ACC Bank Plc v Margaret Hanrahan and Others

• Jurisdiction: Ireland
• Court: Supreme Court
• Judge: Mr. Justice Clarke
• Judgment Date: 26 June 2014
• Neutral Citation: [2014] IESC 40
• Docket Number: [S.C. Nos. 145 and 146 of 2014]
• Date: 26 June 2014

ACC Bank plc v Hanrahan & Sheeran

Between/

ACC Bank plc

Plaintiff/Appellant

and

Margaret Hanrahan and Michelle Sheeran

Defendants/Respondents

ACC Bank plc

Plaintiff/Appellant

and

Margaret Hanrahan

Defendant/Respondent

[2014] IESC 40

Clarke J.

Laffoy J.

Dunne J.

[Appeal No: 145/2014]

[Appeal No: 146/2014]

THE SUPREME COURT

Costs – Summary judgment – Plenary hearing – Plaintiff appealing against orders for costs – Whether there is any basis for interfering with cost orders in respect of a motion for summary judgment which results in the case being remitted to plenary hearing

Facts: The plaintiff/appellant ACC, in both cases, claimed liquidated sums arising out of lending transactions with the defendants/respondents, Ms Hanrahan and Ms Sheeran. The High Court decided that the low threshold for establishing an arguable defence had been met on both cases and remitted both sets of proceedings for plenary hearing. An application for costs against ACC was made by the defendants/respondents in relation to both of the summary judgment motions. The High Court awarded the costs of the transactions against ACC. ACC appealed to the Supreme Court against these orders for costs.

Held by Clarke J that two questions arise on these appeals: one as to the proper approach to an award of costs in respect of a motion for summary judgment which results in the case being remitted to plenary hearing, the other as to the extent to which it might be considered appropriate for the Supreme Court to interfere with a decision of the trial judge on the question of costs when no challenge is brought as to the correctness of the trial judge"s substantive decision to remit both proceedings to plenary hearing. On summary judgment applications, relying upon Civil Procedure in the Superior Courts, Delany and McGrath, 3rd Ed. at para. 26-87 and O. 99 r. 1(4A) of the Rules of the Superior Courts, Clarke J held that the Supreme Court is required to separately decide on the costs of each interlocutory application unless it is not possible to adjudicate in a just fashion on liability for costs at that stage. Considering Allied Irish Banks v Diamond [2011] IEHC 505, Clarke J held that a plaintiff may well secure an interlocutory injunction by putting forward evidence of facts which, if true, would give him or her an arguable case and by succeeding on the balance of convenience test thereafter; however, if the facts on which the plaintiff's claim is predicated are rejected at trial, then the justice of the case may well lead to the conclusion that the interlocutory injunction was wrongly sought. Clarke J held that, certainly in cases where a material part of the defence put forward is based on an assertion of facts which are contested by the plaintiff, there will be many cases where it will not be possible to justly determine the costs of a summary judgment motion for a trial judge may be in a much better position to reach a judgment on such matters in the light of the ultimate outcome of the case on the facts. Clarke J held that there was an error in principle. The trial judge appeared to take the view that costs followed the event in the sense that a failure on the part of ACC to obtain summary judgment amounted to an "event" on which ACC lost which necessarily ought lead, in the absence of special or unusual circumstances, to the grant of costs against ACC. Clarke J held that this approach was improper; rather the proper question to be asked is as to whether it can be said that ACC acted in a manifestly unreasonable way in failing to agree that the matter should go to plenary hearing, at least when all of the replying affidavits had been filed, thus leading to a lengthy and costly hearing on the question of whether summary judgment should be granted. Having reviewed the affidavit evidence and the ruling of the trial judge on the question of whether a sufficiently arguable defence had been established to require that the case be remitted to plenary hearing, Clarke J could not conclude that there is any legitimate basis for suggesting that ACC acted in a manifestly unreasonable way. Clarke J held that the trial judge was incorrect to award costs against ACC and that the trial judge should, instead, have ordered that the costs be costs in the cause.

Clarke J held that there was an error in principle in the approach to the award of costs of the summary judgment motions. Clarke J allowed the appeal and substituted for the orders of costs made by the trial judge orders that the costs of both motions be costs in the cause.

1 Judgment of Mr. Justice Clarke delivered the 26th June, 2014.

2 Judgment delivered by Clarke J [Nem diss]

1. Introduction

3 2 1.1 The appropriate way for a court to deal with the costs of a hard fought summary judgment application, which results in the proceedings being remitted to plenary hearing, lies at the heart of both of these appeals. In both cases the plaintiff/appellant ("ACC") commenced proceedings claiming liquidated sums arising out of lending transactions. In both cases appearances were entered by the respective defendants and, in accordance with ordinary procedure, motions for judgment were brought initially before the Master of the High Court. Replying affidavits were filed which led to the motions being transferred into the judge's list. As a matter of logistics and because it was anticipated that the motions were, because of their likely length at hearing, unsuitable for being deal with in the ordinary way as part of a Monday list, the motions were further adjourned for a full hearing. The hearing of the motions was estimated to take between half a day and a full day but, in the events that happened, approximately one and a half days were spent in considering the question of whether, as ACC proposed, judgment should be entered against the respective defendants/respondents in both proceedings or whether, as those parties suggested, the proceedings should be allowed to go to plenary hearing.

4 3 1.2 In the end the High Court (Barr J.) decided that the admittedly low threshold for establishing an arguable defence had been met in both cases and remitted both sets of proceedings for plenary hearing. There is no appeal against that aspect of the decisions made by Barr J.

5 4 1.3 In the light of those decisions an application for costs against ACC was made in relation to both of the summary judgment motions. On the basis of the documents available to this Court Barr J. concluded that, in his view, costs should follow the event and awarded the costs of the two motions against ACC on that basis. ACC has appealed to this Court solely against those orders for costs. I t is, of course, the case that appeal courts, quite properly, require good reason to depart from the exercise of an adjudication by a court of trial on the question of costs alone ( i.e. where the appeal court is asked to vary the order for costs made by the Court of trial even though the substance of the trial court's decision is not sought to be interfered with or where any appeal on the substance of the case is dismissed).

6 5 1.4 Therefore, two interrelated questions arise on these appeals. One is as to the proper approach, at the level of principle and in the circumstances of these cases, to an award of costs in respect of a motion for summary judgment which results in the case being remitted to plenary hearing. The second concerns the extent to which it might be considered appropriate for this Court, in the light of those principles, to interfere with a decision of the trial judge on the question of costs when no challenge is brought as...