About this case:

• Citation:
  [2025] IECA 77
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Mr Justice Donald Binchy

Delivering judgment for the Court of Appeal, Mr Justice Donald Binchy agreed with the respondent that its fee arrangements were not champertous, that costs do not form part of the “proceeds” of litigation and that champerty could not be deployed as a defence to its cause of action.

Background

The respondent, the Collector General, claimed in summary proceedings for unpaid taxes, interest and penalties from each of the appellants in the sum of €2,419,603.064 and €625,513.76 respectively. Summary judgment was granted to the respondent on 8 April 2022, but following an appeal, the proceedings were remitted to plenary hearing. 

The appellants delivered amended defences on 11 April 2023, inter alia contending that the respondent was not entitled to maintain the proceedings on the basis that the fee agreement entered into between the respondent and its solicitors, Ivor Fitzpatrick & Co. solicitors, on 29 January 2020 constituted a champertous agreement on the basis inter alia that the fee arrangements provided for therein contained a contingency fee element.

The High Court

Mr Justice Michael Quinn concluded that the contract in question was not champertous and that in any event, champerty could not be relied upon as a defence to the proceedings.

Having set out and analysed the relevant provisions of the contract, the Legal Services Regulation Act 2015 (LSRA), the Rules of the Superior Courts (RSC) and the appellants’ arguments, Mr Justice Quinn concluded that the “proceeds” of the litigation are the recovered taxes, surcharges and interest, but not the costs thereof, and that there was nothing to preclude Revenue from claiming at the point of adjudication the full amount of costs which would be payable if assessed in accordance with Order 99, rule 37 RSC, subject to the indemnity principle.

The High Court also rejected inter alia an argument that clause 5.2 of the contract operated so as to confer a “contingent bonus” upon the respondents’ solicitors, finding that the contract merely provided for the recovery of ordinary party and party costs and the payment thereof to the respondent’s solicitors, if recovered, and could not be properly characterised as a “division of the spoils” of the litigation.

As to whether champerty could serve as a defence for the appellants, having regard to O’Keeffe v. Scales [1998] 1 I.R. 290 and Greenclean Waste Management Limited v. Leahy [2014] IEHC 314, Mr Justice Quinn was satisfied that champerty was only relevant to the appellants’ potential objection to the measurement and recovery of costs.

By orders of 6 February 2024, the High Court granted judgment in favour of the respondent in both cases. The appellants appealed the judgment and orders of the High Court on grounds inter alia that Mr Justice Quinn erred in failing to find that the contract was not champertous and contrary to law and that champerty was not a defence to the proceedings.

The Court of Appeal

Mr Justice Binchy considered the definitions of maintenance and champerty in Greenclean, opining: “It is difficult to understand how the effect of clause 5.2 of the Contract could accurately be said to amount to a form of maintenance or champerty. The respondent is charged with the collection of taxes and has a statutory obligation to pursue those who fail to pay taxes due. It follows that these proceedings would be brought irrespective of the fee arrangements entered into between the respondent and his legal advisors.”

The court also observed that “the respondent is an emanation of the State, which itself in its various guises is the single largest purchaser of legal services in the State, and the respondent has no need of the financial support of his legal advisors to maintain whatever litigation he deems it necessary to bring in order to discharge his functions. There is, therefore, a distinct air of unreality in the case being made by the respondent…”

Mr Justice Binchy considered that the appellants’ case as to champerty rested entirely on the proposition that the respondent and its solicitors agreed to share the proceeds of the litigation and further, upon the conditional nature of the solicitors’ fees, which the appellants alleged as constituting maintenance in light of Wallersteiner v. Moir (No.2) [1975] QB 373.

The Court of Appeal considered that to accept Wallersteiner as representing the law in this jurisdiction would amount to an extension of the law of champerty as it now stands with potentially very undesirable knock-on effects, noting that “no win, no fee” arrangements are pervasive and that it would take more than “a single authority from the neighbouring jurisdiction, dating back to 1975, and which does not appear to have been the subject of previous discussion not to mention approval in this jurisdiction, to conclude that it does indeed represent the law here”.

Mr Justice Binchy accepted the analysis of Mr Justice Quinn to the effect that the contract entitled the solicitors to charge the respondent such party and party costs as may be adjudicated, subject to two conditions — the first being that the solicitors must credit any sums already paid to them by the respondent, and the second being that insofar as the sum adjudicated exceeds the sum provided for by clause 5.3 of the contract, it must have been recovered, otherwise the solicitor must waive any shortfall.

Finding that the appellants had not explained how this arrangement could constitute maintenance of litigation, the court then explained that costs are not the “fruits” of litigation in circumstances where inter alia they could not be equated with damages sought in proceedings and where article 3 of S.I. No. 343/1988 (the Solicitors (Professional Practice) Regulations, 1988) underlines a clear distinction between the costs incurred and recovered in proceedings, which may not be shared by the solicitor with their client, and the monies recovered in the same proceedings by way of damages.

The Court of Appeal further considered O’Keeffe v. Scales [1998] 1 I.R. 290 which made it “absolutely plain that the law relating to champerty and maintenance should not be deployed so as to deprive people of their constitutional right of access to the courts to litigate reasonably stateable claims”.

The court also found that a further allegation as to fraud and/or misrepresentation on part of the respondent was entirely without foundation and should never have been made in the first place or re-agitated on appeal.

Conclusion

Having rejected the balance of the appellants’ arguments and finding it unnecessary to address certain grounds of appeal, the Court of Appeal dismissed the appeal. 

Howley v Howard and McClean [2025] IECA 77