O'Connell v O'Connell and Another
| Jurisdiction | Ireland |
| Judge | Ms. Justice Butler |
| Judgment Date | 21 April 2023 |
| Neutral Citation | [2023] IEHC 215 |
| Docket Number | Record No. 2018 No. 383SP |
| Court | High Court |
In the Matter of the Estate of John T. Cronin (Deceased) and
In the Matter of the Succession Act 1965
[2023] IEHC 215
Record No. 2018 No. 383SP
THE HIGH COURT
Judgment of Ms. Justice Butler delivered on 21 st day of April 2023
. This judgment deals with the particularly thorny question of costs following the substantive judgment delivered by me in these proceedings ( [2021] IEHC 127). The proceedings were instituted by special summons by the plaintiff as the executor of the deceased's estate. They concerned the question of whether a gift to the first defendant in the deceased's will, made in 1990, of Kerry Co-Operative shares included shares in Kerry Group plc acquired by the deceased subsequent to 1990 and held by him at the time of his death in 2013. If not, the Kerry Group shares would fall into the residue of the deceased's estate. Although the deceased had disposed of the residue of his estate to his siblings, because he had not made provision for what was to occur to the share of any of his siblings who pre-deceased him as seven of them did, the residual gift partially failed resulting in a partial intestacy. The second defendant, being one of the residuary legatees, was appointed under O.15, r.9 to represent both her own interests and those of the other surviving residuary legatees, the estates of those who had pre-deceased the testator and all of those entitled on an intestacy. Notwithstanding that the case was brought by the plaintiff as executor, all of the argument was had as between the two defendants.
. In the event I held that the gift of Kerry Co-Operative shares, which remained effective to confer upon the first defendant the benefit of some 390 shares in Kerry Co-Operative held by the deceased at the time of his death, did not also confer upon him the 8,937 Kerry Group shares held by the deceased. Thus, the arguments made on behalf of the second defendant prevailed and she and the group of persons whose interests she represented benefitted by the Kerry Group shares being included in the residue of the deceased's estate.
. Whilst this outcome is, on its face, straightforward, it is complicated by the fact that the costs of the litigation which has produced it are very significant. This is not intended as a criticism of the lawyers involved. Indeed, a potentially complex issue concerning whether single farm payments to which the deceased would have been entitled passed with the farmlands or fell into the residue was resolved between the parties saving at least one additional day at hearing. However, litigation costs in Ireland are particularly high. I note that in a letter dated 15 April 2020 the solicitor for the second defendant estimated that €100,000 in legal costs had been incurred in the previous 12 months, which included the costs of an unsuccessful mediation. Assuming that the costs of all three parties to these proceedings are likely to have been roughly similar and assuming that at least an equivalent – but most likely a greater – sum was then incurred by each party in going to trial, the total costs of this litigation may well be somewhere in the region of between €600,000 and €700,000. Obviously, this is a very rough estimate which cannot predict what claims will be made nor what sums might actually be allowed on adjudication but it does serve to illustrate such how significant the legal costs are likely to be.
. As a result of this, the costs issue itself was the subject of written submissions and of a full hearing before the Court – which of course adds to the overall costs of the litigation. In teasing out the issues it may be useful at the outset to identify the position adopted by each of the parties.
. Initially the plaintiff, as executor, adopted what he characterised as a neutral position save as to his own costs. He pointed to the pre-litigation correspondence issued on his behalf by his solicitor which warned the parties that he could not give any commitment that the costs of the parties would be paid by the estate although noting that his costs, as executor, would be likely to be paid from the estate and, in particular, under s.45 and 46(3) of the Succession Act from the residue of the estate. Having outlined the legal basis on which the executor's costs should be met from the estate, he then outlined the alternative approaches available to the Court to direct payment of those costs either from the asset the subject of the litigation (i.e. the Kerry Group shares) under O.99, r.5 or, alternatively, from that portion of the estate subject to a partial intestacy in accordance with the rules as to the application of assets under s.46(3) and the First Schedule, Part II of the Succession Act 1965. The adoption of either of these approaches have somewhat different consequences for the residuary legatees and those entitled on intestacy but, in both cases, preserves the specific legacies to the first defendant.
. However, after written submissions had been filed by all parties, the executor changed his position radically as regards the costs of the other parties. Supplemental legal submissions were filed on his behalf in which, instead of treating the defendants' costs as a matter to be argued between the defendants, he made an extensive argument to the effect that the costs of all parties including those of both defendants should be paid by the estate and, specifically, that those costs should be paid from the residue of the estate.
. Obviously, the effect of the plaintiff's change of position, if adopted by the Court, would be far reaching. The total costs, potentially amounting to €700,000 or more, would be paid out of the residue of the estate thereby depleting significantly the very asset which the second defendant had succeeded in establishing fell within the residue. Although successful, the second defendant and on those on whose behalf she acted, would bear the entire costs burden of the litigation. On the other hand, the first defendant whose claim had prompted the litigation and who had not succeeded in establishing it, would both have his costs paid and receive the entire of his inheritance under the will unaffected by the litigation. Whilst prima facie this outcome appears unjust, the plaintiff argued that it was necessary in light of the public policy objective identified by the Supreme Court in Vella v. Morelli [1968] IR 11 which is that, given the importance of the testamentary disposition of property to the community at large, where the circumstances are such that it is proper to seek the opinion of the Court the costs of doing so, including the costs of the unsuccessful party, should be allowed from the estate.
. Unsurprisingly, the approach of the first defendant was very similar to that adopted by the plaintiff in his supplemental submissions. He argued that the normal “costs follow the event” rule does not apply to this type of litigation and that the discretion conferred on the Court under s.168(1)(b) of the Legal Services Regulation Act 2015 must be governed by the decision of the Supreme Court in Vella v. Morelli (above). The first defendant applied for his costs out of the residue of the estate on the basis that there were reasonable grounds for bringing the litigation and that it was conducted bona fide on his part, a proposition for which he relied on multiple older authorities as summarised in Millers Irish Probate Practice (Maxwell 1900 Ed.) and Vella v Morelli.
. Equally unsurprisingly, the second defendant opposed the first defendant's application for costs from the estate. She made discreet applications in respect of her own costs and in respect of those of the executor. She sought her own costs from the first defendant and that those costs be charged on the property the subject matter of the gift to the first defendant under the will. She accepted the plaintiff's entitlement to costs but sought an order directing that those costs be paid from or set off against the gift to the first defendant under the will. The second defendant relied on the “costs follow the event” principle to which statutory effect is given by s.169(1) of the Legal Services Regulation Act 2015 (the 2015 Act) and argued that there was nothing in s.168(b) or in the jurisprudence which meant that litigation of this nature was exempted from the application of the general rules. She also argued that the litigation had been instituted by the plaintiff because the first defendant demanded that it be so instituted, that the only person who stood to benefit from the first defendant's claim was the first defendant himself and that the conduct of the first defendant warranted making a costs order against him. The conduct referred to was two-fold, namely a shift in the legal basis for the first defendant's claim between the pleading and the arguing of the case and the rejection by the first defendant of an offer made by the second defendant on a “without prejudice save as to costs” basis.
. Whilst both defendants were afforded the opportunity to reply to the plaintiff's supplemental submissions, only the second defendant did so and, in doing so, queried the need for the plaintiff's supplemental submission in circumstances where neither defendant had disputed the plaintiff's entitlement to costs. The second defendant pointed out that the plaintiff and the first defendant are brothers, presumably for the purpose of inviting the Court to draw some adverse inference from this fact which, as it happens, was expressly attested to by the plaintiff in the affidavit grounding the special summons which initiated the proceedings. I do not think the Court can take the view that the change between the position adopted by the plaintiff in his first and...
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