ACC Bank Plc v Johnston (t/a Brian Johnston & Company Solicitors) and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 24 October 2011
• Neutral Citation: [2011] IEHC 500
• Court: High Court
• Date: 24 October 2011

[2011] IEHC 500

THE HIGH COURT

[No. 10559 P/2008]

ACC Bank Plc v Johnston (t/a Brian Johnston & Co Solicitors) & Ors

BETWEEN

ACC BANK PLC

PLAINTIFF

AND

BRIAN JOHNSTON, PRACTISING UNDER THE STYLE AND TITLE OF BRIAN JOHNSTON & CO, SOLICITORS

DEFENDANT

AND

JOSEPH TRAYNOR & SEAMUS MALLON

THIRD PARTIES

ACC BANK PLC v JOHNSTON (T/A BRIAN JOHNSTON & CO SOLICITORS) 2010 4 IR 605

ACC BANK PLC v JOHNSTON (T/A BRIAN JOHNSTON & CO SOLICITORS) UNREP CLARKE 4.3.2011 2011 IEHC 108

ACC BANK PLC v JOHNSTON (T/A BRIAN JOHNSTON & CO SOLICITORS) UNREP CLARKE 22.9.2011 2011 IEHC 376

VEOLIA WATER UK PLC v FINGAL CO COUNCIL (NO.2) 2007 2 IR 81

MENNOLLY HOMES LTD v APPEAL COMMISSIONERS & REVENUE COMMISSIONERS UNREP CHARLETON 9.3.2010 2010/34/8432 2010 IEHC 56

KAVANAGH v MIN FOR JUSTICE UNREP SMYTH 21.11.2007 2007/31/6446 2007 IEHC 389

MCALEENAN v AIG (EUROPE) LTD UNREP FINLAY GEOGHEGAN 16.7.2010 2010/30/7665 2010 IEHC 279

RSC O.99 r1(3)

RSC O.99 r1(4)

CALDERBANK v CALDERBANK 1975 3 AER 333

PRACTICE & PROCEDURE

Costs

General principles - Whether plaintiff required to come to court to obtain award - Whether costs increased by fact pleadings not in order until amended - Whether plaintiff entitled to principal hearing - Whether plaintiff or defendant entitled to costs of separate damages hearing - ACC Bank plc v Brian Johnston & Co. [2010] IEHC 236, [2010] 4 IR 605; ACC Bank plc v Johnston [2011] IEHC 108, (Unrep, Clarke J, 4/3/2011); ACC Bank plc v Johnston [2011] IEHC 376 (Unrep, Clarke J, 22/9/2011); Veolia Water UK plc v Fingal County Council (No. 2) [2006] IEHC 240, [2007] 2 IR 81; Mennolly Homes Ltd v Appeal Commissioners [2010] IEHC 56, (Unrep, Charleton J, 9/3/2010); Kavanagh v Government of Ireland [2007] IEHC 389, (Unrep, Smyth J, 21/11/2007); McAleenan v AIG (Europe) Ltd [2010] IEHC 279, (Unrep, Finlay Geoghegan J, 16/7/2010) and Calderbank v Calderbank [1975] 3 WLR 586 approved - The Rules of the Superior Courts 1986 (SI 15/1986), O 99 r 1 - Costs awarded (2008/10559P - Clarke J - 24/10/2011) [2011] IEHC 500

ACC Bank plc v Johnston

1. Introduction

2 2 1.1 This ruling relates to some of the costs of this case. The proceedings have already been the subject of three judgments (ACC Bank plc. v. Brian Johnston & Co. [2010] 4 I.R. 605 ("the principal judgment"), ACC Bank PLC v. Johnston [2011] IEHC 108 ("the third party judgment") and ACC Bank PLC v. Johnston [2011] IEHC 376 ("the damages judgment")). Parties are described and terms are used in this ruling in the same way as in those judgments.

3 3 1.2 For the reasons set out in the principal judgment I found that Mr. Johnston was negligent in the way in which he handled a mortgage transaction on behalf of ACC. For the reasons set out in the third party judgment I found that, at the level principle, Mr. Mallon, in his capacity as the partner of Mr. Traynor, was a concurrent wrongdoer with Mr. Johnston but left over the question of assessing the relative liabilities of Mr. Johnston and Mr. Mallon, as and between themselves, for a further hearing. For the reasons set out in the damages judgment I came to the view that it was appropriate to award ACC €2m in damages against Mr. Johnston. As the scope of the claim for an indemnity or contribution which Mr. Johnston made against Mr. Mallon was, for obvious reasons, significantly influenced by the scale of any damages that might be awarded against Mr. Johnston to ACC, it is clear that Mr. Mallon was a necessary and significant party to the damages hearing.

4 4 1.3 Finally, to bring matters up to date since the damages hearing, it is appropriate to note first that counsel on behalf of Mr. Mallon has indicated to the court that he does not wish, at this stage, to pursue the amendment to his defence to the third party proceedings that is referred to in that judgment. The reason for adopting that position was anticipated in the damages judgment in that it seemed clear that, even if Mr. Mallon were to succeed in amending his defence as sought and further to succeed on that defence, in the light of the approach which I adopted to the calculation of damages as set out in the damages judgment, no practical difference, as a matter of arithmetic, would result in the damages to be awarded in favour of ACC and against Mr. Johnston and, thus, no practical difference would result in the damages which would form the basis of the indemnity or contribution ruling which has yet to be made.

5 5 1.4 Second, it should, however, be noted, again as anticipated in the damages judgment, that counsel on behalf of Mr. Mallon has reserved his right to seek to reopen the question of the amendment of the pleadings in the event that an appeal by any relevant party to the Supreme Court leads to a change in the position such that it would no longer be the case that success on the proposed amendment would make no difference.

6 6 1.5 The only matter of substance which remains to be heard and ruled on in these proceedings is, therefore, the question of the extent of any contribution or indemnity which Mr. Mallon must make in favour of Mr. Johnston.

7 7 1.6 Against that background the proceedings, insofar as they involve ACC, are completed. ACC has achieved an award of €2m against Mr. Johnston. The costs of the proceedings between ACC and Mr. Johnston are the subject of this ruling. In addition, Mr. Mallon suggests that he should be entitled to the costs of the damages hearing (in which he fully participated) either directly against ACC or, if that is not considered appropriate, against Mr. Johnston with an order requiring ACC to indemnify Mr. Johnston in respect of those costs. I propose dealing with the costs as and between ACC and Mr. Johnston first. With that in mind I turn first to the question of the principles that apply to the award of costs.

2. Costs - The Principles

2 2 2.1 I had occasion to consider the general principles applicable to the award of costs in complex litigation in Veolia Water UK Plc & Ors v. Fingal County Council [2006] IEHC 240. That judgment was followed in a number of cases since such as by Charleton J. in Mennolly Homes Ltd v. Appeal Commissioners [2010] IEHC 56, by Smyth J. in Kavanagh v. Ireland & Ors [2007] IEHC 389 and Finlay Geoghegan J. in McAleenan v. AIG (Europe) Ltd [2010] IEHC 279. A number of matters seem clear from those judgments.

3 3 2.2 First, the overriding principle is that costs follow the event. That is so not least because the Rules of the Superior Courts (O. 99, r. 1(3)) say so. There can, of course, be cases where deciding precisely what the "event" was can give rise to its own difficulties. Indeed, Veolia is one such case. Order 99, r. 1(4) speaks of the costs of every issue of fact or law following the event. It is, however, in that context, important to make one significant distinction. There is a very great difference between the different elements that go to make up a cause of action, on the one hand, and a series of entirely separate causes of action, potentially dependent on different facts, on the other hand.

4 4 2.3 Most causes of action contain a number of elements that need to be established by the claiming party before a court award can be made. For example, in claims for damages for breach of contract or tort, the plaintiff must start by establishing that there has been a contract and that it has been breached or that there was a duty of care which has not been met. However, that is not sufficient. The party will then have to go on to establish a causal link between the wrongdoing established and some particular loss or consequence. Finally, the party will need to put sufficient evidence before the court to enable an assessment to be made of the amount of damages that is appropriate having regard to the consequences of the wrongdoing concerned in respect of which an appropriate causal link has been established. At each step in that road there may be disputes between the parties. Liability may be contested. Causation may be disputed. The amount of damages, whether generally or in respect of particular items, can be the subject of significant controversy. However, in the ordinary way, in such cases the "event" is the claim which the plaintiff makes for damages. The elements which go to establish that claim are merely steps on the road. Where a plaintiff succeeds in obtaining damages then, prima facie, the plaintiff has succeeded in the "event" for the plaintiff could not have obtained those damages without going to court. A like analysis can be conducted in respect of other forms of cause of action. As pointed out in Veolia, if a plaintiff has to go to court to get something which the plaintiff could not get without going to court, and if the relevant defendant opposes the entitlement of the plaintiff to get that which is sought, then the "event" is determined by whether the plaintiff achieves something sought (or something analogous to, even if less than, that which was sought) which could not have been obtained without the court's intervention.

5 5 2.4 In that context, it also needs to be emphasised that there are methods available to a party who wishes to make a concession concerning the extent of the entitlements of the plaintiff. A defendant can narrow the scope of the issues by admissions in pleadings. In addition, for example, where a defendant believes that a plaintiff's claim in damages is too great, then a lodgement or other similar device can be adopted. Where the defendant proposes a means of addressing the plaintiff's legitimate concerns, then an appropriate form of correspondence without prejudice other than as to costs (a so called Calderbank letter - see Calderbank v. Calderbank [1975] 3 All E.R. 333) can be used. By these devices and others the substance of the "event" can be narrowed by the defendant effectively...