Dunne v Fox

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 01 January 1999
• Neutral Citation: [1998] IEHC 209
• Docket Number: [1993 No. 7722P]
• Court: High Court
• Date: 01 January 1999

[1998] IEHC 209

THE HIGH COURT

Record No. 7190P/1993

RECORD NO. 7722P/1993

DUNNE v. FOX, MONTGOMERY, BOWEN & UNIACKE

IN THE Matter OF DUNNES HOLDING COMPNAY

AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACTS 1963– 1990

AND IN THE MATTER OF

BETWEEN

BERNARD DUNNE

PLAINTIFF

AND

NOEL FOX, EDWARD MONTGOMERY, FRANK BOWEN AND BERNARD UNIACKE

AND BY ORDER OF THK COURT

FRANK DUNNE, MARGARET HEFFERNAN AND THERESE DUNNE

AND BY FURTHER ORDER OF THK COURT

LESLIE MELLON AND JOHN O'DONOVAN

DEFENDANTS

Citations:

RSC O.31 r29

PANDION HALIAETUS LTD V REVENUE COMMISSIONERS 1987 IR 309, 1988 ILRM 419

EMI RECORDS LTD V WALLACE 1982 2 AER 980

KELLY V BREEN 1978 1 ILRM 63

PROJECT DEVELOPMENT CO LTD V KMK SECURITIES LTD 1983 1 AER 465

ALLIED IRISH BANKS PLC V ERNST & WHINNEY 1993 1 IR 375

HALSBURYS LAWS OF ENGLAND 4ED V17 PARA 254

WORKING MENS MUTUAL SOCIETY, IN RE 1882 21 CH 831

IBIS VI, THE 1921 P 255

MCGRORY V EXPRESS NEWSPAPERS PLC UNREP MURPHY 21.7.1995

BANKERS TRUST CO V SHAPIRA 1980 1 WLR 1274

ARAB MONETARY FUND V HASHIM (NO 5) 1992 2 AER 911

COMPANIES ACT 1963 S205

DUNNE V O'NEILL 1974 IR 180

BEST V WELLCOME 1996 1 ILRM 34

Synopsis

Practice and Procedure

Third party discovery; costs; review of taxation; whether plaintiff should have been ordered to pay third party costs of discovery; basis for taxation of costs of third party discovery; whether costs reasonably incurred in making discovery; whether onus is on non-party to establish reasonableness of costs incurred; whether allowances by Taxing Master properly made; O.31 r.19 & O.99 Rules of the Superior Courts Held: Amounts charged by non-party were reasonable and allowances properly incurred

Dunne v. Fox - High Court: Laffoy J. - 03/04/1998 — [1999] 1 IR 283

1 Judgment of Miss Justice Laffoy delivered the 3rd day of April. 1998.

BACKGROUND

2 Order 31, Rule 29, of the Rules of the Superior Courts, 1986 provides as follows:-

"Any person not a party to the cause or matter before the Court who appears to, the Court to be likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising or likely to arise out of the cause or matter or is likely to be in a position to give evidence relevant to any such issue may by leave of the Court upon the application of any party to the said cause or matter be ordered by the Court.......to make discovery of such documents or to permit inspection of such documents. The provisions of this Order shall apply mutatis mutandis as if the said order of the Court had been directed to a party to the said cause or matter provided always that the party seeking such order shall indemnify such person in respect of all costs thereby reasonably incurred by such person and such costs borne by the said party shall be deemed to be costs of that party for the purposes of Order 99."

3 By Order of this Court (Lynch J.) made on 3rd October, 1994 in these proceedings, it was ordered that Price Waterhouse, which firm will be hereafter referred to as "the Non-party", should within a period of three weeks from the date of the Order make discovery of the documents described in paragraph 1 of the Notice of Motion dated 14th September 1994 referred to in the said Order and furnish copies thereof to the Plaintiff and to all the parties to the proceedings. The Non-party was given liberty to apply in the meantime in the event of difficulty in complying with the said time limit. It was further ordered that the Plaintiff should pay to the Non-party their costs of appearing on the motion and the reasonable costs of complying with the Order, the costs to be taxed in default of agreement.

4 By a further Order of this Court (Lynch J.) made on 8th November, 1994, it was ordered that the Plaintiff should pay to the Non-party the costs of a motion dated 1st November, 1994, brought by the Plaintiff seeking to disallow the claim to privilege made by the Fifth, Sixth and Seventh named Defendants, to which motion the Non-party was a notice party, when taxed and ascertained.

5 Two Bills of Costs presented by the Non-party were taxed by the Taxing Master, Master James Flynn, pursuant to the said Orders on 3rd May, 1995. Subsequently, objections were carried in on behalf of the Petitioner in the first proceedings mentioned in the title hereof, who is also the Plaintiff in the second proceedings mentioned in the title hereof, to whom, for the sake of brevity, I will hereafter refer as "the Plaintiff". On 20th February, 1996 the Taxing Master ruled on the objections disallowing the objections in their entirety.

6 On this application the Plaintiff seeks an Order under Order 99, Rule 38(3), of the Rules of the Superior Courts to review the said taxation by the Taxing Master of the items to which objections were raised by the Plaintiff.

ISSUE OF PRINCIPLE

7 An issue of principle arose before the Taxing Master and in this Court on the review, namely, what is the proper basis for the taxation of costs payable by a litigant who has obtained an Order under Order 31, Rule 29, to the person against whom that Order has been obtained. I propose addressing this issue of principle before dealing with the specific objections of the Plaintiff in relation to the taxation of the Non-party's costs. I understand that this is the first occasion on which this issue of principle has been raised in this-Court on a review of taxation.

8 The Taxing Master, in ruling on the Plaintiffs objections, set out his views on the issue of principle in a very comprehensive reasoned report dated 20th February, 1996. He rejected the submission made by the Plaintiff that he should follow the ruling dated 23rd February, 1988 made by his predecessor in Pandion Haliaetus Limited & Ore, -v- The Revenue Commissioners, in which it was ruled that costs being taxed pursuant to Order 31, Rule 29, should be taxed on a party and party basis. Referring to the decision of Sir Robert Megarry, V.C., in E.M.I. Records Limited -v- Wallace, (1982) 2 All E.R. 980, he stated that he believed that the appropriate criterion to apply when taxing costs under Order 31, Rule 29, is that of an indemnity basis provided the charges have not been unreasonably incurred or are not of an unreasonable amount. He stated his approach to the taxation of the Non-party's costs against the Plaintiff in clear and unequivocal terms in the following passage from his report:-

"In summary, my view as stated is that the non-party is entitled to be paid their costs on an indemnity basis provided such costs have not been unreasonably incurred or are [not] of an unreasonable amount and in applying these two exceptions the receiving party will be given the benefit of any doubt."

9 In this Court, it was submitted on behalf of the Plaintiff that the Taxing Master erred in law in that an "indemnity" basis as applied in the E.M.I. case, which it was suggested was a more generous basis that a "solicitor and client" basis, is not the appropriate basis for the taxation of costs under Order 31, Rule 29. It was submitted that the E.M.I. case, which concerned the taxation of costs awarded by the Court on an "indemnity" basis against the defendants in proceedings for contempt of court was not an appropriate analogy because the award reflected the court's displeasure and its desire to punish the contemnors. The following further submissions were made on behalf of the Plaintiff:-

10 (1) It is an incorrect interpretation of Order 31, Rule 29, to equate the word "indemnify" therein with the term "indemnity" in the concept of "indemnity costs". Even the recipient of party and party costs is entitled to be indemnified, and the dictum of Hamilton J., as he then was, in Kelly -v- Breen, (1978) 1 I.L.R.M. 63 at page 68 was cited in support of this proposition.

11 (2) The Taxing Master's approach does not have sufficient regard to the requirement in Rule 29 that the costs in respect of which the non-party is entitled to be indemnified are costs "reasonably" incurred in making discovery. His approach seeks to model costs payable under Order 31, Rule 29, on solicitor and client costs pursuant to Order 99, Rule 11. If it had been the intention of the rule making authority that costs payable under Order 31, Rule 29, should be payable on a solicitor and client basis, it would have been a simple matter to so provide. Unlike Order 99, Rule 11, Order 31, Rule 29, does not contemplate payment of all costs, other than those of "an unreasonable amount" or which "have been unreasonably incurred"; rather it contemplates payment only of costs shown to be reasonable.

12 (3) That the onus should be on a non-party receiving costs under Order 31, Rule 29, to establish their reasonableness is consistent with the approach adopted by the English Courts where an innocent third party who is affected by a Mareva injunction successfully applies to the Court for a variation of the order. In Project Development Company Limited S.A. -v- K.M.K. Securities Limited, (1983) 1 All E.R. 465, it was held that, while the successful third party intervener should be allowed all his reasonable costs, it was also held to be right that he should have to establish the reasonableness of the costs for which he was contending.

13 (4) That the onus should be on the non-party to establish that the costs were reasonably incurred is also consistent with the fulfilment of the purpose underlying Order 31, Rule 29 - to advance justice ( Allied Irish Banks Plc. -v- Ernst & Whinney,. (1993) 1 I.R. 375). As with other aspects of the administration of justice, for example, jury service, its advancement is some times necessarily burdensome on members of the public.

14 (5) As regards a non-party who is ordered to make discovery under Order 31, Rule 29, the true analogy is with a witness, possibly an expert witness, served with a subpoena and required to attend Court...