Tanager Designated Activity Company v Ryan

• Jurisdiction: Ireland
• Judge: Mr Justice Garrett Simons
• Judgment Date: 25 October 2019
• Neutral Citation: [2019] IEHC 694
• Docket Number: 2019 No. 392 CA
• Court: High Court
• Date: 25 October 2019

[2019] IEHC 694

THE HIGH COURT

CIRCUIT APPEAL

Garrett Simons

2019 No. 392 CA

BETWEEN

TANAGER DESIGNATED ACTIVITY COMPANY

PLAINTIFF

AND

RONAN RYAN

DEFENDANT

PAMELA FLOOD

NOTICE PARTY

Costs – Special costs rules – Personal Insolvency Act 2012 s. 97 – Defendant seeking costs – Whether the special costs rules under s. 97 of the Personal Insolvency Act 2012 apply

Facts: An order of the Circuit Court dated 15 August 2019 granted leave to the plaintiff, Tanager DAC, to execute an order for possession in respect of the family home of the defendant, Mr Ryan, notwithstanding the existence of a protective certificate under the Personal Insolvency Act 2012. The defendant was successful in his appeal against the order of the Circuit Court, which was set aside by order of the High Court. The principal judgment was delivered on 7 October 2019: Tanager DAC v Ryan [2019] IEHC 659. This supplemental judgment addressed the question of which party, if any, should bear the costs of the appeal from the Circuit Court. Tanager advanced the argument that there should be no order as to costs under four broad headings: first, the appeal represented a form of “test case” in that the principal judgment was the first judgment of the High Court interpreting s. 96 of the 2012 Act; secondly, the special costs rules under s. 97 of the 2012 Act should be applied, by analogy, to an application under s. 96; thirdly, it would be unjust to make a costs order in favour of Mr Ryan in circumstances where it was common case that he owed a significant amount of money in mortgage arrears to Tanager; and fourthly, in exercising its discretion in relation to costs, the court should have cognisance of the fact that the principal judgment contained a finding that Mr Ryan breached his duty of disclosure under s. 118. In response, Mr Ryan submitted that the ordinary rule, i.e. that costs follow the event, should be applied. He emphasised that the application was made pursuant to s. 96, and that, accordingly, the special costs rules under s. 97 do not apply.

Held by the High Court (Simons J) that the costs of the appeal proceedings fell to be determined by reference to the ordinary rule under Order 99 of the Rules of the Superior Courts, namely that costs follow the event. Notwithstanding the careful submissions made by counsel on behalf of Tanager, Simons J was unpersuaded that there were any special circumstances which would justify a departure from the general rule. Simons J noted that Tanager sought, as it was in principle entitled to do, to pursue an application for leave to execute as against Mr Ryan’s family home notwithstanding the existence of the protective certificate and that application was ultimately dismissed on the merits. Simons J held that the “event” for costs purposes thus went Mr Ryan’s way and, accordingly, he was entitled to an order for costs in his favour.

Simons J proposed to make an order directing that the plaintiff do pay the costs of the defendant in respect of and incidental to the application under s. 96 of the 2012 Act. Simons J held that the costs were to include the costs of the Circuit Court, the costs of the subsequent appeal to the High Court, the costs associated with the various applications made to the High Court during August and September, all reserved costs and the costs of the “costs” hearing before him on 15 October 2019. Simons J held that the costs order would also record that it extended to the written legal submissions filed before the High Court in September 2019. Simons J also granted a certificate for counsel.

Plaintiff to pay costs.

JUDGMENT of Mr Justice Garrett Simons delivered on 25 October 2019

INTRODUCTION

1 This supplemental judgment addresses the question of which party, if any, should bear the costs of the appeal from the Circuit Court. The principal judgment was delivered on 7 October 2019, Tanager DAC v. Ryan [2019] IEHC 659. As appears from the principal judgment, Mr Ronan Ryan, the defendant to the proceedings, was successful in his appeal against an order of the Circuit Court dated 15 August 2019. The order of the Circuit Court had granted leave to the plaintiff, Tanager DAC, to execute an order for possession in respect of Mr Ryan's family home notwithstanding the existence of a protective certificate under the Personal Insolvency Act 2012. The order of the Circuit Court was set aside by order of this court.

2 If the ordinary rule in relation to costs under Order 99 of the Rules of the Superior Courts were to apply, then Mr Ryan, as the successful party, would be entitled to his costs in this court and in the court below.

3 Notwithstanding that it was unsuccessful in resisting the appeal, and that this court found that it was not entitled to an order granting leave to execute, Tanager submits that this court should make no order as to costs. Instead, each party should bear its own costs. The basis for this submission is explained under the next heading below.

SUBMISSIONS OF THE PARTIES

4 Mr Rudi Neuman, BL, counsel on behalf of Tanager, advances the argument that there should be no order as to costs under four broad headings as follows. First, the appeal represented a form of “test case” in that the principal judgment is the first judgment of the High Court interpreting Section 96 of the Personal Insolvency Act 2012 ( “the Personal Insolvency Act”). Secondly, the special costs rules under Section 97 of the Personal Insolvency Act should be applied, by analogy, to an application under Section 96. Thirdly, it would be unjust to make a costs order in favour of Mr Ryan in circumstances where it is common case that he owes a significant amount of money in mortgage arrears to Tanager. Fourthly, in exercising its discretion in relation to costs, the court should have cognisance of the fact that the principal judgment contains a finding that Mr Ryan breached his duty of disclosure under Section 118.

5 In response, Mr Keith Farry, BL, counsel on behalf of Mr Ryan, submits that the ordinary rule, i.e. that costs follow the event, should be applied. Counsel emphasises that the application was made pursuant to Section 96, and that, accordingly, the special costs rules under Section 97 do not apply. The special costs rule under Section 97(4) is described as the only costs “carve out” under the entire Act. Reference is made to Section 115A(14) which provides that the court, in an application under that section, shall make such other order as it deems appropriate, including an order as to the costs of the application.

6 In rebutting the argument that the case represented a form of “test case”, counsel very helpfully referred me to the judgment of the High Court (McDonald J.) in Re Finnegan (A Debtor) (No. 2) [2019] IEHC 137.

DISCUSSION

7 The four arguments advanced on behalf of Tanager are addressed in sequence under separate headings below.

(1). Test case

8 The ordinary rule in relation to costs under Order 99 of the Rules of the Superior Courts is that the losing side must pay the winning side's costs. This is described in legalese as “costs follow the event”. The rationale underlying this rule is that a party who has been put to the expense of either pursuing or defending legal proceedings in respect of which that party is ultimately successful should be able to recover a contribution towards their costs from the other side. The logic being that had the other side either conceded the proceedings (if a defendant) or had not pursued the proceedings (if a plaintiff), then the successful party would not have had to incur the legal costs.

9 This rationale has been expressed more eloquently by the Supreme Court in Godsil v. Ireland [2015] IESC 103; [2015] 4 I.R. 535, [19] and [20] as follows.

“Inter partes litigation for those unaided is, or can be, costly: certainly it carries with it that risk. It is therefore essential in furtherance of the high constitutional right of effective access to the courts on the one hand and the high constitutional right to defend oneself, having been brought there, on the other hand, that our legal system makes provision for costs orders. This is also essential as a safeguarding tool so as to regulate litigation, and the conduct and process thereof, by ensuring that it is carried on fairly, reasonably and in proportion to the matters in issue. Whilst the Importance of such orders is therefore clearly self-evident, nevertheless some observations in that regard, even at a general level, are still worth noting. A party who institutes proceedings in order to establish rights or assert entitlements, which are neither conceded nor compromised, is entitled to an expectation that he will, if successful, not have to suffer costs in so doing. At first, indeed at every level of principle, it would seem unjust if that were not so but, it is, with the ‘costs follow the event’ rule, designed for this purpose. A defendant's position is in principle no different: if the advanced claim is one of merit to which he has no answer, then the point should be conceded: thus in that way he has significant control over the legal process, including over court participation or attendance. If, however, he should contest an unmeritorious point, the consequences are his to suffer. On the other hand, if he successfully defeats a claim and thereby has been justified in the stance adopted, it would likewise be unjust for him to have to suffer any financial burden by so doing. So, the rule applies to a defendant as it applies to a plaintiff.”

10 The general rule is, therefore, that costs follow the event. The court nevertheless retains a discretion in respect of costs. The courts have long since recognised that in some instances the bringing of proceedings will have served a public interest in that the judgment of the court has clarified the law In a particular area. The court will, therefore, on occasion depart from the...