JABAAR Ltd v TOWNLINK CONSTRUCTION Ltd
| Jurisdiction | Ireland |
| Judgment Date | 18 February 2011 |
| Docket Number | [2010 No. 259 MCA] |
| Date | 18 February 2011 |
| Court | High Court |
High Court
Cases mentioned in this report:
Fernée v. Gorlitz [1915] 1 Ch. 177; 84 LJ Ch. 404; 112 L.T. 283.
O.J. v. Refugee Applications Commissioners [2010] IEHC 176, [2010] 3 I.R. 637.
Kennedy v. Killeen Corrugated Products Ltd. [2006] IEHC 385, [2007] 2 I.R. 561
Nelson v. Nelson [1997] 1 W.L.R. 233; [1997] 1 All E.R. 970.
Simmons v. Liberal Opinion Ltd. [1911] 1 K.B. 966; [1911-13] All E.R. Rep. 281.
Yonge v. Toynbee [1910] 1 K.B. 215; [1908-10] All E.R. Rep. 204.
Practice and procedure - Costs - Action brought on behalf of dissolved company - Non-existent plaintiff - Whether solicitor personally liable for costs of defence - Whether award of costs under inherent jurisdiction of court - Whether award of costs improperly or without reasonable cause incurred - Whether discretion of court should be exercised in favour of solicitor where not aware company was dissolved - Rules of the Superior Courts 1986 (S.I. No. 15), O. 99, r. 7.
Professions - Solicitor - Agency - Apparent authority - Costs - Whether solicitor bringing an action warrants his client's existence - Whether solicitor liable for breach of warranty to defendant where action brought on behalf of non-existent plaintiff.
Motion on notice
The facts have been summarised in the headnote and are more fully set out in the judgment of Laffoy J., infra.
These proceedings were initiated by an originating notice of motion issued on behalf of the plaintiff on the 7th October, 2010, seeking an order setting aside the award of an arbitrator in a dispute concerning a building contract.
On the 19th November, 2010, the defendant issued a notice of motion seeking an order striking out the claim or, in the alternative, an order for security for costs pursuant to s. 390 of the Companies Act 1963.
On the 24th January, 2011, the plaintiff withdrew its application. The issue of costs came on for hearing before the High Court (Laffoy J.) on the 14th February, 2011.
The plaintiff commenced proceedings against the defendant for certain reliefs including, inter alia, an application to set aside the award of an arbitrator under the Arbitration Acts 1954 to 1998. Solicitors for the defendant conducted a search at the Companies Registration Office and discovered that the plaintiff company had been struck off the register of companies with effect from 20th August, 2010, for failure to file annual returns. Solicitors for the defendant contacted solicitors for the plaintiff on 8th October, 2010, inquiring as to how the former were instructed to initiate proceedings in circumstances where the plaintiff was non-existent and inquired as to proposals for security for the defendant's costs.
The solicitor for the plaintiff subsequently averred on affidavit that the first time he became aware of the non-existence of his client was on the 12th October, 2010. On 19th November, 2010, the defendant issued a motion on notice seeking to have the plaintiff's claim struck out and seeking the costs of defending the proceedings against the solicitor for the plaintiff. On the 24th January, 2011, the plaintiff withdrew its motion.
At the hearing of the issue of costs, the defendant argued that the plaintiff's solicitor was personally liable for the defendant's costs, either under the court's inherent jurisdiction over solicitors, or alternatively under O. 99, r. 7 of the Rules of the Superior Courts 1986.
Held by the High Court (Laffoy J.), in granting an order for costs under the court's inherent jurisdiction against the solicitor for the plaintiff on a party and party basis, 1, that a solicitor assuming to act for one of the parties to an action warranted his authority and was personally liable to the opposing party for costs, if it turned out that the client for whom he was assumed to act did not exist, or had revoked the authority, notwithstanding that the solicitor for the plaintiff was not aware of the plaintiff's non-existence when initiating proceedings.
Fernée v. Gorlitz [1915] 1 Ch. 177; Kennedy v. Killeen Corrugated Products Ltd [2006] IEHC 385, [2007] 2 I.R. 561; Nelson v. Nelson [1997] 1 W.L.R. 233,Yonge v. Toynbee [1910] 1 K.B. 215 considered.Simmons v. Liberal Opinion Ltd. [1911] 1 K.B. 966 followed.
2. That there was no basis for the court to exercise its discretion in relation to costs in favour of the plaintiff's solicitors, in circumstances where most, if not all, of the costs of defending the proceedings were incurred by the defendant after the plaintiff's solicitors became aware of the plaintiff's non-existence. The solicitor had a duty to immediately inform the defendant's solicitors that they would apply to court to stay the proceedings pending the restoration of the plaintiff to the register of companies, or to withdraw the proceedings.
3. That O. 99, r. 7 of the Rules of the Superior Courts 1986 conferred jurisdiction on the court to disallow costs as between the solicitor and client, or to order the solicitor to repay to his own client any costs which his client had been ordered to pay to any other person, in circumstances where costs had been improperly or without reasonable cause incurred; or where costs properly incurred had been wasted due to misconduct on the part of a solicitor. An order under the rule could not have arisen in this case as the plaintiff had not existed while the proceedings were in being, and accordingly no order for costs could be made against the plaintiff.
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O.J. v. Refugee Applications Commissioners [2010] IEHC 176, [2010] 3 I.R. 637 distinguished.
Cur. adv. vult.
| Laffoy J. | 18th February, 2011 |
The applications
[1] These proceedings were initiated by an originating notice of motion issued on behalf of the plaintiff by its solicitors, O) on the 7th October, 2010. The motion, which was returnable for the 22nd November, 2010, sought various reliefs under the Arbitration Act 1954, the primary relief being an order setting aside the award of an arbitrator. The award arose out of a reference to arbitration on foot of a building contract. After a hearing in July, 2010 the arbitrator, Kevin Brady, issued a corrected interim award on the 26th August, 2010, directing that the plaintiff should pay to the defendant the sum of EUR441,654.84 and the defendant's costs of the reference.
[2] On the 19th November, 2010, the defendant issued a notice of motion in these proceedings returnable for the 6th December, 2010, seeking an order striking out the claim of the plaintiff on the basis that it had been dissolved and was no longer on the register of companies or, in the alternative, an order for security for costs pursuant to s. 390 of the Companies Act 1963 against the plaintiff.
[3] After both motions had been listed for hearing, the Court court was told that the plaintiff was withdrawing its application, which has rendered the defendant's application unnecessary. The issue which has arisen between the parties is that the defendant contends that, having regard to the dissolution of the plaintiff and its non-existence when the proceedings were issued, the plaintiff's solicitors should be directed to pay the defendant's costs of the proceedings. The sequence of...
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