Mitsubishi Electric Europe B.v v Design Air Ltd

• Jurisdiction: Ireland
• Judgment Date: 22 May 2007
• Neutral Citation: [2007] IEHC 203
• Date: 22 May 2007
• Court: High Court

[2007] IEHC 203

THE HIGH COURT

[No. 1562 S/2006]

MITSUBISHI ELECTRIC EUROPE BV v DESIGN AIR LTD

BETWEEN

MITSUBISHI ELECTRIC EUROPE B.V.

PLAINTIFF

AND

DESIGN AIR LIMITED

DEFENDENT

RSC O.63 r6

BASE METAL TRADING LTD v SHAMURIN (NO 3) 2003 AER 79

COOK ON COSTS 2005 ED 802

JEFFERSON v NATIONAL FREIGHT CARRIERS PLC 2001 2 COSTS LR 313

RSC O.99

HENEHAN v AIB UNREP FINLAY 19.10.1984 1985/2/279

MAHONY v KCR HEATING SUPPLIES UNREP CHARLETON 22.2.2007 2007 IEHC 61

WOOLF ACCESS TO JUSTICE, INTERIM REPORT TO THE LORD CHANCELLOR ON THE CIVIL JUSTICE SYSTEM IN ENGLAND & WALES 1995 199

AG (MCGARRY) & ORS v SLIGO COUNTY COUNCIL 1991 1 IR 99

RSC O.99 r37

FLYNN & HALPIN TAXATION OF COSTS 1999 659

SMYTH v BULLER 1875 19 EQ 475

FRANCIS v FRANCIS & DICKERSON 1955 3 AER 836

FLYNN & HALPIN TAXATION OF COSTS 1999 380

GARTHWAITE & ANOR v SHERWOOD 1976 1 WLR 705

RSC O.99 r37(13)

MIN FINANCE v GOODMAN (NO 2) 1999 3 IR 333

RSC O.99 r10(2)

ORMOND (AN INFANT) v IRELAND & ORS 1988 ILRM 490

FLYNN & HALPIN TAXATION OF COSTS 1999 438

RSC O.9 r6

RSC O.99 r37(10)

TOBIN & TWOMEY SERVICES LTD v KERRY FOODS & KERRY GROUP PLC UNREP KELLY 3.12.1998 1998 32 12769

SMITH v IRELAND & ORS UNREP LYNCH 14.2.1991 1991/6/1395

LYNCH v MACAN 1890 91 26 LR IR 385

RSC O.63 r11

RSC O.99 r10(3)

RSC O.52 r17

COURTS & COURT OFFICERS ACT 1995

QUINN v SOUTH EASTERN HEALTH BOARD UNREP PEART 30.11.2005 2005 IESC 19 ITLR 23.1.200

CROTTY v AN TAOISEACH 1990 ILRM 617

RSC O.99 r11(2)

LEOPOLD LAZARUS LTD v SECRETARY OF STATE FOR TRADE & INDUSTRY 1976 120 SOL JO 268 QBD 1976 COSTS LR (CORE VOL) 62

SUPREME COURTS COSTS OFFICE GUIDE (UK)

MALTBY v DJ FREEMAN & CO 1978 2 AER 913 1978 1 WLR 431

RSC O.99 r37(22)(ii)

FLYNN & HALPIN TAXATION OF COSTS 1999 520

ROYAL COMMISSION ON LEGAL SERVICES REPORT 1979

ROGERS & GREENSLADE GREENSLADE ON COSTS

BEST v WELLCOME FOUNDATION LTD & ORS (NO 3) 1996 3 IR 378

FINLEY v GLAXO LABORATORIES LTD 1989 COSTS LR 106 QBD

LEGAL AID IN CIVIL PROCEEDINGS (REMUNERATION) REGS 1994 SI 228/1994 (UK)

Abstract:

Practice and Procedure - Costs - Jurisdiction of Master - Measurement of costs awarded - Submission on appropriate legal fees - Amount of work - Comparative jurisdictions - Rules of the Superior Court, Order 63, Rule 6

: The Master of the High Court conducted an extensive review of legal costs in a number of applications before the Master, pursuant to O. 63 r. 6 RSC and the measurement of costs.

Held by the Master, in exercise of his jurisdiction pursuant to O. 63 r. 6 RSC, that the amount recoverable for each item would be measured objectively not subjectively. The hourly rate of the lawyer would be determinative. The rate was the same irrespective of the item or court. Advocacy would be allowed as a team work item. Full fees would be allowed for adjournments contested on the day with reduced fees in other circumstances. Various uplift factors would be allowed in particular instances.

Reporter: E.F.

AND LINKED CASES

1 Decision of the Master of the High Court 22nd day of May 2007

2 In all of the above matters I have previously made orders on the applications coming before me, and have awarded costs. Today's decision concerns the measurement of those costs in each case. Under O. 63 r. 6, the Master has jurisdiction to award costs in his discretion and "may direct payment of a sum in gross in lieu of payment of costs to be taxed". It is under this rule that I am proceeding.

3 It is not uncommon to find a court "measuring costs" in lieu of ordering taxation thereof, and usually it is done immediately following the hearing of the motion or trial. In each of the above cases I afforded an opportunity to the successful party, and the party against whom costs had been awarded, to return to me on 15 ^th March, to be heard. In the case of the first case above mentioned the matter was brought forward to the 8 ^th March, Accordingly, the awards in each of these cases have been the subject of full due process to the extent, in each case, that the parties thought it appropriate to open their files and argue matters before me. In other words, the hearing on the 15 ^th March mirrored as closely as possible the procedure which one would expect to find being followed in the Taxing Master's chambers.

4 In addition, the exercise was preceded ten weeks earlier by an invitation to practitioners to offer suggestions to the court as to the levels of fees and costs appropriate for today's marketplace for legal services. A suggested draft form of response was made available and is appended hereto. Many practitioners, of both branches of the profession, responded to the invitation and, although the material submitted is of only anecdotal interest, it was nevertheless useful. If it appeared to suggest something approaching a consensus it could not be discounted as irrelevant. For the record, no such consensus emerged but the figures quoted apparently randomly did not deviate so far from a mid range figure as to suggest that the anecdotal evidence was anything other than bona fide, and I wish to thank practitioners for their assistance in this exercise. For the record, it should be noted that three of the larger firms in Dublin attended on the 15 ^th March, and requested the Master not to measure costs in their particular cases. For whatever reason, these solicitors' firms, presumably on their client's instructions, opted to go the taxation route (which does not involve hearings in public).

Costs: to reserve or not to reserve

5 At the outset I should draw attention to the fact that there is no developed jurisprudence as to whether or not to reserve the costs of interlocutory applications. The almost invariable practice is for the court hearing the interlocutory application to reserve costs to the trial judge. That is the uncontroversial option. Another option is the reservation only of the costs of the successful party in the application, an indication that the unsuccessful party's position was misconceived or unstatable or in some other way that it would be unjust to allow that party to profit from a reserved order for costs in the motion even if, after the full hearing of the case, the party emerged successful in regard to the substantive issues in the case. A reservation of one party's costs in regard to a motion is an indication that the court hearing the motion is of the view that the party ought not to be liable to the unsuccessful party in respect of that particular set of costs even if it ultimately loses the case.

6 Or there may be no order for either side's costs.

7 It has been recommended that the costs of interlocutory hearings should not be reserved but instead should be awarded and measured by the court at the close of the hearing. This decision is not concerned with developing or offering any coherent principles as to when to make an order for costs with immediate effect as opposed to reserving same to the trial judge. Most of the matters dealt with in the Master's Court involve applications at preliminary stages of litigation when both parties are represented, but some are applications of a final nature where a defendant has opted not to contest the matter. An award of costs, and the measurement of costs on the spot, will enable the successful party to execute on foot of that order against the unsuccessful party and this may have significant and immediate cash flow implications. For that reason, in interlocutory matters it may be thought appropriate to place a stay on the execution of such costs until the determination of the proceedings.

8 It would be unfortunate if the costs associated by a failure to properly attend to court procedures or rules, or orders of the court, by his solicitor were to bar the client's access to the courts at a preliminary stage. If the court chooses not to place a stay on the execution of such an order it is open to the party awarded costs to tax and collect same and this has immediate implications for the party the subject of the order, perhaps even for his solicitor. It is clearly a concern that an order with immediate effect might prove to be a "last straw" for a party in financial difficulties, and that such an order might bar his constitutional right of access to justice.

Legal Costs Reform: a synopsis

9 Most personal litigants do not pay legal costs: it is the other party, most often an institution, an insurance company or the State, which usually ends up with the bill. A plaintiff rarely concerns himself about costs, or if he does, often apparently thinks that the higher the fee, the more likely he is to win. The Competition Authority, however, sees very high earnings, restrictive practices and costs' measurement without reference to work actually done, and concludes that the legal system is an over-expensive overhead for the economy generally.

10 Changes are proposed to ensure that lawyers will only be paid for work actually done, and for transparency in billing. The courts do not have a competition agenda. Nor is it the courts' function to regulate legal fees generally or to cap them. But even with the new fees guidelines and assessment bodies in place, the court will still have the final say in limiting the size of a costs award to costs which have been properly and necessarily incurred in the pursuit of justice.

11 The new system of payment only for actual work done might or might not reduce overall costs. The likelihood is that some lawyers will gain and some will lose. Solicitors and Barristers have completely different business models. Civil litigation is only a small part of most solicitors' work, but for barristers, litigation (including criminal work) is where they make their living as advocates. Barristers have much lower overheads but workloads that fluctuate alarmingly: their lifetime...