HM v S.M.

• Jurisdiction: Ireland
• Judge: Ms. Justice Baker
• Judgment Date: 05 December 2018
• Neutral Citation: [2018] IECA 396
• Date: 05 December 2018
• Court: Court of Appeal (Ireland)
• Docket Number: Neutral Citation Number: [2018] IECA 396

IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989 AND IN THE MATTER OF THE FAMILY LAW ACT 1995 AS AMENDED BY THE FAMILY LAW (DIVORCE) ACT 1996

BETWEEN/

H.M.

APPLICANT/RESPONDENT

-AND-

S.M.

RESPONDENT/APPELLANT

-AND-

THE PRIVATE TRUST CORPORATION LIMITED

NOTICE PARTY

[2018] IECA 396

Baker J.

Birmingham P.

Baker J.

Costello J.

The President

Neutral Citation Number: [2018] IECA 396

Appeal No. 2015/652

THE COURT OF APPEAL

Costs - Taxation of costs - Judicial separation - Appellant seeking review of the taxation of the costs of the respondent - Whether High Court erred in awarding the costs of the taxation to the respondent

Facts: The appellant appealed to the Court of Appeal from the decision of the High Court (Noonan J) in M. v M. [2015] IEHC 727, by which it dismissed the appellant's application for review of the taxation of the costs of the respondent in judicial separation proceedings between them. The appellant appealed the decision of Noonan J on the grounds that he erred in failing to have regard to the fact that the Taxing Master did not properly tax the costs by reference to the time spent on the individual items under consideration. The appellant argued that the trial judge erred in the approach he took to the alleged failure on the part of the solicitors for the respondent to comply with s. 68 of the Solicitors (Amendment) Act 1994, and that the correct approach ought to have been to either refuse to award costs or to award costs on a de minimis basis. The appellant argued that the costs payable in respect of the involvement by Rutherfords Solicitors in the early stages of the proceedings were to be limited to €12,705 (including VAT) and that the letter sent by Mrs Rutherford to the respondent on 17 June 2008 created an estoppel such that higher fees for that period could not be claimed. The appellant argued that the solicitors acting for the respondent had estimated the likely fees of the litigation at €200,000 and that this estimate either acted as a limit on the amount that may be claimed in respect of costs or as an estoppel. The appellant argued that the trial judge erred in awarding the costs of the taxation to the respondent and in refusing to reduce the contribution of €100,000 payable by the appellant pro rata having regard to the fact that the results of the taxation process was to reduce the respondent's total legal costs.

Held by Baker J that the appellant's argument that time records and scrutiny of the type for which he contended were essential for the proper taxation of costs and that a bill of costs which fails to itemise the time spent on each individualised is invalid was not sustainable in the light of the clear and authoritative analysis of Laffoy J in Sheehan v Corr [2017] IESC 44. Baker J found no error in the approach of Noonan J to the findings of fact of the Taxing Master, nor to his reasoning or that of the Taxing Master with regards to the consequence of a failure to service a s. 68 letter. Baker J held that the appellant was to be treated as a third party or outsider to the taxation process and to the contractual relationship between his former wife and her solicitors for that purpose, and may not raise any arguments regarding the limitation or alterations by reason of an estoppel in the contractual terms which might derive from representations in the course of dealings or in correspondence; further, he was not in a position to argue that, on the facts, his former wife relied on any representation as to the limit of the likely costs of the proceedings, as she was satisfied with the measure of costs and had advanced no proposition nor adduced any evidence that she relied in any way on alleged representation even had it been found to have been made. Baker J held that Noonan J, on the review, and the Court on appeal, had no competence to vary the order of MacMenamin J or to direct any pro rata reduction in the contribution payable by the appellant in respect of the costs of taxation and Noonan J was, therefore, perfectly justified in making an order directing the appellant to pay the sum of €61,822.48 "in compliance with the undertaking of the respondent to pay the costs relating to the taxation" of his former wife's costs and in pursuance of the order of MacMenamin J made on 22 July 2011. Baker J held that Noonan J had no jurisdiction to vary the amount payable by the appellant by reducing the starting sum of €100,000, and therefore, the approach he took and the order he made were correct. Baker J rejected the appellant's contention that Mr Simms had misled the Taxing Master and the High Court in his affidavit evidence where he had averred that there was "no agreement" with the respondent regarding the final fee and the Taxing Master had ample evidence on which he could reject the assertion that Mr Simms failed in his professional duty of candour which, in Baker J's view, was not borne out by any reasonable view of the evidence.

Baker J held that the appellant's appeal must fail on all grounds.

Appeal dismissed.

JUDGMENT of the Court delivered on the 5th day of December 2018 by Ms. Justice Baker

1 This is the appeal of Mr. S. M. ('Mr. M.') from the decision of Noonan J. in M. v. M. [2015] IEHC 727, by which he dismissed Mr. M.'s application for review of the taxation of the costs of Mrs. H. M. ('Mrs. M.') in judicial separation proceedings had between them. The taxation of the costs of Mrs. M. took place, to borrow the phrase used by Noonan J. in his judgment, in 'extremely unusual, and quite possibly unique' circumstances following the making of an order for judicial separation in lengthy proceedings in the High Court.

The matrimonial proceedings

2 The proceedings for judicial separation was an 'ample resources' case of some complexity. In March 2006, Mrs. M. instructed Dermot Simms, of Rutherfords Solicitors, but Mr. Simms left that firm and established his own to which, on 17 July 2008, Mrs. M.'s instructions were transferred. At that time, by letter of 17 June 2008, Rutherfords Solicitors indicated that the outstanding professional fees owed to them was €12,705.

3 The separation proceedings were heard in the High Court before MacMenamin J. over eleven days between December 2009 and May 2010 and focused, inter alia, on the issue of asset division. MacMenamin J. gave judgment on 29 July 2010. Following a second hearing in regard to ancillary matters and to the costs of the proceedings, in a separate written judgment delivered on 22 July 2011 MacMenamin J., having taken the view that the trial had been lengthened by the action of Mr. M., directed that he pay his former wife a contribution to her costs in the measured sum of €100,000, 20% of costs then estimated, less the costs to be paid by Mrs. M. to her former husband for two interlocutory motions which the High Court had deemed unnecessary.

4 Mr. M. argued that he had a legitimate financial interest in the quantum of the costs payable by Mrs. M. to her solicitors, because the issue of whether proper provision exists or is still required to be made in respect of the spouses and their dependent children in a future application for divorce was likely to arise in an application by either of them for divorce. He sought in those circumstances to be permitted to engage in the process of the taxation of the costs of his former wife and MacMenamin J. gave him liberty to participate in the taxation process in the manner prescribed.

5 The order of 22 July 2011 provided for the following:

'8. That the respondent would retain a Cost Drawer within one week of the date of the perfection of the within Order. That such Cost Drawer identify himself/herself to the Applicants Costs Drawer within ten days of the date of perfection of the within Order and that both Costs Drawer do apply to the Taxing Master for an early date for taxation.

9. That the applicant's costs for the substantive hearing and the preliminary motion be taxed and that the respondent's cost drawer will be permitted to make submissions to the Taxing Master in relation to the items of costs identified in the Bill of Costs which will be submitted by the applicant's solicitors.'

6 The taxation process has been ongoing since 2011 and has, to date, produced four written rulings from the Taxing Master. The substantive ruling was given on 11 October 2012, and the ruling on the objection on 29 May 2014. The issues determined will appear in more detail in the course of this judgment and, broadly, related to the amount of the professional fee, the validly of the bill of costs, and an argument that Mrs. M's solicitor was estopped from claiming an instruction fee in excess of that identified in correspondence with his client early in the process.

7 Mrs. M. did not have any objection to the fees charged by her legal advisors or with the rulings of the Taxing Master.

High Court judgment by which Mr. M could engage in taxation

8 The matter came before Noonan J. on an application to review the ruling of the Taxing Master on 22 October 2015 and he delivered his reserved judgment on 20 November 2015.

9 Mr. M. had challenged the Taxing Master's final ruling on the six grounds set out by Noonan J. at para. 21 of his judgment:

'1. The applicant's solicitor was bound by the terms of the Rutherfords' letter above referred to so that for the period in question, he could not recover costs of more than €12,705. Mr. Simms claimed a figure of €56,265 for this period and the Taxing Master ultimately allowed a figure of €25,000. In fact, the respondent went further at the hearing before me and contended that the entire bill was invalid. I will address this further below.

2. The s. 68 letter previously referred to was invalid in that it failed to include any hourly rates and was issued 19 months after the taking of instructions.

3. The applicant's solicitor's bill of costs was invalid because it...