to what weight and consequence should be put upon this factor. A court may intervene in a costs award if there is an error of principle; it should be much slower to intervene if the question is one of degree, not amounting to principle. The trial judge recognised the distinction between the 5 issues; he chose to make no order on the CGT issue, but to award the wife costs on the balance of the issues. Were it to be shown that in so ordering, he had committed a significant error in principle, such as by not recognising at all that there should be a distinction between the issues, then, I think, an appeal court might well interfere with a costs order. However, can it be said that there is a demonstrable error in principle here? As well as looking at the overall outcome, the judge did, in fact, give weight to his determination regarding each of the “discrete issues”, and thereby adopted the approach identified in Veolia. Even at risk of repetition, it is helpful here to re-emphasise precisely the approach which the trial judge adopted in his ex tempore decision on the costs question. The transcript shows:
“JUDGE: Yes. Well, first of all, working from the results of the court proceedings backwards, taking the final trial which is the last, the trial recently in this court relating to the division of assets results in these figures, which ultimately have come out, there were two issues in that trial where the wife did not succeed. Firstly, in relation to her claim that she was entitled to deduct from her assets the rent etc., and there will be interest which she paid on interim accommodation. That was not allowed, she failed on that. She also failed fairly significantly on the capital gains arguments. She succeeded in a few of them but overall she didn’t succeed in that so that she wouldn’t expect to get her full costs of the hearing. I would think that she is entitled to 80% of the cost of the hearing, and then in relation to the balance of costs that are not already the subject of an order and (counsel for the husband) says that taxation hasn’t been completed in respect of them, but there are a number of orders for the reserved costs, and I think an appropriate allowance for the one day or so that [counsel for the wife] would have envisaged where the parties would be sharing the costs, just to administer the Supreme Court order. I would think that 80% again would be - would meet the justice of the situation because the day that would be had, or the couple of applications that might be had to actually administer the order would only be dealing with fixing the reserve of the price, getting the result of the auction and then dividing it on the basis that the court decided without having the tussle about the - the various matters that took up the time in the actual trial recently. Now there is an overlap there in terms of the capital gains might have been an item for one that would be shared, but the costs are not being recovered by the wife in respect of the capital gains. So if she had delayed it during the one or two days mentioned by Mr. Durkin she certainly wouldn’t have got credit for that. So I think 80% overall in respect of all reserved costs and the costs of the recent hearing.” (emphasis added)
47. One must accept, from the emphasised part of this quotation onwards, that the judge might be criticised for starting “backwards”, and working from the proceedings he had just heard. This was his choice of words in a very ex tempore situation. But, in my view, this was not, by any standards, an ordinary case, where ordinary cost considerations should apply.
48. I am not persuaded that a trial judge should be criticised or found to be in error for failing to draw a ‘red line’ between the trial in January, 2014 and everything which went before. It is not always easy to get a sense of the interpersonal dynamics of a hard fought family law case, where one party, at least, acts unreasonably. In family law, unlike physics, the reaction to every action may not be an equal reaction. But unreasonable conduct is very likely to beget unreasonable reactions. The question is, whether such reaction, or stance, may be a foreseeable consequence of unreasonable actions? To my mind, there are sound reasons in this particular case, for conferring a substantial measure of respect to the trial judge’s ruling, based on the facts and circumstances which were critical to his findings on costs. Four of the considerations warranting adverse costs orders in the High Court, Practice Order 51 were breached. They are emphasised in the quotation from the Practice Direction.
49. I entirely agree with the majority, that a judge may appropriately adopt a “broad brush approach” in making “Veolia orders”. Where I differ, in this case, is in identifying the appropriate “starting point”, and thereafter the methodology which should be adopted in the Veolia approach. I start from the proposition that, as a result of the earlier judgment of this Court, and as a result of the various intervening events, the High Court hearing in January, 2014 was inevitable and necessary. As a consequence, it was reasonably foreseeable that at least a two or three day hearing would inevitably result. What actually occurred was that, as a result of the capital gains tax issue being ventilated, two days extra were added. But, to my mind, these were added to a case which had a very unusual background, where there has been serious misconduct, leading to wasted days in court, and where the remaining issues required in any case to be determined.
50. I also have a concern as to the way in which the “Veolia” approach might be applied in this case. These concerns are, as it were, without prejudice to my overall position. My concerns can be put quite simply, and in the form of a question. Is there not difficulty, when one allocates percentages, in treating all days as being equal? While I would not agree with such a view, I can see logic in making an order in relation to two days of the hearing devoted to the capital gains tax issue. But such an award would not, foreseeably, have the same consequence as the form of apportionment by percentage which is now proposed.
51. The basis of my concern is, I think, illustrated by the approach which is suggested for the costs of this appeal. Here, it is not intended to treat the two days of the appeal alike. It is accepted that Ms. D should, generally, have her costs of appeal, but that there should then be a set-off on the second day devoted to the costs issue. However, such a set-off is confined to the second day, in circumstances where, it was accepted, that the generality of Ms. D’s costs would be incurred, as Mr. D had decided to appeal in any case. This rendered it inevitable that Ms. D would incur costs. While I adhere to my view that the judge’s order should not be interfered with, at all, I would accept that a “segregation” of the days would be possible for the appeal. But I would have thought a similar approach would have been appropriate in relation to the two extra days incurred in the inevitable High Court hearing where, undoubtedly, significant costs, and witnesses’ expenses, were incurred.
52. Such an approach would have had the advantage of recognising that the preponderance of costs, in the shape of instruction fees and brief fees, would, as a matter of likelihood, have been incurred in any case. Even accepting that the additional two days were arguably “expensive”, in the light of expert witnesses, I am not persuaded that what is proposed achieves the correct end-result. In particular, I query whether there is sufficient evidential groundwork (as to costs and expenses actually incurred) to interfere with the trial judge’s order, and, specifically, whether this Court has sufficient information to know what the “bottom line” outcome of a costs order will be.
53. What is clear is that the judge in his determination attached weight to, and did segregate, the issues upon which the wife succeeded, and those upon which she failed. I am not persuaded that it has been sufficiently shown that he departed significantly from principle in not awarding the husband some measure of costs, or ordering a set-off on the CGT issue. I think that in assessing the trial judge’s decision here we are dealing with matters of degree, not a true error in principle. The trial judge had some six years experience of this case from 2008 onwards. The material before the Court does indicate that he adopted, both an overall “outcome” approach, and also one focusing on the individual success or failure on each of the issues. Clearly, he had regard to, and placed particular weight on, a “global approach” in assessing what the costs award should be. But he was, after all, very well placed to adjudicate on this issue, from his long experience of the case, and was, to my mind, best placed to allocate an appropriate and just weighting, on a proportionate basis, on the many issues with which he had to deal, the consequences of having to address those issues arising from the remittal following the first appeal from this Court, and the subsequent interlocutory applications. I am not persuaded that an error in principle is shown, even if one might conclude that an award of 80% of costs on both the main and interlocutory hearings was towards the upper end of what lay within the foreseeable parameters.
54. I have already commented that many of the husband’s submissions relied on matters which are already determined by this Court, specifically his financial circumstances, rather than the principles which should apply. I reiterate my question as to whether the Court has a sufficient evidential basis to substitute a substantial recalibration of costs which will, in any case, bear on the other orders which this Court has already made.
55. If some indication of error is shown in cost awards, an appeal court, in deciding to intervene, will necessarily be reluctant to engage in a process sometimes described as “salami slicing”, that is, engaging in some notional reduction of the percentages by some 5% or 10%, without some clear rationale. There is no necessary connection between time spent on witnesses, and the outcome of the issues on which they were called, though it can be a guide. We are not in a position to assess whether all the examinations or cross-examinations were necessary, or could have been curtailed further. Specifically, I am uncertain whether this Court is in a position to segregate those costs which were inevitable, as a consequence of the High Court hearing, as compared to those costs which were added as a result of the capital gains tax matter. Unless, therefore, there was a significant error in principle, which was sufficiently evident, and sufficiently quantifiable in its outcome, I think we should be slow to engage in a process of micro-analysis, where the evidence is insufficient, where the outcome is not clear, and which might, in future cases, run the risk of an overly forensic revisiting of costs, on a Veolia basis, on issues which have already been determined by a judge.
56. While there is, therefore, some difference between the views of the majority and minority, I would hope that the judgments are nonetheless of assistance in future cases. Perhaps, one of the lessons is that a trial court should be clear in establishing what is its “starting point”.
57. I would, however, add that, for the future, a question may arise whether the time has come for a yet more nuanced approach on costs. At the case management stage, it should in future be possible, not only to allocate “time” to the various issues, but also to identify (on the basis of a record of past cases), potential costings, both of an entire case, and each of the issues, on a global and Veolia basis. The consequence of this would be that parties, who are not always financially minded, would be able to see more clearly the costs, and benefits, of pursuing particular issues in ample resource cases well prior to embarking on the full hearing, and prior to incurring all of those costs.
The Costs of this Appeal
58. For myself, therefore, I would not interfere with the High Court costs order. It would follow from this, that I would award the wife the costs of both days of the appeal before this Court, i.e. the first day in relation to the substantive property issues, and the second day in relation to the costs question.
