Fergus Byrne v Revenue Commissioners

JudgeMr. Justice Twomey
Judgment Date17 June 2021
Neutral Citation[2021] IEHC 415
Docket Number[2020 No. 88 R]
CourtHigh Court
Fergus Byrne
Revenue Commissioners

[2021] IEHC 415

[2020 No. 88 R]


(No. 2)

JUDGMENT of Mr. Justice Twomey delivered on the 17th day of June, 2021


One of the apparent ironies of the administration of justice is that the persons who oversee it, the judges, and who most often complain about the high cost of litigation, have very little control over the level of the costs which are incurred in the system.


For example, on a regular basis the courts highlight the high cost of litigation in Ireland, see the statement of Clarke C.J. in the Supreme Court case of SPV Osus Limited v. HSBC Institutional Trust Services (Ireland) Limited [2019] 1 I.R. 1 at pp. 7 and 8:

“However, I remain very concerned that there are cases where persons or entities have suffered from wrongdoing but where those persons or entities are unable effectively to vindicate their rights because of the cost of going to court. That is a problem to which solutions require to be found. It does seem to me that this is an issue to which the legislature should give urgent consideration.” (Emphasis added)


Of course, it is not just the Supreme Court which complains about the high level of legal costs, since for example, judges from all jurisdictions were represented in the Review of the Administration of Civil Justice chaired by Mr. Justice Peter Kelly, and in its Report published in October 2020, it was noted that:

‘Ireland ranks among the highest-cost jurisdictions internationally for civil litigation’ (at p. 267)

and the aim of that Review was to

‘ensure that litigation costs levels will be reduced’ (at p. 267).


Yet, the reason judges have very little control over the high level of costs is because the rate at which legal costs are incurred is set by the legislature (most recently in the Legal Services Regulation Act 2015 (the “2015 Act”)) and the actual calculation of legal costs in individual cases is administered by legal costs adjudicators, who are completely independent of the courts.


In many ways therefore, absent a change implemented by the legislature, there is very little that judges can do about the high level of legal costs, apart from highlighting it in judgments and reports, as in the aforementioned examples. This is despite the fact that costs are ‘ an intrinsic part of the administration of justice’ (per Baker J. in Quinn Insurance Ltd v. PricewaterhouseCoopers [2020] IECA 109 at para. 53), which judges are required to administer under Article 34. 1 of the Constitution.


However, the recent Court of Appeal judgment in Chubb European Group SE v. The Health Insurance Authority [2020] IECA 183 indicates that, in light of a recent change to the law on costs contained in the 2015 Act, the courts are in a position, albeit only in certain circumstances, to reduce, if not the rate at which legal costs accrue (since, as noted, this is a task for the law makers), at least the quantum, or amount of time, that is spent pursuing issues on paper (in pleadings, legal correspondence and legal submissions) and at hearings. If less time is spent on paper and at hearings on issues, then it is likely that legal costs will reduce accordingly, and perhaps more importantly scarce court resources will be available for other litigants.


As illustrated by the facts of this case, this is achieved by the courts, in line with the Chubb principles and the 2015 Act, considering in decisions on costs whether the winning litigant acted reasonably in pursuing all the issues she pursued? As noted below, another way to put this is for a court to ask in all costs applications by a winning litigant, whether every issue pursued by that litigant had a reasonable chance of success?


Where issues which did not have a reasonable chance of success are duly lost by the ‘winning’ litigant, this is likely to result in costs being awarded against the winning litigant. For this reason, this legislative change contained in the 2015 Act to the costs regime, which was noted by the Court of Appeal in Chubb, may therefore lead to a more focussed and disciplined approach to litigation, if not for every litigant, at least for those for whom legal costs are a significant issue.


Since financial incentives/disincentives can be a very powerful tool in changing human behaviour, this legislative change has the potential therefore to lead to a more efficient use of scarce court resources.


This case highlights the practical effects of the new legal costs regime as provided for by ss. 168 and 169 contained in Part 11 of the 2015 Act. Under the old costs regime, a winning litigant in a straightforward case might not suffer any costs consequences even if he had unreasonably pursued certain issues. This is because under the former costs rule ‘ costs followed the event’ and under that regime, a more nuanced approach to costs, in which consideration was given to whether the winning litigant who had won the ‘event’ but had not succeeded on every issue she raised, only applied to complex cases.


However, as a result of the coming into force of s. 169(1) of the 2015 Act, this is no longer the case and now, when determining costs for a winning litigant (in all cases, and not just complex cases), the court must consider, inter alia, whether the winning litigant acted reasonably in raising all the issues she raised. If not, then the court must consider whether to withhold some of the winning litigant's costs or whether to award certain costs to the losing litigant.


This case is an example of this new costs regime in action. The respondent, Revenue, was successful in the Case Stated as is evident from the principal judgment ( Byrne v. Revenue Commissioners [2021] IEHC 262), since each of the three questions in the Case Stated were answered in the affirmative, as claimed in the proceedings by Revenue, and not in the negative as claimed by Mr. Byrne.


Revenue relied on one primary issue and three secondary issues to support its claim that Mr. Byrne was incorrect to pursue the Case Stated. This Court agreed with Revenue in relation to the primary issue and one of the secondary issues and on this basis held that the three questions in the Case Stated should be answered in the affirmative. However, this Court and Mr. Byrne's lawyers also spent time in dealing with the two other secondary issues raised by Revenue, which the Court held were not supportive of Revenue's claim.


For the reasons set out below, this Court concludes that a more disciplined approach to the litigation would have led Revenue to rely solely on the primary issue – which this court regards as by far the strongest issue in Revenue's favour (as is clear from the principal judgment) and not to have raised the second and third secondary issues – which this court regards, even allowing for the benefit of hindsight, as containing tenuous claims and so it was unreasonable to have pursued.


For this reason, and bearing in mind this new focus, which the legislature requires the courts to consider in relation to litigation costs, this Court concludes, for the reasons set out below, that it will not award Revenue its full costs. Instead this Court will make a modified costs order in its favour for 60% of its costs. Another way to look at this is that Revenue could have achieved the same result by taking a more disciplined and focussed approach to the litigation, which would have reduced the time spent on certain issues on paper and at hearing by about 20%, in which case 20% of the costs would not have been awarded to Mr. Byrne and Revenue would have got 100% of its legal costs. All of this is justifiable on principle, since Mr. Byrne should not be liable for legal costs, which it was not necessary for Revenue to incur, in order to win its case.


The provisions contained in s. 168 and s. 169 of the 2015 Act were commenced on 7th October, 2019 (per S.I. No. 502 of 2019). The related provisions on costs contained in O. 99 of the Rules of the Superior Courts (as amended by S.I. No. 584 of 2019) came into force on 3rd December, 2019. The 2015 Act places on a statutory footing the principles to be applied in determining the costs of litigation. The 2015 Act provides that, even where a party has been ‘entirely successful’ in civil proceedings, the court may depart from the convention that costs follow the event. This is because s. 169(1) makes clear that before awarding costs to such a party, the court must have regard to the ‘ particular nature and circumstances of the case’, as well as the ‘ conduct of the proceedings by the parties’ (by reference to a list of non-exhaustive factors cited at s. 169(1)(a) – (g)).


The changes introduced in Part 11 of the 2015 Act were discussed in some detail by the Court of Appeal (Whelan J., Power J., Murray J.) in Chubb European Group SE v. The Health Insurance Authority [2020] IECA 183. At para. 19 of the court's judgment, Murray J. summarised the principles applicable to the costs of proceedings under the reformed costs regime and confirmed that the ‘general discretion of the Court in connection with the ordering of costs is preserved (s.168(1)(a) and 0. 99, r.2(1))’.


At para. 20 of the court's judgment, Murray J. observed two differences between the pre-2019 costs regime and the post-2019 regime (the reference to 2019 is because the 2015 Act was not commenced until that year). First, prior to the commencement of the 2015 Act, a reduction in costs for a winning party, where that party did not succeed on all of the issues raised by it, was limited to ‘ complex’ cases (per the decision of Clarke J. (as he then was) in Veolia Water UK plc v. Fingal County Council (No. 2) [2007] 2 I.R. 81). Of considerable significance however is the fact that, as Murray J. points out, no such restriction is...

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3 cases
  • Word Perfect Translation Services Ltd v The Minister for Public Expenditure & Reform
    • Ireland
    • Court of Appeal (Ireland)
    • 27 July 2023
    ...mediation issue arose in the present case. 10 . In his judgment, the trial judge also referred to Byrne v Revenue Commissioners (No. 2) [2021] IEHC 415. In that case, the Revenue Commissioners were awarded 60% of their costs even though they had been successful in the overall litigation bec......
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    ...ipso facto be awarded the entirety of its costs, reliance being placed on the judgement of Twomey J. in Byrne v. Revenue Commissioners [2021] IEHC 415 in that regard. The submission is also made that the defendant failed to engage in mediation with the plaintiff and that this should also be......
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    ...successful, the conduct of the parties. 23 . Word Perfect also relied upon this Court's decision in Byrne v. Revenue Commissioners [2021] IEHC 415 which considered the impact of s. 169(1) on the legal costs landscape. In that case, the Revenue Commissioners won the litigation, but were only......

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