The Governor and Company of the Bank of Ireland v Balford Construction Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Allen
• Judgment Date: 14 February 2023
• Neutral Citation: [2023] IECA 26
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2021/179

Between

The Governor and Company of the Bank of Ireland

Plaintiff

and

Balford Construction Limited

Defendant

[2023] IECA 26

Haughton J.

Ní Raifeartaigh J.

Allen J.

Appeal Number: 2021/179

THE COURT OF APPEAL

CIVIL

Costs – Legal practitioner and client basis – Wasted costs order – Plaintiff seeking costs of appeal and review application – Whether the defendant should pay the costs on a legal practitioner and client basis

Facts: The defendant, Balford Construction Ltd, appealed against a procedural order made by the High Court in the course of case managing a motion by the plaintiff, the Governor and Company of the Bank of Ireland, to amend the special indorsement of claim on a summary summons and for summary judgment, and a cross motion by the defendant to strike out part of the special indorsement of claim. On 25th July, 2022, the Court of Appeal (Allen J, Haughton and Ní Raifeartaigh JJ concurring) decided that the defendant’s appeal should be dismissed: [2022] IECA 169. On 30th November, 2022, the same division of the court decided that the application brought by the defendant to “review” the judgments then delivered must be refused: [2022] IECA 273. Regarding the costs of the appeal and the review application, the plaintiff contended that the circumstances were such as to warrant not only an order that the defendant should pay the costs of both applications on a legal practitioner and client basis but a wasted costs order against the defendant’s solicitor, Ms McNicholas, on the same basis. In support of its application for an order for costs against the defendant on a legal practitioner and client basis, the defendant relied on s. 169(1) of the Legal Services Regulation Act 2015 and O. 99, rr. 1(3) and 10(3) of the Rules of the Superior Courts. As to the plaintiff’s entitlement to costs, it was submitted that the plaintiff, having been entirely successful on the appeal, had a presumptive entitlement to an order for costs, which had not been displaced. As to the scale of costs, the plaintiff relied on the summary of the law set out in the judgment of Barniville J in Trafalgar Developments Ltd v Mazepin [2020] IEHC 13. The plaintiff’s argument was that the appeal, and the persistence in the appeal, was an abuse of process and that the case was one in which the court ought to mark its displeasure or disapproval of the conduct of the defendant by departing from the normal rule. As to the wasted costs order which it was submitted ought to be made against Ms McNicholas, the plaintiff referenced O. 99, r. 9(1)(a) of the Rules. The plaintiff submitted that this was a case in which Ms McNicholas had been shown to have been guilty of gross negligence by bringing and pursuing an appeal which, if she did not know, she ought reasonably to have known, was vexatious, wasteful of court time, and an abuse of process. The appeal, it was said, like the appeal in Ward v Tower Trade Finance (Ireland) Ltd [2022] IECA 70, was one in which “the prospects [of the appeal were] hopeless to the point where the further continuation of the [appeal was] plainly wasteful and vexatious”. All that the defendant’s written submission, signed by Ms McNicholas, had to say about the costs was that “It would only serve to compound the injustice suffered by the defendant if the plaintiff were given an order for costs”.

Held by Allen J that the plaintiff, having been entirely successful on the appeal and the review application, was entitled to an order for payment of its costs in respect of both. Allen J held that those costs would include the costs of the aborted costs hearing on 6th October, 2022 which were thrown away by the issuing of the review application. On the application for the special costs orders, Allen J held that the plaintiff, having secured a wasted costs order against Ms McNicholas, had substantially succeeded. Allen J considered that the costs of the costs application were not materially increased by the inclusion of the application for the adjudication of the costs on a legal practitioner and client basis.

Allen J made an order for the adjudication of the plaintiff’s costs on the party and party basis and for payment by the defendant of so much of those costs as are attributable to the appeal between the service of the notice of appeal and 31st October, 2021 and for the payment of the costs thereafter by Ms McNicholas personally.

Costs awarded to plaintiff.

NO REDACTION NEEDED

JUDGMENT of Mr. Justice Allen delivered on the 14 ^th day of February, 2023

Introduction

1 . The background to the application now before the court is set out in a judgment delivered by me on 25 ^th July, 2022, with which Haughton and Ní Raifeartaigh JJ. agreed, [2022] IECA 169 and a later ruling by the same division of the court on 30 ^th November, 2022 on an application brought by the defendant to “review” the judgments then delivered [2022] IECA 273.

2 . The decision of 25 ^th July, 2022 was that the defendant's appeal should be dismissed. The decision on 30 ^th November, 2022 was that the review application must be refused.

3 . This judgment deals with the costs of the appeal and the review application. The plaintiff contends that the circumstances are such as to warrant not only an order that the defendant should pay the costs of both applications on a legal practitioner and client basis but a wasted costs order against the defendant's solicitor on the same basis.

Summary of the previous applications

4 . The defendant's appeal was an appeal against a procedural order made by the High Court in the course of case managing a motion by the plaintiff to amend the special indorsement of claim on a summary summons and for summary judgment, and a cross motion by the defendant to strike out part of the special indorsement of claim.

5 . The plaintiff's claim in the High Court was for judgment in the sum of €2,751,216.73, said to be due and owing on foot of two loan facilities, each of which was said to have been repayable on demand, and in respect of which demand was said to have been made. Shortly after the summary summons was issued the Supreme Court gave judgment in Bank of Ireland Mortgage Bank v. O'Malley [2019] IESC 84, [2020] 2 I.L.R.M. 423. By reference to O'Malley the particulars were clearly insufficient and the plaintiff needed to amend the special indorsement of claim. Therefore the plaintiff issued a combined motion seeking first, leave to amend, and secondly summary judgment for the amount claimed.

6 . The defendant's position was that the loans were not payable on demand and that the proposed additional particulars were inadequate but instead of simply making that case in defence to the claim, the defendant issued a motion to strike out the plea that the loans were payable on demand, “on the grounds that the said pleadings are untrue and prejudicial to the fair trial of the action”.

7 . As I observed, by the way, in my earlier judgment, it was not easy to see how the power invoked by the defendant's motion – O. 19, r. 27 of the Rules of the Superior Courts – was engaged. The rule relied on confers an express power to strike out or amend any matter in an indorsement of claim which is unnecessary or scandalous, or which may tend to prejudice, embarrass or delay the fair trial of the action. If, as was the defendant's position, the loans were not repayable on demand, that would be a matter of defence. If the defendant could show that there was a credible factual basis for contending that the loans were not repayable on demand, it could have done so by simply filing and serving an affidavit setting out its defence. Instead, the defendant, by its cross-motion, sought to pre-empt the case which the plaintiff wished to make. However, in the circumstances which I have previously set out, the defendant abandoned its motion before it was heard.

8 . When the plaintiff's motion came before the High Court (Hanna J.) on 21 ^st June, 2021 he ordered that it, and the defendant's cross motion which had been issued recently and was returnable for 8 ^th November, 2021 should, in the case of the plaintiff's motion be adjourned to, and in the case of the defendant's cross-motion should be brought forward to, the following Thursday, to travel together “to be heard and directed” on the same occasion. Hanna J., sitting as he was in a busy Monday morning list, did not engage at all with the merits of either motion. Specifically, he made no order as to the sequencing of the motions.

9 . My judgment of 25 ^th July, 2022 traces the progress of the plaintiff's and the defendant's motions in the High Court. When they first appeared in the non-jury list on 24 ^th June, 2021 there was no appearance on behalf of the defendant and they were put back to 28 ^th June, 2021. On 28 ^th June, 2022 the motions were further adjourned to accommodate a personal difficulty on the part of Ms. McNicholas. On the further adjourned date, 12 ^th July, 2021, there was again no appearance and the non-jury list judge gave directions for the exchange of affidavits with a view to a hearing on 15 ^th March, 2022. The defendant failed to engage at all with the directions hearings or with the directions given as to the filing of affidavits. Absent any attendance on behalf of the defendant there was no debate, still less a direction, as to the sequencing of the hearing of the motions.

10 . Ms. McNicholas, on behalf of the defendant, has steadfastly maintained that the defendant would be prejudiced if its motion was not heard first but was not able to say why. It is true, as Ms. McNicholas submitted – citing Bank of Ireland Mortgage Bank v. O'Malley – that the defendant was in principle entitled to sufficient particulars of the claim to enable it to know whether it should concede or resist the claim. But the issue which the defendant wished to raise by its cross-motion was entirely separate to the adequacy of the...