RHS Energy Ltd v ES Energy Saving Systems Ltd
| Jurisdiction | Ireland |
| Judge | Ms. Justice Baker |
| Judgment Date | 16 May 2019 |
| Neutral Citation | [2019] IECA 146 |
| Court | Court of Appeal (Ireland) |
| Docket Number | [C.A. No. 65 of 2017],Neutral Citation Number: [2019] IECA 146 Record No. 2017/65 |
| Date | 16 May 2019 |
[2019] IECA 146
THE COURT OF APPEAL
Baker J.
Irvine J.
Whelan J.
Baker J.
Neutral Citation Number: [2019] IECA 146
Record No. 2017/65
AND
AND
Costs order – Charge – Legal Practitioners (Ireland) Act 1876 s. 3 – Applicant firm seeking a declaration pursuant to s. 3 of the Legal Practitioners (Ireland) Act 1876 that the firm is entitled to a charge over a costs order made by the Court of Appeal in favour of the plaintiff against the first defendant – Whether the applicant firm was entitled to a charging order
Facts: Messrs Larkin Tynan Nohilly formerly acted as solicitors for the plaintiff, RHS Energy Ltd, in High Court proceedings and brought an application for a declaration pursuant to s. 3 of the Legal Practitioners (Ireland) Act 1876 that the firm was entitled to a charge over a costs order made by the Court of Appeal on 22 February 2017 in favour of the plaintiff against the first defendant, ES Energy Saving Systems Ltd. The notice of motion issued on 30 November 2017, grounded on the affidavit of Mr Nohilly sworn on that date and the documents therein referred to and exhibited. Mr Healy, the liquidator of the first defendant, swore a replying affidavit on 20 March 2018 in which he denied that the applicant firm was entitled to a charging order, inter alia, on the grounds that he, as liquidator of the first defendant, compromised the substantive proceedings at negotiations had on 22 May 2017 by which, inter alia, it was agreed that the plaintiff would discontinue its proceedings and by way of compromise, pay the sum of €10,000 plus VAT and outlay to the first defendant and that the costs order made in favour of the plaintiff by the Court of Appeal would be set off. It was argued in the circumstances that the costs order over which the charging order was sought had been extinguished by the agreement to set off and that the application should be refused. Mr Nohilly swore a supplemental affidavit in reply on 10 April 2018 in which he, inter alia, averred to the fact that the Court of Appeal order continued to subsist and had not been varied or vacated, and no application under O. 99, r. 4 of the Rules of the Superior Courts (RSC) for set-off had been made, and that the firm’s costs were taxed with the knowledge and authority of Messrs AMOSS solicitors on record for the plaintiff, the liquidator of which had not resisted the application.
Held by the Court of Appeal (Baker J) that, in the circumstances of the case, the applicant firm was entitled to an order pursuant to s. 3 of the Act. Baker J noted that it was clear and was not the subject of any great debate at the hearing of the application, that the order for costs made by the Court of Appeal was properly characterised as property recovered or preserved as a result of the appeal, that those costs were recovered through the instrumentality of the applicant firm. Baker J was satisfied that the liquidator of the first defendant could not defeat the entitlement of the applicant firm to a charge as neither he, nor the first defendant, may be characterised as a bona fide purchaser for value without notice of the award of costs and of the entitlement of the applicant firm be paid those costs. Baker J held that the right was a right which had not in the circumstances been defeated by the actions of the liquidators of the plaintiff and the first defendant in compromising the substantive proceedings, and no compromise entered into between them could impact upon or prejudice the entitlement of the applicant firm to seek an order in respect of costs which were awarded and over which it had a lien and an entitlement to seek a charge before the first defendant went into liquidation and several months before the compromise was achieved.
Baker J held that she would make an order pursuant to s. 3 of the Act, declaring that the firm of Larkin Tynan Nohilly be entitled to a charge upon the costs order made by the Court of Appeal on 22 February 2017 in the proceedings against the first defendant, and refuse the application for a set-off under O. 99, r. 4 RSC.
Motion granted.
Messrs Larkin Tynan Nohilly formerly acted as solicitors for the plaintiff in High Court proceedings and have brought this application for a declaration pursuant to s. 3 of the Legal Practitioners (Ireland) Act 1876 (‘the Act’) that the firm is entitled to a charge over a cost order made by the Court of Appeal on 22 February 2017 in favour of the plaintiff against the first defendant.
The plaintiff and the first defendant are now in liquidation. A provisional liquidator was appointed to the first defendant by Twomey J. on 16 February 2017 and his appointment was confirmed by order of White J. on 6 April 2017. Aidan Garcia Diaz was appointed liquidator of the plaintiff company on 27 April 2017 by O'Connor J. following a petition presented by its employees.
The notice of motion issued on 30 November 2017, grounded on the affidavit of David Nohilly sworn on that date and the documents therein referred to and exhibited. John Healy, the liquidator of the first defendant, swore a replying affidavit on 20 March 2018 in which he denies that the applicant firm is entitled to a charging order, inter alia, on the grounds that he, as liquidator of the first defendant, compromised the substantive proceedings at negotiations had on 22 May 2017 by which, inter alia, it was agreed that the plaintiff would discontinue its proceedings and by way of compromise, pay the sum of €10,000 plus VAT and outlay to the first defendant and that the costs order made in favour of the plaintiff by the Court of Appeal would be set off.
It is argued in the circumstances that the costs order over which the charging order is sought has been extinguished by the agreement to set off and that the application should be refused.
David Nohilly swore a supplemental affidavit in reply on 10 April 2018 in which he, inter alia, avers to the fact that the Court of Appeal order continues to subsist and has not been varied or vacated, and no application under O. 99, r. 4 of the Rules of the Superior Courts (‘RSC’) for set-off has been made, and that the firm's costs were taxed with the knowledge and authority of Messrs AMOSS solicitors now on record for the plaintiff, the liquidator of which has not resisted the application.
When the matter first came on for hearing before this Court, the question arose as to whether the compromise entered into between the liquidator of the plaintiff and the liquidator of the first defendant required the sanction of the High Court pursuant to s. 231 of the Companies Act 1963 and whether the provisions of s. 627 of the Companies Act 2014 had altered the position in a material way.
At that point, and following legal argument, the liquidator of the plaintiff was directed to furnish an affidavit dealing with the circumstances in which the compromise was agreed. Mr Garcia swore an affidavit on 12 February 2019.
Mr Healy, liquidator of the first defendant, furnished a supplemental affidavit sworn on 13 December 2018 in which he explained the circumstances and details of the compromise of the substantial proceedings.
Written legal submissions and supplemental submissions were provided by both parties and the legal issues crystallized in the course of those submissions and oral submissions to this Court.
Section 3 of the Act provides as follows:
‘In every case in which an attorney or solicitor shall be employed to prosecute or defend any suit matter or proceeding in any court of justice, it shall be lawful for the court or judge before whom any such suit matter or proceeding has been heard or shall be depending to declare such attorney or solicitor entitled to a charge upon the property recovered or preserved; and upon such declaration being made such attorney or solicitor shall have a charge upon and against and a right to payment out of the property, of whatsoever nature tenure or kind the same may be, which shall have been recovered or preserved through the instrumentality of any such attorney or solicitor, for the taxed costs, charges, and expenses of or in reference to such suit matter or proceeding; and it shall be lawful for such court or judge to make such order or orders for taxation of and for raising and payment of such costs charges and expenses out of the said property as to such court or judge shall appear just and proper; and all conveyances and acts done to defeat or which shall operate to defeat such charge or right shall, unless made to a bona fide purchaser for value without notice, be absolutely void and of no effect as against such charge or right: Provided always, that no such order shall be made by any such court or judge in any case in which the right to recover payment of such costs, charges, and expenses is barred by any Statute of Limitations.’
The section provides for an application to the relevant court for a declaration that an attorney or solicitor is entitled to a charge, in respect of his taxed costs, over the property recovered or preserved in any suit, and at the making of the declaration shall constitute a charge upon and against and a right to payment out of the property.
No dispute arises as to whether Messrs Larkin Tynan Nohilly had been engaged by the plaintiff to prosecute the High Court proceedings, and to defend the motion for the stay of the order of Twomey J. made on 16 February 2017, and the firm was on record for the plaintiff when the costs order of 22 February 2017 was made by the Court of Appeal after it had refused the order for a stay.
Having regard to the clear authority of the judgment of Barrington J. in ...
To continue reading
Request your trial