Cafolla -v- Kilkenny & Ors, [2010] IEHC 24 (2010)

Parts:Cafolla, Kilkenny & Ors
Reporting Judge:Ryan J.
Docket Number:2007 2078 P
 
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THE HIGH COURT

COMMERCIAL2007 2078 P

BETWEEN

IVANO CAFOLLAPLAINTIFFAND

OSSIE KILKENNY, JERRY O'REILLY,

LYTTLETON ENTERPRISES LIMITED

AND

CONEFORTH TRADING LIMITEDDEFENDANTSJUDGMENT of Mr. Justice Ryan delivered the 5th day of February 2010

This case is a review of taxation in respect of three major items of a bill of costs. The first three defendants are the paying parties and they have challenged the awards made by the Taxing Master in respect of the solicitors' instructions fee and the brief fees of senior and junior counsel who acted for the plaintiff.

The action began with the issue of a plenary summons on the 16th March, 2007 and it was admitted to the Commercial Court where it proceeded according to a tight schedule. The case did not go to a hearing in the end because the defendants made a series of concessions leading ultimately to their consenting to an order in terms sought by the plaintiff. Also by consent, the Court ordered the costs of the action to be paid to the plaintiff when they were taxed and ascertained.

The background to the case was a plan to acquire and develop Tolka Park in Drumcondra, Dublin for residential purposes. The plaintiff, Mr Kilkenny and Mr O'Reilly were shareholders in the fourth defendant, Coneforth Trading Ltd. It was necessary in order to perfect the title to the property to secure the lessee's interest in a 99 year lease of the land that was known as the "Donnelly Interest." This was done by agreement with the owners but the interest was actually transferred to Lyttleton Enterprises Ltd and not Coneforth. The primary relief claimed by the plaintiff in the action was a declaration that Lyttleton held the Donnelly interest in trust for Coneforth. He made this claim as minority shareholder in Coneforth against the company and the majority shareholders who denied his allegations. This type of proceeding is known as a derivative action and it presented substantial difficulty because the plaintiff was endeavouring to prove as against the company and its controllers that the company's interests were being damaged. Notwithstanding these obstacles, the plaintiff pursued his claim and succeeded. He then proceeded to recover the costs against the first, second and third defendants who had been ordered to pay them.

The case was unusual, complex and difficult but it was concluded with great expedition. The plaintiffs' solicitors received initial instructions in mid-November, 2006, the plenary summons was issued on the 16th March, 2007 and the orders granting the relief sought by the plaintiff and his costs were made on the 4th December, 2007.

Taxation of costs followed the usual procedure. There was an original hearing and award, the defendants put in objections and after a further hearing the Taxing Master came to his decision and gave a written ruling rejecting the objections that the defendants had made and he incorporated his decision and reasoning in a 24-page report to this Court. This is the important document on which this review is based.

The three items in dispute are as follows:-1. The instructions fee was claimed by the plaintiff's solicitors at 620,000 and the Master awarded 550,000;

2. Senior counsel's brief fee was marked at 100,000 and the Taxing Master allowed 75,000;3. Junior counsel's fee of 65,000 as marked was reduced to 50,000.

The defendants (by which I mean the three paying defendants) object to these allowances on four grounds which Counsel, Mr Declan McGrath, summarised as follows: 1. The Taxing Master did not examine the nature and extent of the work that was done by the solicitors and counsel to justify the fees claimed and did not relate the amount allowed to time, labour and expertise;2. He overvalued the money and property in the case;3. He did not make any reduction for the concession of liability that was made 2½ weeks before the date of trial;

4. The fees allowed were grossly disproportionate to those of the defendants' solicitors and counsel and the Taxing Master was wrong to reject such comparison.The plaintiff rejected these arguments. Mr Andrew Fitzpatrick, his Counsel, argued that the Master carried out his task in accordance with the relevant legislation and the Rules of the Superior Courts and that he followed the precepts laid down in the cases decided by this Court. He rebutted the specific complaints listed above and contended that the defendants had failed in an essential requirement, namely, to specify the correct allowances for the disputed costs. Overall, he said that there was no injustice done to the defendants.

In order to succeed, the defendants have to establish that the Taxing Master erred as to the amount of one or more of the above allowances so that his decision was unjust. The jurisdiction to review the taxation is contained in s. 27(3) of the Courts and Court Officers Act, 1995 which limits the capacity of the court to interfere with a decision of the Taxing Master to allow or disallow an item or items of costs to cases where the court is satisfied that the Master was in error as to the amount of an allowance resulting in injustice. Section 27 is as follows except that I have highlighted certain parts for greater clarity:

"27.-(1) On a taxation of costs as between party and party by a Taxing Master of the High Court, or by a County Registrar exercising the powers of a Taxing Master of the High Court, or on a taxation of costs as between solicitor and client by a Taxing Master of the High Court, the Taxing Master (or County Registrar as the case may be) shall have power on such taxation to examine the nature and extent of any work done, or services rendered or provided by counsel (whether senior or junior), or by a solicitor, or by an expert witness appearing in a case or any expert engaged by a party, and may tax, assess and determine the value of such work done or service rendered or provided in connection with the measurement, allowance or disallowance of any costs, charges

(2) On a taxation of costs as between party and party by a Taxing Master of the High Court, or by a County Registrar exercising the powers of a Taxing Master of the High Court, or on a taxation of costs as between solicitor and client by a Taxing Master of the High Court, the Taxing Master (or County Registrar as the case may be) shall have power on such taxation to allow in whole or in part, any costs, charges, fees or expenses included in a bill of costs in respect of counsel (whether senior or junior) or in respect of a solicitor or an expert witness appearing in a case, or any expert engaged by a party as the Taxing Master (or County Registrar as the case may be) considers in his or her discretion to be fair and reasonable in the circumstances of the case, and the Taxing Master shall have power in the exercise of that discretion to disallow any such costs, charges, fees or expenses in whole or in part.

(3) The High Court may review a decision of a Taxing Master of the High Court and the Circuit Court may review a decision of a County Registrar exercising the powers of a Taxing Master of the High Court made in the exercise of his or her powers under this section, to allow or disallow any costs, charges, fees or expenses provided only that the High Court is satisfied that the Taxing Master, or the Circuit Court is satisfied that the County Registrar, has erred as to the amount of the allowance or disallowance so that the decision of the Taxing Master or the County Registrar is unjust."

The section prescribes a new approach for the Taxing Master in assessing costs. Whereas previously the main focus in a taxation was on comparisons with other cases, particularly when it came to major items such as instructions' and brief fees, s. 27(1) and (2) of the Act now focus on the work that was done in a case by solicitors, barristers and expert witnesses and mandate the Taxing Master to examine the nature and extent of their work in order to evaluate the claims in the bill of costs. The section has been examined in a series of cases and the law can be considered to be settled in this area. The consensus is that the Master must assess the nature and extent of the work which is the subject of the item of claim in the bill of costs. This applies to the work of a solicitor giving rise to his claim for his instructions fee and also the work of counsel. In Superquinn Ltd v Bray UDC (No 2) [2001] IR 459 at 480 Kearns J said:

"It seems to me that in the aftermath of the Act of 1995, any ruling of the Taxing Master must of necessity, set out in some detail an analysis of the work and the reasoning which leads to the determination made in respect of solicitor's instruction fees and counsel's fees, particularly having regard to the powers and responsibilities imposed on the Taxing Master by s. 27(1) and (2), and on the court by s. 27(3), given that the Court may be called upon to review taxation."

Charleton J in Mahony v KCR Heating Supplies [2007] 3 IR 633 said at para [11] that the section "establishes...

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