Word Perfect Translation Services Ltd v The Minister for Public Expenditure & Reform

• Jurisdiction: Ireland
• Judge: Ms. Justice Donnelly
• Judgment Date: 27 July 2023
• Neutral Citation: [2023] IECA 189
• Court: Court of Appeal (Ireland)
• Docket Number: Record No.: 2022 247

Between/

Word Perfect Translation Services Ltd

Respondent

and

Minister for Public Expenditure and Reform

Appellant

[2023] IECA 189

Donnelly J.

Faherty J.

Ní Raifeartaigh J.

Record No.: 2022 247

THE COURT OF APPEAL

UNAPPROVED

NO REDACTIONS NEEDED

Judgment of Ms. Justice Donnelly delivered on the 27 ^th day of July, 2023

Introduction

1 . This is an appeal by the Minister for Public Expenditure and Reform in respect of a judgment and order of the High Court ( [2022] IEHC 219) awarding 50% costs to the Minister after the successful defence of public procurement proceedings brought by Word Perfect Translations Ltd. (hereinafter “Word Perfect”). Word Perfect has brought a cross-appeal seeking a greater reduction in the award of the costs. The primary reason for the reduction in the award of costs by the High Court was that although the Minister succeeded on a preliminary point that Word Perfect was not an “eligible person” to challenge the tender (“the eligibility point”), the Minister had failed to bring a motion to have a preliminary legal point decided before the trial. In those circumstances, the High Court did not find it necessary to address the three substantive claims raised by Word Perfect which took up most of the time at trial.

2 . The case raises issues under s. 169(1) of the Legal Services Regulation Act, 2015 (“the 2015 Act”); primarily whether there is a requirement of the parties to conduct litigation in the most cost-effective manner possible. This includes the question of whether the ‘conduct of the parties’ in the sub-section concerning litigation misconduct also involves the failure to conduct the proceedings in the most cost-effective manner. More particularly, it raises the question of whether conducting the proceedings in the most cost-effective manner is the starting point for the exercise of that discretion, as the trial judge considered it to be, or whether it is merely a factor to be considered in the overall exercise of discretion.

Background

3 . Word Perfect challenged the legality of a Request for Tenders by the State in respect of the supply of Irish translation services. It did so on three substantive grounds primarily involving principles of EU law. As well as denying each of those substantive points, the Minister made a preliminary objection that Word Perfect was not eligible to bring the challenge because it had not submitted a tender and was not an “eligible person” within the Public Procurement Remedies Regulations (Regulation 4).

4 . By judgment (“the principal judgment”) of 2 February 2022 ( [2022] IEHC 54), the High Court found in favour of the Minister on the ground that Word Perfect was not an eligible person (because it had not submitted a tender) and therefore did not perceive it to be necessary to consider the substantive issues raised on its behalf. That decision was upheld on appeal ( [2022] IECA 131).

5 . Order 84A of the RSC prescribes the procedure to be adopted in respect of reviews of the award of public contracts. Rule 6(2) provides that where a contracting authority or notice party to such proceedings opposes the application on the ground the applicant is not an eligible person, it may apply to the court for an order dismissing the application by motion on notice, grounded on affidavit, which motion may be made returnable for the return date of the originating notice of motion. No such application was brought by the Minister in the present case.

6 . In its submission on the subsequent application for costs, Word Perfect argued that the Minister should have brought a preliminary motion on the eligibility points as this would have saved a huge amount of court time and expense for the parties. Word Perfect submitted there was no dispute concerning the facts relevant to the eligibility dispute; it was clear that the applicant had not submitted a tender. This was not, it submitted, a case in which the facts were in conflict or intertwined with the substantive issues; the eligibility issue was a stand-alone point with no factual conflict (i.e. they had not submitted a tender) and could easily have been dealt with by way of preliminary motion. The High Court accepted this argument and proceeded to make a modified costs order.

The High Court Judgment

7 . The trial judge accepted the objective logic of Word Perfect's uncontroverted submissions that the purpose of O. 84A r. 6(2) was to promote and encourage the determination of eligibility as a discrete issue, with the objective of minimising costs and the burden on court resources, so as to avoid the situation where a substantive case is heard unnecessarily. The trial judge referred to the Supreme Court's dictum in Permanent TSB plc v Skoczylas [2021] IESC 10, at para 12, that part of the function of making costs orders is to “encourage” an “efficient approach to litigation”.

8 . The trial judge stated that at a time where there was a “well publicised shortage of judges and a backlog in the courts' system, it is even more important that costs orders encourage such efficiency by ensuring that scarce court resources are only used when necessary… Where this is not the case, there are likely to be negative costs consequences for the parties”. He said it was only due to a recent change in legislation, i.e. s.169(1) of the 2015 Act, that the court was “obliged to ask, in every application for costs by a party that has been entirely successful, have the parties conducted the case in the most cost-effective way possible?”. He said the existence of this obligation was clear from the wording of s. 169(1) (“shall have regard”) and the decisions in Chubb v The Health Insurance Authority [2020] IECA 183, and Somers v Kennedy [2022] IEHC 78 (Butler J). He also referred to Ryanair v An Taoiseach [2020] IEHC 673 (Simons J). He said that s. 169 provided “a powerful financial incentive for litigants to be as efficient as possible with the use of court time” and that it had “the potential to lead to a significant change in the attitude of litigants and their lawyers regarding how they resolve disputes and a significant saving to court resources, in the public interest” (para 4). He said that “it is no longer sufficient for [the winning party] to have been entirely successful in litigation. The party must also have conducted her case in the most cost-effective manner possible, failing which she is unlikely to get her full costs” (para 8). He said the wording of s. 169(1) meant that a court “must consider in every costs application (…) whether (…) the winning party conducted the case in a manner which justifies a lesser award” (para 25).

9 . The trial judge referred to mediation as the most obvious way that parties might resolve their dispute in the most cost-effective manner possible, citing Mascarenhas v Karim [2022] IECA 48 (failure by party to accept an invitation to mediation led to significant difference in costs which would otherwise have received), although he noted that no mediation issue arose in the present case.

10 . In his judgment, the trial judge also referred to Byrne v Revenue Commissioners (No. 2) [2021] IEHC 415. In that case, the Revenue Commissioners were awarded 60% of their costs even though they had been successful in the overall litigation because they had unsuccessfully raised issues which took up 20% of court time.

11 . While the trial judge noted the Minister's argument that O. 84A was clearly permissive in nature (“ may apply to the Court”), he said that the key point was not whether the procedure was optional. Rather, the key point, in light of the new costs regime, “is that the court must ask whether the winning litigant had other options in relation to the litigation it pursued”. If so, the next key question is “whether it chose the most cost-effective option”.

12 . The trial judge rejected the argument that this amounted to penalising a winning litigant and referred to the “public interest in seeking to preserve court resources”, citing a dictum of McMenamin J in Tracey t/a Engineering Design and Management v Burton [2016] IESC 16, para 45. He stated: “Since the effective use of court resources is a matter of public interest, it follows that from the objective perspective of a court, incentivising litigants to adopt the most cost-effective approach to resolving their litigation is a matter of considerable public interest”. He referred to various other dicta regarding the efficient use of court time.

13 . At para 43 of the judgment, the trial judge said that it was “important to point out at this juncture that there is no criticism by this Court of the fact that the Minister chose not to raise the eligibility issue as a preliminary matter”. This is a comment upon which emphasis is placed by the Minister in this appeal, in her argument that there was an express finding that there was no “litigation misconduct”.

14 . The trial judge said however that how a litigant chooses to run her case has implications for the other parties to the litigation who may have to pay those costs. He cited from Fyffes plc v DCC plc [2006] IEHC 32 that “the defendants were entitled to raise any issue they thought fit in the proceedings” but their decision to do so “should not be devoid of consequences”.

15 . The trial judge viewed it as useful to look at the facts in Somers in answering the question of whether the State should have brought a preliminary application. He then said, with reference to the present facts, that the State had a clear choice between bringing a motion on eligibility under O. 84A r. 6(2) or allowing the matter to proceed to hearing on the eligibility issue (circa 20% of the hearing time) at the same time as the substantive claims (circa 80% of the hearing time). He referred to Gold v Patman & Fotheringham [1958] 2 ALL ER 497 where Romer L.J. said that “all of this could have been determined by a...