McCool Controls and Engineering Ltd v Honeywell Control Systems Ltd

• Jurisdiction: Ireland
• Judge: Mr Justice Garrett Simons
• Judgment Date: 11 November 2019
• Neutral Citation: [2019] IEHC 749
• Court: High Court
• Docket Number: 2005 No. 2747 P.
• Date: 11 November 2019

[2019 IEHC 749

THE HIGH COURT

Garrett Simons

2005 No. 2747 P.

BETWEEN

MCCOOL CONTROLS AND ENGINEERING LIMITED

PLAINTIFF

AND

HONEYWELL CONTROL SYSTEMS LIMITED

DEFENDANT

Costs – Substitution application – Abuse of the court process – Parties seeking costs – Whether costs should follow the event

Facts: This supplemental High Court judgment addressed the question of the appropriate costs order to be made in respect of an unsuccessful application by a non-party to be substituted as plaintiff in the proceedings. The substitution application had sought to give effect to a purported assignment of the proceedings from the corporate plaintiff, McCool Controls and Engineering Ltd, to its sole shareholder, Mr McCool. The substitution application was refused for reasons set out in a reserved judgment delivered on 25 October 2018: McCool Controls and Engineering Ltd v Honeywell Control Systems Ltd [2019] IEHC 695 (the principal judgment). One of the unusual features of this case was that an application in almost identical terms to have Mr McCool substituted as plaintiff had been dismissed by the High Court on 10 April 2018, and this dismissal was the subject of an appeal on behalf of Mr McCool to the Court of Appeal. Relevantly, the High Court had found that Mr McCool had been engaged in an abuse of the court process. The High Court made an order for costs in respect of the first substitution application on a “solicitor and client” basis. The execution of that costs order was stayed pending the directions hearing in the Court of Appeal. Counsel on behalf of the defendant, Honeywell Control Systems Ltd, submitted that a similar order should be made on the facts of this case.

Held by Simons J that there was no doubt as to which side was successful in respect of the substitution application; Mr McCool failed entirely in his application and the “event” went in favour of the defendant. Simons J found that Mr McCool had not put forward any cogent argument as to why the ordinary rule, i.e. that costs follow the event, should not apply; it had not been suggested, for example, that the application represented a “test case”. Simons J held that that the defendant was entitled to an order for costs as against Mr McCool in relation to the second substitution application. Whereas the bringing of a second substitution application was certainly wrongheaded, Simons J did not think that it entailed the level of unreasonableness or moral culpability necessary to justify directing that the costs be assessed on a “solicitor and client” basis.

Simons J proposed to make an order that the defendant do recover its costs of and incidental to the (second) substitution application as against Mr McCool personally, i.e. as opposed to as against the corporate plaintiff. Simons J held that such costs were to be adjudicated upon by the Office of the Legal Costs Adjudicator in default of agreement between the parties. Simons J held that costs were to be measured on a “party and party” basis. Simons J held that a stay, in the usual terms, would be imposed on the costs order in the event of an appeal to the Court of Appeal and/or an application for leave to appeal to the Supreme Court.

Order for costs against the plaintiff. Costs to be assessed on a "party and party" basis.

JUDGMENT of Mr Justice Garrett Simons delivered on 11 November 2019

INTRODUCTION

1 This supplemental judgment addresses the question of the appropriate costs order to be made in respect of an unsuccessful application by a non-party to be substituted as plaintiff in the proceedings (“ the substitution application“). The substitution application had sought to give effect to a purported assignment of the proceedings from the current corporate plaintiff to its sole shareholder, Mr Eugene McCool (“ Mr McCool”).

2 The substitution application was refused for reasons set out in a reserved judgment delivered on 25 October 2018, McCool Controls and Engineering Ltd. v. Honeywell Control Systems Ltd. [2019] IEHC 695 (“the principal judgment”).

3 As appears from the principal judgment, one of the unusual features of this case is that an application in almost identical terms to have Mr McCool substituted as plaintiff had been dismissed by the High Court on 10 April 2018, and this dismissal is the subject of an appeal on behalf of Mr McCool to the Court of Appeal. Relevantly, the High Court had found that Mr McCool had been engaged in an abuse of the court process. The High Court made an order for costs in respect of the first substitution application on a “solicitor and client” basis. (The execution of that costs order was stayed pending the directions hearing in the Court of Appeal). As discussed immediately below, counsel on behalf of the defendant submits that a similar order should be made on the facts of the present case.

SUBMISSIONS OF THE PARTIES

4 The proceedings were adjourned for a period of two weeks subsequent to the delivery of the principal judgment to allow the parties time to consider same. The issue of costs was adjourned to Friday, 8 November 2019.

5 Leading counsel on behalf of the defendant, Mr Declan McGrath, SC, made an application for costs in favour of his client. Counsel submitted that costs should follow the event, and that Mr McCool, as the unsuccessful applicant, should be liable for the costs of the defendant. Counsel emphasised that the application had been made by Mr McCool personally, and not by the corporate plaintiff. It was further submitted that costs should be awarded on a “solicitor and client” basis.

6 It is necessary to pause briefly to explain what is meant by this term. Generally, when an order for costs is made in favour of a party, the court will direct that the costs be taxed or measured in default of agreement. The function of measuring costs has, very recently, been transferred to the Office of the Legal Costs Adjudicator.

7 The default position is that costs are measured on what is known as a “party and party” basis. On this basis, the party whose costs are being measured will be allowed to recover all such costs as were “necessary or proper” for the attainment of justice or for enforcing or defending the rights of that party. The costs are measured objectively, and the costs allowed may be less than those actually incurred. For example, a party may have chosen to retain both senior and junior counsel for a case, but would only be allowed to recover the costs of one of the barristers from the other side if the Legal Costs Adjudicator were to decide that it was not “necessary or proper” to retain more than one counsel. That party would have to pay the costs of the second barrister itself.

8 The courts have, however, a discretion to award costs on a different basis, namely, a “solicitor and client” basis. On this basis, the party whose costs are being measured will be allowed to recover...