Judgment
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THE SUPREME COURT [Appeal No: 323/2014] Denham C.J. Clarke J. MacMenamin J. In the Matter of the Judicial Separation & Family Law Reform Act, 1989;
And in the Matter of the Family Law Act, 1995
M.D. Applicant/Respondent and
N.D. Respondent/Appellant Judgment of Mr. Justice Clarke delivered the 23rd July, 2015. 1. Introduction 1.2 Although I agree with a great deal of what is said by MacMenamin J. in his judgment on these costs issues, I have come to a different conclusion as to the way in which the principles which MacMenamin J. identifies should be applied in this case. 2. The Principles 2.2 For the reasons which MacMenamin J. has advanced, it seems to me that a different approach needs to be taken to the costs of matrimonial proceedings than that which is appropriate in many other forms of civil proceedings. This is so not least in matrimonial cases which are substantially concerned with the division of assets and other financial resources. Costs have to be borne by one or other party. Those costs will inevitably diminish the overall resources available. A court, in deciding on the proper provision which requires to be ordered, must have regard to the fact that the overall resources from which that provision can be made will inevitably be diminished by whatever costs are incurred in the litigation. It seems to me that in any case where the Court is minded (as the Court was in this case) to divide the available financial resources on a broadly equal basis between the parties (even if not necessarily on a strict 50/50 basis), the starting point or default position should be that the Court should make no order as to costs and thus require both parties to bear their own costs. That is so precisely because to make any other order, unless there were good reason for so doing, would in fact have the potential to significantly interfere with the provision made. If the party providing assets or resources as a result of any court order is required to also pay costs then that party will end up, for no good reason, materially worse off than the party to whom provision is made. Likewise, if the party to whom provision is to be made ends up paying costs then that party will get less provision than might have been intended. 2.3 I, therefore, agree with MacMenamin J. that the broad based approach should be the starting point and that, ordinarily, it may well be that in many cases where there is a broadly equal sharing of the resources available that approach will require, as part of the very exercise of ensuring broad equality, that both parties bear their own costs. Obviously, somewhat different considerations might apply in a case where the Court did not consider it appropriate to conclude that whatever provision was to be made would lead to a broad equality of resources. 2.4 However, I also agree with MacMenamin J. that regard has to be had to the Veolia principles (see Veolia Water UK plc v. Fingal County Council (No. 2) [2007] 2 IR 81). By virtue of those principles, a court should consider whether it needs to depart from what might be the default position to reflect the fact that the costs of the litigation have been increased because of unmeritorious actions taken by one or other party. The precise application of the Veolia principles in the context of family law will, however, likely be different to the application of those same principles in, for example, commercial litigation. In ordinary inter partes litigation the starting point is that the winner obtains an order for all reasonable costs against the loser. Costs, as it is put, follow the event. In such a context, the Veolia principles require the Court to consider whether unmeritorious action on the part of the winning party has had the effect of increasing the costs of the litigation as a whole to a material extent. If the Court so finds, then the Court should give serious consideration to adjusting its order as to costs to reflect that fact. An unsuccessful defendant may properly be obliged to pay the plaintiff’s costs. However, if that unsuccessful defendant has been put to a great deal of additional and unnecessary expense because of the way in which the case was run by the successful plaintiff then that fact needs to be taken into account in fashioning an appropriate and just order as to costs. 2.5 For the avoidance of doubt, it is important to identify, however, the proper extent of the application of the Veolia principles. Those principles were recently summarised by Barrett J. in IBB Internet Services Limited and ors. v. Motorola Limited [2015] IEHC 445 at para. 6 of his judgment where he says the following:-
2.7 It should also be emphasised that a party who is forced to come to court to obtain some relief which was not otherwise available to it must, ordinarily, be taken to have “won” the proceedings although, as pointed out in Veolia itself, there may be certain types of cases or applications where it may be less clear as to what the “event” is. Likewise, a party which successfully defends proceedings must also be taken to have “won”. It should also be noted that courts frequently do not have to resolve some of the issues raised because of the view which the Court takes on other issues. It would be wrong to penalise an otherwise successful party by not awarding them costs attributable to issues which were reasonably raised but which did not have to be resolved because of the way in which other issues in the case were determined. I will return, later in this judgment, to the question of how best to apply the Veolia principles in practice. 2.8 However, for the reasons already identified, in many cases the starting point in family law proceedings will be that both parties are to bear their own costs. In many such cases there will also be aspects of the litigation which are inevitable in any event. There may be genuine differences of opinion as to the value of assets or as to the best way to divide up resources. Where the parties have acted reasonably in relation both to the conduct of the litigation and in any attempts to resolve it (such as, as MacMenamin J. points out, by writing focused Calderbank letters and the like) then the reasonable costs incurred are an inevitable, if unfortunate, consequence of marital breakdown. Those costs should be borne equally in cases where the assets and financial resources are likewise being distributed on the basis of broad equality. 2.9 Where, however, it can be shown that a party to family litigation has acted unmeritoriously in the conduct of the case and has thereby significantly increased the costs of the proceedings, a court should attempt the same broad task which was identified in Veolia and attempt to adjust the default costs order to reflect the fact that the other party has been put to significant additional costs because of an unmeritorious course of action adopted by an opponent. 2.10 Before going on to the application of those general principles to the facts of this case I should state that, in my view, a trial judge considering costs issues under the Veolia principles must be afforded a significant margin of appreciation both as to the question of whether it is appropriate to deviate from the default position in the first place but also as to the manner and extent to which any appropriate deviation should occur. There is a range of methods by which a court can properly reflect the fact that an otherwise successful party has made the proceedings significantly more expensive than necessary by adopting an unmeritorious position or by conducting itself in an improper fashion. Sometimes it may be possible to identify with precision a particular area of costs which can be subjected to a costs order which is different from the order made in respect of the remainder of the costs of the proceedings. For example, there may have been a discreet hearing on a particular issue which was decided against an otherwise successful party. It may be appropriate to award the costs of that separate hearing in a different way to the costs of the remainder of the proceedings. Likewise, there might be circumstances where the costs of a particular expert witness or witnesses might be dealt with separately. There is no necessarily correct way in which it may be appropriate to apply the Veolia principles. It is very much a case of the trial judge deciding how best to deal with the particular circumstances which have arisen in the case in question. 2.11 I now turn to the application of those general principles to this case. 3. Application to this Case 3.2 Neither would I second guess the trial judge’s assessment of 20% as representing the proportion of the overall costs attributable to those issues which were unmeritoriously raised by Ms. D. I appreciate that counsel for Mr. D. attempted to conduct a detailed exercise, by reference to the transcript, of analysing the time spent dealing with various types of issues with a view to suggesting that the 20% figure fixed on by the trial judge was an underestimate. As noted earlier, I do not believe that the proper application of the Veolia principles is really capable of that sort of minute analysis. The costs of litigation are affected by a range of issues. The length of time spent on various issues in the course of a hearing is a significant, but by no means the only, factor. The fact that there is a hearing at all brings with it some costs irrespective of the issues. The presence of expert witnesses means that the costs associated with issues requiring such expertise may be greater than other issues. In reasonably lengthy litigation the fees of lawyers are structured in a way in which they are not necessarily directly proportionate to the number of hours or minutes spent on a particular issue. 3.3 In those circumstances, it seems to me that a trial judge who becomes satisfied that the Veolia principles ought to be invoked to deviate from what might otherwise be the proper costs order may necessarily have to take a relatively broad brush approach. Indeed, adopting any other course of action may, in many cases, be likely to be counterproductive, for it would turn the exercise of determining the proper order as to costs into a major forensic debate in and of itself, thus adding significantly to the overall costs of the litigation. It would only be appropriate for this Court, on an appeal, to vary the assessment of the trial judge of the extent to which costs had been increased by the actions of a relevant party if that assessment was clearly and significantly wrong. I am not satisfied that it has been demonstrated that the assessment of 20%, as being the costs attributable to those issues which were unmeritoriously raised by Ms. D., has been shown to be clearly and significantly wrong. 3.4 It might, of course, have been the case that the trial judge might have attempted to isolate a particular number of days of the hearing and deal with the costs attributable to those days in a manner appropriate to reflect the unmeritorious issues raised by Ms. D. on which Mr. D. succeeded. That is undoubtedly an approach which a trial judge, in an appropriate case, may choose to adopt. However, it is also open to the view that it would have been very difficult, in the circumstances of this case, to make a fair and exact finding as to just by how much Mr. D.’s costs had been increased by the raising of the relevant issues simply by reference to a number of days’ hearing. First, there was no separate and distinct hearing in relation to the issues concerned. Second, it is by no means clear as to how much of the overall cumulative cost of all expert witnesses was attributable to dealing with those issues. Furthermore, it is not clear as to the extent to which solicitors’ instruction fees or barristers’ brief fees may themselves have been higher because of the greater complexity and scale of the case which resulted from the raising by Ms. D. of those unmeritorious issues. While the trial judge was not, therefore, in any way bound to approach this case on the basis of an estimate of a percentage of costs, such an approach was, in my view, well within the range of approaches which were open to the trial judge. That was so particularly in the circumstances of this case where it would have been difficult to disentangle, with any real degree of precision, the costs attributable to the issues in respect of which a separate order in relation to Mr. D.’s costs was required to be made. 3.5 There is, however, another issue which, in my view, the trial judge should have taken into account. There clearly were some aspects of the hearing in the High Court to which the judgment relates which would almost inevitably have been required in any event. There were differences between responsible experts as to the valuation of property and as to the way in which property could most beneficially be sold. A resolution of those differences would have been required in any event. As the Court understands it, there was no position adopted in a Calderbank type letter which would have been material to treating the costs of any of those valuation issues as properly falling on one party. The situation might well have been different had the trial judge completely accepted the valuation of one or other side, or if the valuation of any relevant asset as found by the trial judge demonstrated that one party ought reasonably to have accepted the position on the valuation of the asset concerned as set out by its opponent in a Calderbank letter. However, no such considerations arise in this case. 3.6 In those circumstances, it is appropriate to divide up the costs which arose before the High Court into three different categories. The first category relates to those issues which would have arisen in any event. Applying the same broad brush approach as was properly adopted by the trial judge in respect of identifying the costs attributable to those issues unmeritoriously raised by Ms. D., I would estimate that 20% of the total costs incurred in the High Court related to issues which would have been required to have been dealt with in any event. 3.7 The second category of costs relates to those issues unmeritoriously raised by Ms. D. As already noted, I do not believe that there is any basis for disturbing the assessment of the trial judge to the effect that a further 20% of the costs incurred in the High Court are attributable to those issues. 3.8 The third category relates to the balance of the costs and again, for the reasons which I have already sought to identify, I see no reason to disturb the decision of the trial judge that the balance of the costs (being 60% of the total costs) are properly attributable to issues on which Ms. D. was successful and where those issues only arose because of unmeritorious positions taken, or actions conducted, by Mr. D. 3.9 It follows that the analysis of the costs of both parties is that 20% of those costs would have been incurred in any event, a further 20% was incurred because of unmeritorious issues raised by Ms D. on which Mr. D. succeeded, while the balance of 60% relates to unmeritorious issues raised by Mr. D. on which he failed, or were otherwise attributable to improper actions by Mr. D. 3.10 Given that the starting point for the allocation of costs is, for the reasons already set out, that both parties should pay their own costs, it follows that the first 20% of costs should be directed to be borne by each party paying that part of their own costs for those costs would have been incurred in any event. It further follows that Mr. D. should be entitled, as against Ms. D., to 20% of his costs, for that is the estimate of the additional cost to which he was put by having to successfully deal with unmeritorious issues raised by her. Likewise, Ms. D. should be entitled to 60% of her costs, for that is the estimate of the proportion of her costs which are attributable to issues which she had to deal with because of unmeritorious positions adopted by Mr. D. or as a result of improper actions on his part. 3.11 The effect of those considerations is that there should be no order as to 20% of costs, an order in favour of Mr. D. in respect of a second 20% of costs, and an order in favour of Ms. D. of 60% of costs. All such costs should be set off one against the other so that a net order that Ms D. recover 40% of the costs incurred in the High Court follows from a proper consideration of each of those elements. 3.12 For the purposes of clarity I should add that, in my view, Mr. D. should actually be awarded 20% of the costs although they require to be set off in the manner which I have specified. In my view, the order of the trial judge, which simply directed that Mr. D. would not have to pay 20% of the costs which might otherwise have to be paid to Ms. D., was insufficient and amounted to an error in principle. An actual order in favour of Mr. D. was the appropriate course of action to adopt. That is what the Veolia principles require. Mr. D. was put to significant additional expense in having to fight the issues concerned because Ms. D. chose to raise them. Having raised those issues and having failed on them, it seems to me that Mr. D. is entitled to his costs of that issue. 3.13 I do not disagree with MacMenamin J. that the same overall approach should be applied to all interlocutory costs (except for those in respect of which an actual order as to costs had already been made) as should be applied to the costs of the hearing. While it might be possible to attempt to minutely examine each of the applications before the High Court, I am of the view that it is better to regard those interlocutory applications in respect of which the High Court judge did not make a specific order, (being an order designed to reflect the trial judge’s view of the merits of the application in question), as part of the overall costs and to subject them to the same general regime as I have indicated should be applied to the costs of the substantive hearing. While I obviously differ from MacMenamin J. on what the overall approach should be, I agree that it should be applied to the relevant interlocutory costs as well, and would propose that Ms. D. be awarded 40% of those costs on that basis. Finally, I should express my agreement with the views expressed by MacMenamin J. on the issue of interlocutory costs in respect of which no order at all was made. 4. The Costs of this Appeal 4.2 In addition, it must be recalled that the issues raised by Ms. D. were in the context of a cross appeal. Regard must always be had to the fact that a party on whom a notice of appeal is served may well decide to bring a cross appeal in circumstances where, if their opponent had been prepared to leave the High Court judgment unchallenged, those issues would not have been raised at all as a basis for a stand alone appeal. It follows that the costs of the hearing of the substantive appeal should be awarded to Ms. D. in full. However, having found that Mr. D. was entitled to succeed on his appeal against costs, and in light of the fact that there was a separate day’s hearing devoted solely to that question, it seems to me to equally follow that Mr. D. is entitled to his costs of the second day. Both sets of costs in relation to this appeal should be set off one against the other. 4.3 It might be thought that there is something of an inconsistency between the fact that I have proposed that the costs in the High Court should be dealt with on the broad brush percentage approach, which I have already analysed, while the costs of the appeal are proposed to be dealt with by distinguishing between the costs of the appeal generally, on the one hand, and the specific costs relating to the second day’s hearing, on the other. However, unlike the costs of the High Court, it seems to me that it is possible to fairly and appropriately segregate those aspects of the costs of the appeal to which Mr. D. is entitled. There was an entirely separate hearing, with its own separate written submissions, devoted solely to the question of costs. Unlike the position which pertained in respect of the High Court costs, it seems to me that it is possible, in this context, to readily segregate the costs to which Mr. D. is entitled by way of set off by specifying those costs by reference to the costs attributable to the second day’s hearing. 5. Conclusions 5.2 So far as the costs of the appeal to this Court are concerned, I would award the costs of the appeal generally to Ms. D. with the exception of any additional costs associated with the second day’s hearing directed to the appeal against the costs of the High Court. As I have, in substance, found in favour of Mr. D. on that latter issue, I would propose that the costs attributable to that second day be awarded to Mr. D. and be set off against the costs awarded to Ms. D. The net position should be taxed in default of agreement. Judgment of Mr. Justice John MacMenamin dated the 23rd day of July, 2015 This case involves property, assets and pensions. The questions which arise in this appeal are, therefore:
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; 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.
(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.”
(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) Discretion
15. More recently, in Roche v. Roche [2010] IESC 10, Murray C.J. stated:
The ‘Veolia’ Approach
The History of the Case 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 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 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 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:
Submissions on the Main Hearing Discussion
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 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:
44. When the matter was remitted back to the High Court, the central issues in dispute were, in fact, 5 in number:
(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. 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:
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
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