Connective Energy Holdings Ltd v Energia Group Roi Holdings DAC
| Jurisdiction | Ireland |
| Judge | Mr Justice Twomey |
| Judgment Date | 18 January 2024 |
| Neutral Citation | [2024] IEHC 23 |
| Court | High Court |
| Docket Number | RECORD NUMBER 2022/6454P |
[2024] IEHC 23
RECORD NUMBER 2022/6454P
THE HIGH COURT
COMMERCIAL
JUDGMENT OF Mr Justice Twomey delivered on the 18 th day of January, 2024
. While High Court legal costs have been described by the former President of the High Court (Kelly P.) as only affordable to ‘millionaires’ 1, it is rare that, in open court, one gets to see what exactly is meant by ‘ millionaire’ costs, in euro and cent terms. However, this is such a case, since the amounts/rates of pay for the lawyers were ventilated in open court.
. This is because in this case, this Court was provided with evidence, from two experts on legal costs, on the likely costs of the trial of a dispute between the plaintiff (“ Connective) and the defendant (“ Energia”), regarding a relatively straightforward alleged breach of contract.
. The lowest estimate stated that the Legal Costs Adjudicator would calculate costs for the defendant's solicitor, senior counsel and junior counsel of €206,025, €146,677 and €114,597 respectively (a total of almost half a million euro). This estimate was based on the fees for a trial lasting less than two weeks (i.e. 7 1/2 days), plus preparatory work. To put these fees into context, the most important office holder in the State, the Taoiseach, earns €230,372 for 52 weeks work or circa €5,000 per week. One can see therefore why Kelly P. described High Court costs as affordable only to millionaires.
. However, that was the lowest estimate. The highest estimate was that the costs would be €937,186 (inc. VAT), based on the trial lasting 16 days. That expert estimated that out of
these costs, the solicitor would receive €473,550, the senior counsel, €214,020, and the junior counsel, €148,830. It is worth bearing in mind that these are just one side's legal costs. Thus, if the plaintiff were to lose, it would have to pay its own lawyer's fees, but also the defendant's legal costs, estimated to be €937,186. It seems likely therefore that, based on this expert's view, a losing litigant in the High Court in a relatively straight forward contract dispute would be liable for total costs of between 1 and 2 million euro. Thus, whether one takes the lowest estimate or the highest estimate, both experts' evidence starkly highlight what Kelly P. meant when he referred to ‘millionaire’ costs in the High Court. However, in addition to the professional fees to be paid to the three lawyers involved, this case also provided evidence of what the plaintiff described as the ‘extraordinary’ cost of discovery. This is because the defendant's solicitor estimates that for this relatively straightforward case the discovery costs of his firm would amount to €701,100. Thus, this case also provides evidence of why the Kelly Review (as detailed below) described discovery as a major contributor to legal costs and why, some four years ago, it called for its abolition.
. While this case is one involving corporate litigants, it should be borne in mind that the Legal Costs Adjudicator, when determining costs, does not apply different rates for costs, depending on whether the litigant is an individual, a small business or a large company. Accordingly, this expert evidence on legal costs in High Court cases is relevant to all High Court cases, including those where ordinary citizens end up being sued, or having to sue, in the High Court.
. In this regard, another former President of the High Court (Irvine P.) stated that:
“I have always seen it as my responsibility to try to make the system better for the litigant, who must always be kept front and central in the administration of justice.” 2
It seems to this Court that one area where the system could certainly be made better for litigants is in relation to the legal costs which losing litigants are obliged by the State to pay. This is particularly so, when their cases are heard in the High Court, whether because they are required by law to be heard in that court (rather than the District Court or the Circuit Court), or because one of the parties is entitled to pursue the litigation in the High Court.
. However, judges have no control over the level of legal costs, even though they preside over the administration of justice. This is because legal costs are calculated, not by judges in open court, but by the Legal Costs Adjudicator in accordance with the rates/rules passed by the Oireachtas. Indeed, this case was one of the rare instances where there is transparency (in the sense of these matters being aired in open court) regarding the precise level of legal costs in the High Court. This is because it was a security for costs application, in which Energia wants Connective to come up with €937,186, as security for Energia's costs, before being permitted to proceed with the litigation.
. As it was a security for costs application, this case highlights the level of costs which a losing litigant in the High Court is forced to pay his opponent's lawyers. However, it is crucial to point out that if a client agrees to pay her own lawyer ‘millionaire’ rates of pay, this is a private matter and there is no public interest involved. This is because lawyers are as entitled as any other professional to seek to be paid what they believe to be market rates. The client is then perfectly free to choose to agree to pay, or not to pay, those rates,
. However, what we are concerned with in this case, is a completely separate matter. This is because it is the amount which the State, by its laws, forces a losing litigant in the High Court to pay her opponent's lawyers. In this respect, a losing litigant's legal costs differ from practically all other legal fees. This is because the payer of the legal costs does not choose the lawyer she is paying, nor does she agree the rate of payment for that lawyer. Instead, this is the sum which is determined by the Legal Costs Adjudicator in accordance with rates/rules set down by Oireachtas and then the State obliges her to pay that amount to someone else's lawyer. In addition, in order to ensure that she complies with this obligation, the machinery of the State is available to seek to enforce the payment (e.g. by obtaining court judgments, registering judgment mortgages etc). For this reason, this is a matter of considerable public interest, particularly where one is dealing with High Court costs which, unlike Circuit Court and District Court costs, have been described as ‘millionaire’ costs.
. In the experts' reports on legal costs provided to this Court, there is no breakdown of hourly rates or of how much time would be involved in preparing for the hearing. Nonetheless, whether one takes the lowest estimate, or the highest estimate, for the individual lawyers' fees, it certainly appears to be the case that a losing litigant in the High Court is forced to pay his opponent's lawyers at hourly rates of pay that are many multiples of the rates of pay of the Taoiseach. It is important to emphasise, once again, that if a client wants to pay her own lawyers these rates of pay, there is no reason why she should not do so. However, it does beg the fundamental question of whether it could be said to amount to justice that an ordinary citizen should be obliged by the State to pay her opponent's lawyers rates of pay, which appear to be multiples of what the Taoiseach earns?
. This is a matter of potential significance for every person in the State because at any time, any individual could be sued in the High Court ( e.g. for defamation, personal injuries, property/planning issues, family law etc), or may have to sue in the High Court (since so many minor matters are heard in the High Court). 3 Bearing in mind the unpredictability of
litigation, 4 this means that any individual could end up, at any time, being a losing litigant in a High Court case and then be forced to pay these ‘ millionaire’ rates — all in their pursuit of ‘justice’. This is not the first time that a judge has expressed misgivings regarding unaffordable legal costs. It is six years since Kelly P. stated that 'the only people who can litigate in the High Court are paupers and millionaires, 5 while four years ago, Chief Justice Clarke called for the Oireachtas to give ‘ urgent consideration’ to the reform of laws which govern the ‘ cost of going to court’. 6 It is also almost four years since the Kelly Review called for the reform of legal costs. However, as can be seen from the expert evidence in this case, these ‘millionaire’ rates continue to be the ‘going rates’ applied by the Legal Costs Adjudicator in calculating the amount a losing litigant must pay her opponent's lawyers in High Court litigation.
. Who benefits from the continuation of these ‘ millionaire’ rates of pay in the High Court? It would certainly not appear to be litigants (except perhaps litigants who use strategic lawsuits against public participation (‘slapp’) – this is because a ‘slapp’ is likely to be much more effective, in stifling criticism/publicity/litigation, if it comes with a threat of High Court legal costs in the hundreds of thousands/millions or euro, than say with a threat of District Court legal costs of hundreds of euro). Yet as noted by Irvine P., the courts should try and improve the system for litigants. However, since judges do not make, or amend, the laws governing the calculation of legal costs in the High Court, all this Court can do, in seeking to improve the system for litigants, is to highlight this issue, as was previously done by Kelly P. and Clarke C.J.
. Finally, in this regard, it is important to emphasise that neither the lawyers nor the legal costs accountants, who provided the expert evidence, in this case, have any role in determining the level of fees which a losing litigant is obliged by law...
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