Cafolla v Kilkenny and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Ryan
• Judgment Date: 05 February 2010
• Neutral Citation: [2010] IEHC 24
• Court: High Court
• Date: 05 February 2010

[2010] IEHC 24

THE HIGH COURT

No. 2078P/2007

Cafolla v Kilkenny & Ors

COMMERCIAL

BETWEEN

IVANO CAFOLLA

PLAINTIFF

AND

OSSIE KILKENNY, JERRY O'REILLY, LYTTLETON ENTERPRISES LIMITED

AND

CONEFORTH TRADING LIMITED

DEFENDANTS

COURTS & COURT OFFICERS ACT 1995 S27(3)

COURTS & COURT OFFICERS ACT 1995 S27

COURTS & COURT OFFICERS ACT 1995 S27(1)

COURTS & COURT OFFICERS ACT 1995 S27(2)

SUPERQUINN LTD v BRAY URBAN DISTRICT COUNCIL & ORS (NO 2) 2001 1 IR 459 1999/23/7593

MAHONY v KCR HEATING SUPPLIES 2007 3 IR 633 2007/39/8004 2007 IEHC 61

LANDERS v JUDGE PATWELL & DPP UNREP SMYTH 20.6.2006 2006/33/7084 2006 IEHC 248

RSC O.99 r37(22)(ii)

D (C) v MIN FOR HEALTH & HEPATITIS C COMPENSATION TRIBUNAL UNREP HERBERT 23.7.2008 2008/10/2055 2008 IEHC 299

TREASURY SOLICITOR v REGESTER & ANOR 1978 1 WLR 446 1978 2 AER 920

THOMPSON v DEPT OF THE ENVIRONMENT FOR NORTHERN IRELAND 1986 3 NIJB 73

RSC O.99

RSC O.99 r37(22)(ii)(F)

RSC O.99 r37(22)(ii)(C)

PRACTICE AND PROCEDURE

Costs

Taxation - Review of taxation - Solicitors' instructions fee - Brief fees of senior and junior counsel - Approach for Taxing Master in assessing costs - Obligations of Taxing Master - Failure to ascertain nature and extent of work done - Failure to evaluate work - Failure to ascertain time spent on work - No reduction for concession of liability made 2½ weeks before date of trial - Whether fees grossly disproportionate to defendants' solicitors - Relevance of timesheet records - Whether established that Taxing Master erred as to amount of allowances so that decision was unjust - Whether impossible to understand how figure arrived at - Whether Taxing Master must act judicially and proceed in rational and transparent way - Mahony v KCR Heating Supplies [2007] IEHC 61, [2007] 3 IR 633; Landers v Judge Patwell [2006] IEHC 248, (Unrep, Smyth J, 20/6/2006) and Minister for Finance v Goodman (Unrep, Laffoy J 8/10/1999) considered - Treasury Solicitor v Register [1978] 1 WLR 446 and Thompson v Department of the Environment [1986] NIJB 73 distinguished - Superquinn Ltd v Bray UDC (No 2) [2001] IR 459 and CD v Minister for Health & Children [2008] IEHC 299 (Unrep, Herbert J, 23/7/2008) followed - Courts and Court Officers Act 1995 (No 31), s 27- Rules of the Superior Courts 1986 (SI 15/1986) O 99, r 37(22) - Direction that fresh taxation take place by different Taxing Master (2007/2078P - Ryan J - 5/2/2010) [2010] IEHC 24

Cafolla v Kilkenny

Facts The defendants sought a review of taxation in respect of three major items of a bill of costs. The first three defendants were the paying parties and they 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 in proceedings wherein the plaintiff had sought a declaration that the third named defendant held an interest in a particular property in trust for the fourth named defendant. Essentially, the plaintiff's claim was made as a minor shareholder against a company and the majority shareholders who denied his allegations. The defendants submitted that 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. The defendants also submitted that the Master overvalued the money and property in this case, did not make any reduction for the concession of liability that was made two and a half weeks before the date of trial and finally that 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 defendants relied on the terms of s. 27 of the Courts and Court Officers Act, 1995, the mandatory references under the Rules of the Superior Courts and case law, in particular the judgment of Herbert J. in C.D. v Minister for Health and Children and Another [2008] IEHC 299.

Held by Ryan J. in directing that a fresh taxation of the plaintiff's costs take place: That this was an unusual, complex and difficult case but was concluded with great expedition. S. 27(1) and (2) of the 1995 Act had been examined in a series of cases and the law could be considered settled in this area. The Master was obliged to assess the nature and extent of the work which was the subject of the item of claim in the bill of costs. There was no conclusion or judgment or determination made in the Master's report as to the obligation to look at the time actually spent by the solicitors on the work that they did. The approach taken by the Master represented a regression to the previous practice prior to the Act of 1995. The Master fell into serious error in the way he rejected the suggestion that he had to inquire as to the time that was taken to do the work and the different parts of the work. Furthermore, the Master fell into error in failing to provide a detailed analysis of the work that was done. It was impossible to understand from the Master's report how he arrived at the figure for the instructions fee. The Master should have decided whether the value of the property had an effect on the costs allowances he was making and, if so, what was the nature in general terms of the impact. The Master was entitled to conclude as he did that the work done by the plaintiff's solicitors was substantially greater than that done by the defendants'. However, the Master erred by rejecting outright any comparison with the defendant's fees. The Master failed overall to take the steps specified by Herbert J. in the case of C.D. v Minister for Health and Children and Another [2008] IEHC 299 and if this court was to uphold this taxation, it would amount to an implicit rejection of the approach prescribed be Herbert J. in that case. The errors of the Master resulted in an injustice to the paying parties to a sufficient degree as to warrant interference by this court. However, the court was not in a position to make an estimate of what the correct costs should be and so the matter was to be decided by a fresh taxation by a different Taxing Master.

Reporter: L.O'S.

1 Mr. Justice Ryan delivered the 5th day of February 2010

2 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.

3 The action began with the issue of a plenary summons on the 16 ^th 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.

4 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.

5 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 16 ^th March, 2007 and the orders granting the relief sought by the plaintiff and his costs were made on the 4 ^th December, 2007.

6 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.

7 The three items in dispute are as follows:-

8 1. The instructions fee was claimed by the plaintiff's solicitors at €620,000 and the Master awarded €550,000;

9 2. Senior counsel's brief fee was marked at €100,000 and the Taxing Master allowed €75,000;

10 3. Junior counsel's fee of €65,000 as marked was reduced to €50,000.

11 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.

12 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 & did not relate the amount allowed to time, labour and expertise;

13 2. He overvalued the money and property in the case;

14 3. He...