Court of Appeal: Costs order for injunction upheld despite defendant’s claim that proceedings were premature

About this case:

• Citation:
  [2022] IECA 68
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Mr Justice Seamus Noonan

Delivering judgment in the case, Mr Justice Seamus Noonan held that the costs order made by the trial judge was not outside the range of orders that were reasonably open to the court. The court emphasised that an appellate court would be slow to interfere with the ruling of a trial judge in interlocutory matters and refused to overturn the costs order.

Background

In 2016, the plaintiff wished to expand his fishing business by increasing his fishing licence capacity. He approached the defendant company, Skellig Fish Limited, with a view to purchasing some of its licence capacity. In March 2016, the plaintiff met with a director of Skellig to negotiate a purchase of capacity.

It was agreed that Skellig would assign 324 gross tonnes of fishing capacity to the plaintiff for €900,000. On 4 March 2016, a “Capacity Sale Agreement” was entered between the parties. The contract was straightforward and ran to one page. The contract did not provide for a closing/completion date for the sale. A deposit of €90,000 was paid by the plaintiff.

On foot of the agreement, the plaintiff commissioned the construction of a new vessel for his fleet for €6 million. There was no urgency to complete the sale through 2016 while the vessel was being built.

In January 2017, the plaintiff’s solicitor wrote to the solicitor for Skellig, indicating that he was able to complete the sale. Later, the solicitor wrote back and stated that they had received authority from another firm which would act on behalf of the company. It transpired that, at the time of the transaction, the director negotiating the agreement was seeking to divest himself from Skellig by selling his stake to existing Spanish investors.

The plaintiff called upon Skellig to complete the transaction and that failing to do so would result in legal proceedings. In February 2017, the new solicitor stated that he had not received the file from the previous solicitor and that he did not have authority to bind his client at that point.

A plenary summons issued a few days later, seeking specific performance of the contract. Further, a motion for an interlocutory injunction restraining Skellig from dealing with the licence capacity pending transfer to the plaintiff.

In March 2017, the High Court granted the injunction and ordered for costs to be in the cause of the action. The defendant had argued, inter alia, that the proceedings were premature because the new solicitor had not received the file and could not advise his clients.

An expedited appeal was lodged by Skellig. A few weeks after the High Court’s ruling, the defendant wrote to the plaintiff and confirmed that the contract was enforceable. It was noted that advice had been sought based on the “unconventional circumstances” of the director’s negotiations and the drafting of the agreement.

As such, the only issue before the Court of Appeal was whether the costs order should remain in place. The defendant maintained that proceedings should not have issued before the file was transferred. Further, it was argued that time had been requested by the new solicitor to clarify the position.

Court of Appeal

The court began by noting that the defendant and plaintiff disagreed as to whether the proceedings were moot, in light of an amendment to the statement of claim in 2018 where the plaintiff sought damages from Skellig for delaying the transaction.

The court considered the judgment in Heffernan v. Hibernia College Unlimited [2020] IECA 121, where it was emphasised that a trial judge’s decision in interlocutory applications “should not be lightly upset by an appellate court.” It was held orders “should not be overturned on appeal unless the appellate court is satisfied that the determination of the court below was outside the range of judgment calls which were open to the first instance court” (Waterford Credit Union v. J&E Davy [2020] IESC 9).

It was only where a trial judge erred in principle that the Court of Appeal would interfere, the court said (Godsil v. Ireland [2015] IESC 103). This was true even if the appellate court would have approached the matter differently. Further, the court stated that the general principle of non-interference with a trial judge’s decision was particularly applicable where the only issue was a question of costs.

The court noted that there was not a specific ground of appeal which argued that the proceedings were moot. However, the court applied Heffernan, which stated that the court could take a broad overview of the merits of the claim for the purpose of considering costs, notwithstanding the potential mootness of proceedings.

Ultimately, it was held that the trial judge’s costs order was within the range of potential orders that could be made and, accordingly, the court refused to overturn the order. Although another judge may have arrived at a different conclusion, it was noted that the trial judge may well have ordered costs against the defendant in the present matter. As such, if anyone was to be disappointed with the order, it was the plaintiff, the court said.

Conclusion

It was held that the defendant fell “well short of establishing an error of principle or an injustice arising by virtue of the costs order”. The appeal was dismissed.