James Elliott Construction Ltd v Irish Asphalt Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 14 July 2011
• Neutral Citation: [2011] IEHC 338
• Court: High Court
• Date: 14 July 2011

[2011] IEHC 338

THE HIGH COURT

[No. 4767 P/2008]

James Elliott Construction Ltd v Irish Asphalt Ltd

COMMERCIAL

BETWEEN

JAMES ELLIOTT CONSTRUCTION LIMITED

PLAINTIFF

AND

IRISH ASPHALT LIMITED

DEFENDANT

VEOLIA WATER UK PLC & ORS v FINGAL CO COUNCIL (NO 2) 2007 2 IR 81

O'MAHONY v O'CONNOR BUILDERS & ORS 2005 3 IR 167

ARKLOW HOLIDAYS v BORD PLEANÁLA & ORS 2007 1 ILRM 125

RSC O.58 r18

DANSKE BANK A/S (T/A NATIONAL IRISH BANK) v MCFADDEN UNREP 27.4.2010 2010/10/2439 2010 IEHC 119

PRACTICE AND PROCEDURE

Costs

Stay - Order for damages and costs - Principles to be applied - Whether plaintiff entitled to costs - Whether entitled to stay - Veolia Water UK plc v Fingal County Council (No 2) [2006] IEHC 240, [2007] 2 IR 81; Danske Bank A/S trading as National Irish Bank v McFadden [2010] IEHC 116, (Unrep, Clarke J, 20/4/2010) approved - Rules of Superior Courts 1986 (SI 15/1986), O 58 rr 18 and 19 - Order for costs made in favour of plaintiff and conditional stay granted (2008/4767P - Charleton J - 14/7/2011) [2011] IEHC 338

James Elliott Construction Ltd v Irish Asphalt Ltd

1 Judgment of Mr. Justice Charleton delivered the 14th day of July 2011.

2 On May 25 ^th 2011, judgment in favour of the plaintiff was pronounced on the issue of liability for the ruination of the Ballymun Central Youth Facility building. This was constructed by the plaintiff over 2004-2005. The Court decided that the cause of the condition of the building was pyrite heave and that the defendant, as supplier of the stone infill which had expanded, was in breach of contract of sale and answerable in damages. Central to the question of damages was the correct measurement of the cost to the plaintiff of rehabilitating the building. The plaintiff had undertaken this work in 2008-2009 at considerable expense. Huge additional monies were expended by the plaintiff on testing by experts in order to determine the cause of the damage to the building and on the costs of litigation. After the trial on liability, the parties then needed some time to prepare for the trial of the issue of damages. This was set for June 28 ^th 2011, which was the 59 ^th day of trial. The four days set aside for hearing were not needed because, in the meantime, the quantity surveyors for the plaintiff and the defendant met over several days and agreed on the correct measure of cost for the rehabilitation of the building. The Court much appreciates the efforts of all those involved. The 60 ^th day of this case was on the 12 ^th of July 2011 and was taken up in detailed argument on the issue of liability for costs and whether a stay should be put on the agreed order for damages and whatever order the Court might make as to liability for costs. This judgment addresses these issues.

Damages

3 The measure of damages is agreed at €2,659,114.05. Of this sum I understand that €359,114.05 relates to a payment to Ballymun Regeneration Limited, the employer on the building contract. The plaintiff has already rehabilitated the building out of its own resources of manpower and money. On the costs of litigation and the expenses of experts, the plaintiff has already paid out, and I am using round figures now, €2,400,000.00 and this sum is likely to be sought to be increased by 50% or so in the bill for taxation of costs which, if not agreed, will be submitted to the Taxing Master for expert adjudication. Thus, again using round figures, the plaintiff is currently out of pocket to the tune of €4,700,000.00 and because of a liability to Ballymun Regeneration Limited, that sum will increase to close to €5,100,000.00. The ultimate cost of the accumulation of damages and costs is said on behalf of the plaintiff to be close to €6,300,000.00.

4 Having decided that the defendant is liable, there will be a decree in damages in favour of the plaintiff for €2,659,114.05. I now consider in turn the issue of liability for costs and the question of a stay on those orders.

Costs

5 The recoverable costs include the costs of the case and each day of the trial, all costs which have been made costs in the cause by order of judges hearing preliminary applications together with the costs reserved to the trial judge, this Court, by deValera J. on 22 August 2008 and McKechnie J. on 18 February 2010. It is clear that whatever order I make will include all of those costs.

6 In Veolia Water UK plc and others v Fingal County Council [2006] IEHC 240, Clarke J analysed the proper approach which should be taken by a court deciding on the exercise of its inherent discretion as to costs following on a lengthy trial. This Court has followed the principles therein set out on prior occasions and proposes to do so in this instance as well. That analysis commends itself as encompassing prior decisions and reducing disparate authorities to a series of well-ordered propositions which bring predictability to the uncomfortable area of judicial discretion as to costs following on trial. There follows the costs principles set out in that judgment by Clarke J:

7 2 2.1 It is trite to state that in recent times litigation has become more complex. Amongst the consequences of an increased complexity in litigation are:-

8 (i) That litigation as a whole (including interlocutory steps) has become more expensive so that much more turns upon the precise order for costs which may be made at the end of such litigation, or in respect of significant interlocutory matters; and

9 (ii) That it is increasingly the case that numbers of relatively discreet issues arise in the course of litigation so that it is possible to form a view as to whether the result of the litigation as a whole (or, indeed, the result of an individual interlocutory application) might not properly provide the sole basis for the award of costs in respect of the matter determined, having regard to the fact that not all of the issues canvassed at the hearing may have been determined in favour of the party ultimately succeeding on the substantive issue or issues.

10 3 2.2 It seems to me that having regard, in particular, to the very substantial sums of money that may be at stake when a court is considering how to award costs, it is incumbent on the court, at least in complex cases, to at least give consideration to whether it is necessary to engage in a more detailed analysis of the precise circumstances giving rise to such costs having being incurred before awarding costs. Furthermore it seems to me to be incumbent on the court to attempt to do justice to the parties by fashioning, where appropriate, orders of costs which do more than simply award costs to the winning side.

11 4 2.3 Having said the above it seems to me that two matters traditionally taken into account by the courts in the award of costs remain of the highest significance and require to be re-emphasised.

12 5 2.4 The first is that costs always remain discretionary and anything which is said concerning the principles which ought normally to apply in considering the award or refusal of costs should be subject to the caveat that the court always remains open to the suggestion that, by virtue of special or unusual circumstances, it is appropriate to depart from what otherwise might be the normal course in respect of an order for costs in a particular case. What I am about to outline is, therefore, in my view, properly described as the default position which should apply in the absence of such special or unusual circumstances. It should not be taken as, in anyway, diminishing the courts entitlement to depart from such a position in an appropriate case.

13 6 2.5 Secondly the overriding starting position should remain that costs should follow the event. Parties who are required to bring a case to court in order to secure their rights are, prima facie, entitled to the reasonable costs of maintaining the proceedings. Parties who successfully defend proceedings are, again prima facie, entitled to the costs to which they have been put in defending what, at the end of the day, the court has found to be unmeritorious proceedings. Similarly it seems to me that the courts generally (and the Commercial Court in particular) should be prepared to deal with the costs of contested interlocutory applications on the basis of an analysis of whether there were proper grounds for bringing, on the one hand, or resisting, on the other hand, the relevant application. In that context it may be appropriate to distinguish the case of a routine application which would have to be brought in any event as part of the ordinary course of the proceedings and which is not contested to the extent that the costs of the application are increased. In such a case it may well be appropriate that the costs either be reserved to the trial judge or be made costs in the cause.

14 7 2.6 Where, as is increasingly the case, an interlocutory application of significance to the interests of the parties and the conduct of the litigation, is the subject of significant dispute, such applications frequently require to be listed in a manner similar to the listing of full hearings. In such cases it is appropriate, in general terms, to consider the costs of such applications as stand alone items to be assessed by virtue of the "event" being the issue which is determined by the interlocutory application.

15 8 2.7 Before departing from this latter aspect of the matter it is worth noting that there are certain cases where even a determination as to what the "event" is, may be a matter of some complexity. For reasons which I will address in due course this case is one of them.

16 9 2.8 However, as indicated above, it seems to me that the starting point of any consideration of costs has to be to identify what the "event" is and, thereby, identify the winning party. In the ordinary way, if the...