Patrick McFadden v Muckno Hotels Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 22 April 2020
• Neutral Citation: [2020] IECA 110
• Docket Number: 2017/4645P
• Court: Court of Appeal (Ireland)
• Date: 22 April 2020

BETWEEN/

PATRICK MCFADDEN

PLAINTIFF/RESPONDENT

- AND -

MUCKNO HOTELS LIMITED

DEFENDANT/APPELLANT

[2020] IECA 110

Donnelly J.

Faherty J.

Haughton J.

2017/4645P

THE COURT OF APPEAL

Costs – Interlocutory injunction – O. 99 r. 2(3) of the Rules of the Superior Courts 1986 to 2019 – Appellant seeking to substitute the costs order of the High Court – Whether the requirement in O. 99 r. 2(3) of the Rules of the Superior Courts 1986 to 2019 that the court “shall make an award of costs” applied

Facts: The defendant/appellant, Muckno Hotels Ltd, appealed to the Court of Appeal from the order of Costello J made on 3 May 2018 (perfected on 8 May 2018) whereby Costello J determined costs in respect of an interlocutory injunction application, and ordered that the plaintiff/respondent, Mr McFadden, recover from the appellant the costs of the said application for short service, the costs of the interlocutory injunctions motion up to the 22nd June, 2017 and the cost of the application when taxed and ascertained. In written and oral submissions counsel for the appellant argued that it was not necessary for the respondent to seek injunctive relief because an undertaking in relation to the respondent’s salary was given on 19 May 2017and because further undertakings in relation to halting the disciplinary process and non-reliance on the investigation report were not sought in advance of the issue of the notice of motion, but were proffered on 25 May 2017 soon after it issued, all of which undertakings became recorded in Court on 22 June 2017. Counsel sought to distinguish Irish Bacon Slicers Ltd v Weidemark Fleischwaren GmbH & Co. [2014] IEHC 293 on a number of grounds, but primarily because specific undertakings were sought by the plaintiff in advance, but were not offered or given until the matter came before the court. It was submitted that the court should follow the approach of Laffoy J in O’Dea v Dublin City Council [2011] IEHC 100 where she considered that in interlocutory matters costs should follow where a result is brought about by a determination of the court on issues before the court, rather than any supervening event, such as an agreement of the parties in which the court has not been involved. Counsel submitted that the “event” was brought about by acceptance of an offer by the appellant, rather than any determination of the court. It was submitted that, contrary to what senior counsel for the respondent had informed the High Court on 12 October 2017, the substantive matter had not “fallen away” in that orders were sought by the respondent regarding alleged breach of contractual right to fair procedures, alleged personal injury and alleged reputational damage which survived the termination of the respondent’s contract of employment in June 2017. Counsel for the appellant submitted that the court should substitute the High Court order on costs in favour of the respondent with “no orders to costs”.

Held by Haughton J that this was a case where there was no determination by the trial judge of the interlocutory application and therefore the requirement in O. 99 r. 2(3) of the Rules of the Superior Courts 1986 to 2019 (formerly r. 1(4A)) that the court “shall make an award of costs” did not apply; instead the general discretion in relation to the costs applied.

Haughton J held that he would allow this appeal and would substitute the costs order of the High Court in favour of a no order as to costs of the application for leave of short service, of the notice of motion seeking interlocutory relief, and of the costs of the hearing on 22 June 2017.

Appeal allowed.

JUDGMENT of Mr. Justice Robert Haughton delivered on the 22nd day of April 2020

Introduction

1 This is an appeal from the order of Costello J. made on 3 May 2018 (perfected on 8 May 2018) whereby Costello J. determined costs in respect of an interlocutory injunction application, and ordered as follows: -

“IT IS ORDERED that the Plaintiff do recover from the Defendant the costs of the said application for short service, the costs of the interlocutory injunctions Motion up to the 22nd June, 2017 and the cost of the application this day when taxed and ascertained.”

Background

2 The background to the proceedings is that the Appellant employed the Respondent as manager of Glencam Hotel. By letter dated 2 August 2016 the Appellant through its solicitor Mr. Mallon made allegations against the Respondent, of drinking on the premises which required an explanation/investigation; and by a further letter dated 16 November 2016 the Appellant through its said solicitor, made allegations concerning the payment of musical performers in the hotel and of double booking, which also required an explanation. The Respondent's managerial responsibilities were withdrawn.

3 On 21 November 2016 the appointment by the Appellant of Mr. Michael O'Sullivan, a HR Consultant to investigate was notified to the Respondent. However the investigation was not commenced because the Respondent was on sick leave. The Respondent was certified unfit to work from early October 2016 and remained out until he was considered certified fit on 11 February 2017.

4 Following the Respondent's return to good health, on 23 February 2017 the Appellant's solicitor wrote to the Respondent notifying that he was suspended on full pay “pending the completion of this investigation and the preparation of a report”. On 22 March 2017 he was notified the independent person now appointed to investigate was Mr. Oliver Costello B.L. In late March/early April, the investigator interviewed various individuals in the course of the investigation, and on 21 April 2017 met with the Respondent in company with his solicitor. Objection was taken by the Respondent/his solicitor in engaging with any matters arising outside of the allegations made against the Respondent in the letters of 2 August 2016 and 16 November 2016.

5 The investigator's report was completed on 3 May 2017 and found that the Respondent had engaged in behaviour that contravened the Appellant's Disciplinary Code, and that his actions amounted to gross misconduct, and it included a recommendation that the Appellant's Board take such disciplinary decisions as might appear appropriate. A copy of this report was received by the Respondent on 8 May 2017. Objection was taken that a number of findings fell outside the remit of the investigation.

6 The Respondent's salary was due to be paid into his bank account on 3 May 2017, but was not received.

7 By letter of 11 May 2017 the Appellant's solicitors wrote to the Respondent's solicitors indicating that the investigator's report had been considered, that the Appellant accepted its findings of fact, and that the Appellant proposed to take disciplinary action, which might include summary dismissal, and seven days was given for a response and reasons as to why the Respondent should not be dismissed.

8 The Respondent's solicitors Patrick J. Farrell replied on 18 May 2017 in a lengthy letter that will be referred to later in this judgment. In the second paragraph it was indicated that the Respondent's salary had ceased being paid since 3 May and in the third paragraph they sought “immediate payment of the salary due to Mr. McFadden,” and stated that unless this was confirmed by close of business on Friday 19 May “we will be advising our client of his entitlement to seek urgent injunctive relief, without further notice to your client.” In the remainder of the letter they express their client's concerns in relation to the manner in which the investigation was carried out and the contents of the investigator's report, and ended by indicating that the Respondent “is amenable to considering reasonable proposals vis á viz participating in a fair and lawful investigation”.

9 In a further important letter of 19 May 2017 Mallon Solicitors responded. Firstly they indicated that “the employer will agree to pay Mr. McFadden's salary pending the determination of the disciplinary process.” They then addressed the Respondent's solicitor's contentions in relation to the disciplinary investigation, and in summary they stood over the investigator's report. They ended stating “we are again affording Mr. McFadden a period of seven days to set out his reasons in writing as to why he should not be dismissed” indicating that if there was no response within that time frame “the employer will proceed to take such disciplinary action as it deems appropriate in the circumstances”. This was the last correspondence before the proceedings commenced.

The proceedings

10 The Plenary Summons was issued on 23 May 2017 seeking interlocutory injunctions restraining the Appellant from further conducting the disciplinary investigation, from relying on the investigator's report, requiring the Appellant to continue to pay the Respondent's salary, compelling the Appellant to reinstate the Respondent as general manager, and restraining the Appellant from terminating the employment “other than in accordance with his legal and contractual entitlements and his right to fair procedures”. The Respondent also sought declarations in similar terms, damages for breach of contract and exemplary damages for damage to his reputation.

11 A Notice of Motion was then issued on 23 May 2017, with leave of the High Court (Gilligan J.) for short service returnable to 26 May 2017, seeking the following interlocutory reliefs: -

(1) “An interlocutory injunction restraining the Defendant, its servants or agents, from further conducting the disciplinary investigation and/or procedure of and against the Plaintiff, as notified to the Plaintiff by the Defendant in their letters of the 2nd August and the 15th November 2016, other than in accordance with its legal and contractual entitlements and his right to fair procedure.

(2) An interlocutory injunction restraining the Defendant, its servants or agents, from relying...