High Court dismisses claim for pre-award costs interest and backdated taxation in Irish legal proceedings.

Neutral Citation Number: [2008] IEHC 70

THE HIGH COURT

2006 1063 S

BETWEEN

GILES J. KENNEDY

PLAINTIFF

AND

THE LAW SOCIETY OF IRELAND

DEFENDANT

Judgment of Mr. Justice George Birmingham delivered on 10th day of March, 2008

1. In the Notice of Motion before the Court, the plaintiff seeks liberty to enter final judgment in the sum of €261,187.88 together with

further interest thereon from the 6th June, 2007. The plaintiff claims to be entitled to this sum as representing the interest due on

foot of an award of costs.

2. There is a long and complex background to the current application. It is necessary to refer briefly to that history in order to put

the present proceedings in context. On the 5th October, 1999, after a very lengthy High Court hearing, the trial Judge (Kearns J.)

delivered a written judgment refusing the reliefs sought by way of Judicial Review by Mr. Kennedy. Subsequently, on the 20th

October, 1999, he made an Order for costs in favour of the Law Society of Ireland (hereafter referred to as “the Society”).

3. The decision of the High Court was appealed successfully to the Supreme Court by the plaintiff. On the 11th January, 2002, an

Order was made by that Court remitting the matter to the High Court for further hearing and to assess the damages (if any) to which

the plaintiff in the proceedings was entitled.

4. The provisions of the Order of the Supreme Court dealing with the question of costs are of considerable significance in the context

of the present application and should be set out in full:-

“IT IS ORDERED that the Applicant do recover from the Respondents the costs of the Appeal up to and including the date

on which the Judgment of the Court herein was delivered by Mr. Justice Fennelly but no costs thereafter that the said

High Court Order dated the 20th day of October 1999 regarding costs, be set aside and in lieu thereof, IT IS ORDERED

that the High Court costs be reserved to the High Court as the issue in relation to damages is still outstanding and the

entire matter of costs in the High Court to be dealt with by the learned Judge of the High Court who disposes of this

case.”

5. A further hearing before Kearns J. took place in July, 2003 which resulted in the plaintiff’s claim for damages being dismissed. The

question of costs was dealt with by Order of the 31st July, 2003 and again, given its importance to the present case, it is appropriate

to quote the relevant sections of the Order:-

“IT IS ORDERED that the Applicant/Defendant [Mr. Kennedy] do recover from the Respondents/Plaintiff [The Society] the

costs (including any reserved costs and any costs of discovery) of the High Court proceedings up to the 20th day of

October 1999 and that the Respondents/Plaintiff [The Law Society] be granted the costs (including any reserved costs)

of the herein Action for damages all such costs to be taxed in default of agreement.

And IT IS ORDERED that the said costs be offset one against the other.”

6. Both sides appealed the judgment and Order of July, 2003 to the Supreme Court which, on the 21st June, 2005, dismissed the

appeal and cross-appeal.

7. On the 24th November, 2006, the costs to which the plaintiff (Mr. Kennedy) was entitled were taxed at €1,121,763.99. Those to

which the Defendant (the Society) was entitled were taxed at €352,275.49. On the same day the sum of €769,488.50 being the

difference between the two sums certified, was paid by the Society.

8. In these circumstances, and having regard to the decided cases, it is not in dispute that the plaintiff has an entitlement to interest

on the costs paid. However, what is in issue is the amount of that interest. In particular, there is a fundamental dispute between the

parties as to the date from which interest is to be calculated. On behalf of the plaintiff in the present proceedings, it is contended

that he is entitled to interest from the date of the original High Court Order of the 20th October, 1999, up to the 24th November,

2006, the date of payment. While, on behalf of the defendant, it is said that interest applies only in respect of the period between

the 31st July, 2003 and the 24th November, 2006.

9. There is a subsidiary area of dispute between the parties. The plaintiff has prepared his claim on the basis of calculating the

interest due on €1,121,736.99 the amount of his taxed costs, while the defendant has prepared its calculations on the basis of

€769,488.50, the net sum actually paid after the set-off.

The contentions of the parties

10. On behalf of the plaintiff in these proceedings, Mr. Martin Hayden, S.C. submits that the core principle to be applied in this area is

that interest should be payable from the earliest date the law permits. To deny his client interest from the date of the earlier High

Court Order would be a negation of justice. He points out that had his client failed in this appeal to the Supreme Court, then he would

have been obliged to pay interest from the 20th of October, 1999. He relies on the judgment of Fennelly J. in Clarke v. Commissioner

of an Garda Síochána [2002] 1 I.R. 207 as well as the case of Best v. Wellcome Foundation Limited (No. 2) [1995] 2 I.R. 393 and the

leading case in the area of Cooke v. Walsh [1989] I.L.R.M. 322. In Best v. Wellcome Foundation Limited (No. 2), Murphy J. very

helpfully reviewed the case law in this jurisdiction and in England as he had done earlier in Hickey v. Norwich Union Fire Insurance

Limited (Unreported, High Court, Murphy J., 23rd October, 1987, ex tempore).

11. On behalf of the Society, it is argued that if the plaintiff is to succeed in obtaining judgment in the amount claimed, he must

establish an entitlement to a judgment for costs in the sum of €1,121,763.99 from the 20th October, 1999. If he can identify an Order

to that effect, or if a combination of a Court Order, together with statutory provisions, or the Rules of Court have this effect, then he

can succeed, but not otherwise. Mr. O’Donnell, S.C. argues that it is clear that the plaintiff cannot identify such an Order. The only

Order dealing with costs is the Order of the 31st July, 2003, with its provision for a set-off and it is said the arguments that the

plaintiff now seeks to make are in clear conflict with that Order.

12. The Superior Courts here, and indeed, in England, have been much agitated by the question of whether interest on costs runs

from the date of the Order awarding costs or from the date when the amount of costs payable is determined by the Certificate of The

Taxing Master. Indeed, this is an issue which has also attracted the attention of the legislatures. However, it does not seem to me

that the issues of principle which were at the centre of the Supreme Court’s decision in Clarke v. Commissioner of An Garda Síochána

[2002] 1 I.R. 207 and the other cases to which I have been referred are really in issue in the present case.

13. Instead, it seems to be a case that turns very much on the facts of this case. The plaintiff succeeded in his appeal to the

Supreme Court in January, 2002. At that stage, the Supreme Court might well have set aside the Order of the High Court of the 20th

October, 1999, in relation to costs and in lieu thereof substituted an Order awarding the plaintiff the costs of the High Court

proceedings. Had the Court done that then on the basis of the decided cases, there is no doubt that he would have been entitled to

have his interest calculated back to 20th October, 1999. However, the Supreme Court chose not to do so. The reasons for the

course of action taken by the Supreme Court are to be found in the Order itself, in particular in the following phrase:-

“IT IS ORDERED that the High Court costs be reserved to the High Court as the issue in relation to damages is still

outstanding” (my emphasis).

14. When Kearns J. came to adjudicate on the question of costs in July, 2003, there was no question of him hearing an appeal from

the earlier Order of the High Court or in any way correcting that Order, rather, having disposed of the claim for damages so that for

the first time there was now no outstanding issues, he was addressing the issue of costs. He was dealing with the issue of the entire

costs incurred in the High Court after the conclusion of the case in the High Court de novo and did so in the way we have seen,

awarding certain costs to the plaintiff and certain costs to the defendant and providing for a set-off. It was only when the issue of

the entitlement to damages was decided, that the proceedings in the High Court concluded.

15. The only entitlement that the plaintiff in the present proceedings has to be paid costs in respect of the High Court hearing in 1999

stems from the judgment and Order of the 31st July, 2003. While there has been much debate as to whether interest on costs runs

from the date of the award or from the date of taxation, it has never been suggested that the entitlement is to be backdated to a

time before the award of costs was made. In effect, that is what the plaintiff in the present proceedings is seeking. In this case, the

plaintiff was awarded his costs in July, 2003 and was paid the net amount due after the set-off on the 24th November, 2006. In

these circumstances, he is clearly entitled to interest in respect of the period between the award of costs on the 31st July, 2003 and

payment on the 24th November, 2006, but is not in my view entitled to interest in respect of the period prior to the 31st July, 2003.

16. There is a further issue which I can deal with briefly. The claim in the summary summons is calculated on the basis of costs

certified in the sum of €1,121,763.99. However, there was never a period when there was an entitlement to costs in that amount. Mr.

Kennedy was awarded the costs of the High Court proceedings of 1999 only on the 31st July, 2003, when Kearns J. made his Order.

That Order itself provided for a set-off. If the plaintiff is to succeed in the claim as advanced, not only must he establish an

entitlement to interest in respect of a period of four years, approximately, before the award of costs, but he must also persuade the

Court to ignore the provisions of the Order of the 31st July, 2003, providing for a set-off. The approach taken to the question of set-

off which I believe to be clearly wrong, confirms me in my view that the present claim is misconceived.

17. In summary, the plaintiff was entitled to be paid the costs, taxed and ascertained, referable to the High Court hearing of 1999

with a set-off against those costs of the costs awarded to the Law Society in respect of the 2003 hearing. That has happened. In

addition, the plaintiff is entitled to interest for the period between the award of costs on 31st July, 2003 and payment. That too has

been paid. Accordingly, no further sums are due by the defendant to the plaintiff and I will dismiss the plaintiff’s claim.