M.D. v N.D.

• Jurisdiction: Ireland
• Judge: Mr. Justice John MacMenamin, Mr. Justice Clarke
• Judgment Date: 23 July 2015
• Neutral Citation: [2015] IESC 66
• Court: Supreme Court
• Docket Number: [S.C. Nos. 323 & 357 of 2014],[Appeal No: 323/2014]
• Date: 23 July 2015

In the Matter of the Judicial Separation & Family Law Reform Act, 1989;

And in the Matter of the Family Law Act, 1995

Between/

M.D.

Applicant/Respondent

and

N.D.

Respondent/Appellant

[2015] IESC 66

Denham C.J.

Clarke J.

MacMenamin J.

[Appeal No: 323/2014]

THE SUPREME COURT

Family law – Case management – Practice & procedure – Costs – Award of costs in family law cases and approach to be adopted

Facts: In an earlier hearing, the Supreme Court had handed down a judgment in a family law case (see [2015] IESC 16). As part of that judgment, Clarke J and MacMenamin J had set out case management procedures which would help prevent the unnecessary expenditure of time in family law cases. This second judgment was to determine whether the High Court judge had been correct to award 80% costs of the main hearing in 2014, and also in relation to the costs of certain interlocutory orders.

Held by Clarke J, Denham CJ concurring and MacMenamin J dissenting, that the appeal would be dismissed in part. Although Clarke J agreed with a large part of MacMenamin J”s opinion on the matter and the principles applicable, Clarke J disagreed with the manner in which those principles were to apply.

Clarke J stated that the High Court”s approach in respect of the main hearing was flawed, and that the starting point should have been that each party was to bear their own costs. This could be adjusted to reflect any conduct on the part of the parties which the High Court felt had been unreasonable. If a judge considered that the principles set out in Veolia Water UK plc v Fingal County Council (No. 2) applied, a ‘broad brush’ approach was the most sensible. The High Court judge”s discretion in considering costs under the Veolia Water approach was to be given a large margin of appreciation, as they were best placed to assess the conduct of the parties. Veolia Water UK plc v Fingal County Council (No. 2) [2007] 2 IR 81 and IBB Internet Services Limited and ors v Motorola Limited [2015] IEHC 445 considered.

Applying the principles set out in the earlier case law, Clarke J proposed to divide the costs into three groups. These were the costs that would have incurred in any event, those which had been caused by Ms D”s conduct and the balance of the costs. Considering the matter, Clarke J was satisfied that a net order of 40% costs in favour of Ms D was appropriate. In respect of the interlocutory costs, Clarke J agreed with the decision by MacMenamin J on the appropriate levels of costs, if not the approach. Finally, in relation to the costs of this appeal, the costs of the substantive appeal were to be awarded to Ms D, but to be set off against costs for Mr D in relation to a second day of the hearing.

Mr. Justice Clarke

Judgment of Mr. Justice Clarke delivered the 23rd July, 2015.

1

1.1 This judgment is concerned with the costs of aspects of these proceedings in the High Court and also with the costs of this appeal. These costs issues follow on from the joint judgment which I delivered with MacMenamin J. on the substantive issues which arose on this appeal ( D. v. D. [2015] IESC 16).

1.2 Although I agree with a great deal of what is said by MacMenamin J. in his judgment on these costs issues, I have come to a different conclusion as to the way in which the principles which MacMenamin J. identifies should be applied in this case.

2

2.1 Because the jurisprudence and reasoning which lie behind those principles have been so fully analysed in the judgment of MacMenamin J., I do not propose to say very much on that topic other than to summarise my own views which I do not believe differ materially from those of MacMenamin J. It is also unnecessary for me to repeat the facts which are relevant to the costs issues concerned for these are also fully set out in the judgment of MacMenamin J.

2.2 For the reasons which MacMenamin J. has advanced, it seems to me that a different approach needs to be taken to the costs of matrimonial proceedings than that which is appropriate in many other forms of civil proceedings. This is so not least in matrimonial cases which are substantially concerned with the division of assets and other financial resources. Costs have to be borne by one or other party. Those costs will inevitably diminish the overall resources available. A court, in deciding on the proper provision which requires to be ordered, must have regard to the fact that the overall resources from which that provision can be made will inevitably be diminished by whatever costs are incurred in the litigation. It seems to me that in any case where the Court is minded (as the Court was in this case) to divide the available financial resources on a broadly equal basis between the parties (even if not necessarily on a strict 50/50 basis), the starting point or default position should be that the Court should make no order as to costs and thus require both parties to bear their own costs. That is so precisely because to make any other order, unless there were good reason for so doing, would in fact have the potential to significantly interfere with the provision made. If the party providing assets or resources as a result of any court order is required to also pay costs then that party will end up, for no good reason, materially worse off than the party to whom provision is made. Likewise, if the party to whom provision is to be made ends up paying costs then that party will get less provision than might have been intended.

2.3 I, therefore, agree with MacMenamin J. that the broad based approach should be the starting point and that, ordinarily, it may well be that in many cases where there is a broadly equal sharing of the resources available that approach will require, as part of the very exercise of ensuring broad equality, that both parties bear their own costs. Obviously, somewhat different considerations might apply in a case where the Court did not consider it appropriate to conclude that whatever provision was to be made would lead to a broad equality of resources.

2.4 However, I also agree with MacMenamin J. that regard has to be had to the Veolia principles (see Veolia Water UK plc v. Fingal County Council (No. 2) [2007] 2 I.R. 81). By virtue of those principles, a court should consider whether it needs to depart from what might be the default position to reflect the fact that the costs of the litigation have been increased because of unmeritorious actions taken by one or other party. The precise application of the Veolia principles in the context of family law will, however, likely be different to the application of those same principles in, for example, commercial litigation. In ordinary inter partes litigation the starting point is that the winner obtains an order for all reasonable costs against the loser. Costs, as it is put, follow the event. In such a context, the Veolia principles require the Court to consider whether unmeritorious action on the part of the winning party has had the effect of increasing the costs of the litigation as a whole to a material extent. If the Court so finds, then the Court should give serious consideration to adjusting its order as to costs to reflect that fact. An unsuccessful defendant may properly be obliged to pay the plaintiff”s costs. However, if that unsuccessful defendant has been put to a great deal of additional and unnecessary expense because of the way in which the case was run by the successful plaintiff then that fact needs to be taken into account in fashioning an appropriate and just order as to costs.

2.5 For the avoidance of doubt, it is important to identify, however, the proper extent of the application of the Veolia principles. Those principles were recently summarised by Barrett J. in IBB Internet Services Limited and ors. v. Motorola Limited [2015] I.E.H.C. 445 at para. 6 of his judgment where he says the following:-

‘6. …In Veolia Water U.K. plc v. Fingal County Council (No.2) [2007] 2 I.R. 81, Clarke J. outlined a number of relevant considerations that arise in applications for costs in more complex cases. These can be summarised as follows. First, the overriding principle is that “costs follow the event”. Second, the party who wins the “event” should get full costs. Third, the court should consider departing from awarding full costs to such a party where it is clear that it materially added to the costs of the proceedings by raising arguments or grounds found by the court to be unmeritorious; in doing so the court should focus on whether the costs of the proceedings as a whole were materially increased. Fourth, there can be other factors relevant to the award of costs. Less than a decade after Clarke J. made his observations in Veolia (No.2), they are now cited in so many applications for costs and have been relied upon in so many prominent cases (e.g. Kavanagh v. Ireland & Ors [2007] IEHC 389 (Smyth J.), Mennolly Homes Ltd. v. Appeal Commissioners [2010] IEHC 56 (Charleton J.), and McAleenan v. AIG (Europe) Ltd. [2010] IEHC 279 (Finlay Geoghegan J.)) that it does not seem premature to state that those observations ought now to be treated as, and in truth are, representative - indeed they were likely to some extent determinative - of current settled practice in this area.’

2.6 There has, in my view, sometimes been a misunderstanding about the proper application of those principles and in particular the third point noted by Barrett J. in IBB Internet Services. As Barrett J. points out, the circumstances in which a court should consider departing from awarding full costs is ‘where it is clear that (the relevant party) materially added to the costs of the proceedings by raising arguments or grounds found by the Court to be unmeritorious’. In addition, Barrett J. correctly notes that in so doing, the Court should focus on whether the costs of the proceedings as a whole were...