High Court: Court opines that costs of interlocutory application follow the event

Andrew McKeown BL

About this case:

• Citation:
  [2020] IEHC 693
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Ms Justice Nuala Butler

Background

Emma Thompson and Beautiful Minds Creche and Montessori Ltd (Beautiful Minds) sought the costs of an interlocutory injunction granted by the court against Stephen Tennant and Promentoria (Aran) Ltd in a judgment delivered in November 2020. They sought an order for costs pursuant to Ord 99 r3(1) RC and of the Legal Services Regulation Act 2015 s.169(1).

Mr Tennant and Promentoria asked that the costs be reserved to the trial of the action, or to be made costs in the cause. The referred to the recent judgment of Mr Justice David Keane in Hafeez v CPM Consulting Ltd [2020] IEHC 583 in which a “calibrated” order for costs was made under which the successful defendant’s costs, but not those of the plaintiff, were made costs in the cause. Mr Tennant and Promentoria did not, however, made any specific argument as to how that judgment should be applied to the circumstances of the case in which they had not successfully resisted the application that was brought against them and where the court granted the interlocutory relief sought.

Ms Thompson and Beautiful Minds placed particular reliance on the principle enshrined in s.169(1) of the 2015 Act to the effect that “a party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings, unless the court orders otherwise”.

The judge noted that the text does not refer to interlocutory applications nor to “any stage in the proceedings” and so, on its face, could be read as applying only to the outcome of the substantive proceedings, a reading consistent with the reference to the party having been “entirely successful in civil proceedings”. However, Ms Thompson and Beautiful Minds relied on the fact that Ord.99 r.3(1) provides that “The High Court, in considering the awarding of the costs of any action or step in any proceedings, … in respect of a claim or counterclaim, shall have regard to the matters set out in section 169(1) of the 2015 Act, where applicable.”. Thus, they argued that it imports the statutory provisions relating to costs following the event into the court’s consideration of an award of costs in respect of any step in the proceedings including the making of interlocutory orders.

Ms Thompson and Beautiful Minds argued that, having succeeded in obtaining an interlocutory injunction, costs should follow the event. They further argued that the application was based on agreed documentation and not on disputed facts.

The relevance of whether facts are or remain in dispute after the interlocutory stage arises from a series of judgments commencing with AIB v Diamond [2011] IEHC 505 (although the relevant comments are contained in a subsequent ex tempore ruling which is not included in the judgment); and in the judgments of Ms Justice Mary Laffoy in Tekenable Limited v Morrissey [2012] IEHC 391, and Mr Justice Frank Clarke (as he then was) in ACC v Hanrahan [2014] IESC 40.

In their application for the interlocutory injunction, Ms Thompson and Beautiful Minds identified two arguments found to meet the required threshold of a fair question to be tried. They acknowledged that the first of these, as to whether there was an expressed or implied tenancy in existence between Beautiful Minds and Promentoria, is an assertion of fact to be revisited at the substantive hearing. They contended that the second arguments, that that the receiver did not validly accept his appointment, was one based entirely on documentation before the court which was not disputed. The legal consequences flowing from those documents remains in issue. They submitted that even if the first issue was not amenable to the court justly adjudicating upon costs at this stage, which they did not concede, they should still be entitled to their costs as to the second.

Mr Tennant and Promentoria focused on the first issue which they described as the “principal case” made against the. They said there was limited affidavit evidence before the court and that the substantive trial, which may involve oral evidence and discovery, might reach a different conclusion. They argued the trial court would be in a better position to assess the justice of the costs of the interlocutory hearing.

Ms Justice Nuala Butler said that there were two difficulties with the approach adopted by the Promentoria and Mr Tennant. Firstly, Ms Thompson and Beautiful Minds did not actually dispute the contention that the tenancy issue is a factual one upon which a different conclusion may be reached at trial. The only factual evidence adduced on the tenancy issue for the purposes of the interlocutory hearing was the averments of Ms Thompson, with exhibited documentary evidence in relation to the alleged payment of rent. In contrast, Promentoria and Mr Tennant relied on an inference drawn from Promentoria’s records by a deponent who did not have any personal knowledge of the events.

While different evidence may be adduced at trial, the decision to oppose the interlocutory injunction was made in circumstances where Beautiful Minds and Ms Thompson had adduced positive evidence and Promentoria had not. Further, Mr Tennant and Promentoria did not engage at all with the second issue and, apart from characterising the first as the “principal case”, offered no reasons why costs should not follow the event in relation to the second issue.

Ord.99 r.2(3) RSC requires the High Court to make an award of costs upon determining an interlocutory application unless it is not possible justly to adjudicate upon liability for costs. That a trial court may be in a better position to assess the costs of the interlocutory application after the substantive trial is held does not mean that it is not possible for the court which has determined the interlocutory application to justly adjudicate upon costs. “There is quite a conceptual distance between something not being possible and the alternative being better.” The test is “not whether the trial court will be better placed to make that adjudication but whether it is not possible for the interlocutory court to do so – accepting of course that it must be possible to carry out that adjudication ‘justly’.”

Conclusion

The judge was satisfied that it was possible for the court to adjudicate justly upon the interlocutory application at this stage. Ms Thompson and Beautiful Minds had succeeded in circumstances where Mr Tennant and Promentoria had contested the application. Costs followed the event, and the court was prepared to make an order for the plaintiff’s costs of the interlocutory application. However, she was prepared to stay the execution of that order pending the trial, noting that she would hear submissions.