About this case:

• Citation:
  [2025] IEHC 22
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Michael Twomey

Delivering judgment for the High Court, Mr Justice Michael Twomey highlighted that it was important to clarify that a person can agree to pay their own lawyers whatever amount per hour as they see fit, however “what we are concerned with in this case is a losing litigant’s (or a presumed losing litigant’s) costs, i.e. the amount of money the State calculates and obliges a losing litigant to pay his opponent’s lawyers”.

Background

The first and second defendants sought security for their costs from the plaintiff company, which claimed that the defendants sought to extort money from it by wrongfully challenging a grant of planning permission for its proposed development beside the first defendant’s family home.

The court was tasked with deciding whether the company should pay security for the defendants’ costs and if so, the amount which it should pay based on the likely costs which the Legal Costs Adjudicator (LCA) would decide that it should pay in the event that it loses the case. 

The High Court

Mr Justice Twomey highlighted that a central issue of the case was the relevance of hourly rates when a court has to resolve the conflict between the requirement in the Legal Services Regulation Act 2015 that High Court costs be ‘reasonable’ and the fact that the costs, which are adjudicated by the Office of the Legal Costs Adjudicator (LCA), are “anything but reasonable”. 

The court considered that this conflict required consideration of how one determines what is meant by ‘reasonable’ litigation costs, finding that having regard to the fact that the Act was intended to reduce litigation costs, the correct method of interpretation requires the use of hourly rates in calculating litigation costs and secondly, that those hourly rates be ‘reasonable’ on objectively justifiable grounds.

The judge considered that the expert evidence indicated that the current practice regarding the estimation and adjudication of legal costs is based on an incorrect interpretation of two separate provisions of the 2015 Act, where the court was provided with three expert opinions on the likely costs for a single defendant ranging from €250,796 to €454,820.50. 

The court found it “surprising” that the costs estimates did not reference the time which the lawyers were estimated to expend, or their hourly rates, in order to justify those figures. Mr Justice Twomey turned to the provisions of the Act, noting that paragraph 2(c) of Schedule 1 thereof indicates that the use of hourly rates by the LCA is mandatory when adjudicating on whether costs are reasonable.

The judge then considered paragraph 1(b) of Schedule 1 to the Act, finding that the consideration by the LCA of whether costs are reasonable should not be based upon costs adjudicated in previous cases, but should involve consideration of whether they are reasonable per se, in that there must be objectively justifiable grounds to conclude that they are reasonable.

Turning to the position of the court when estimating costs for the purposes of security for costs applications, the court expressed that like the LCA, a court also must estimate costs that are reasonable in amount and, in determining that issue, time must be used by the court in reaching its estimate. 

Mr Justice Twomey then moved to consider whether the company would need to pay security for costs. Having regard to the principles in Quinn v PricewaterhouseCoopers [2021] IESC 15 and s.52 of the Companies Act 2014, the judge found inter alia that the defendants had a prima facie defence and that the company was unlikely to be able to pay costs if unsuccessful.

Having concluded that the plaintiff company should pay security for the defendants’ costs, the judge then considered that none of the three expert reports furnished to him provided an estimate of the time or hourly rates which underpinned their estimates. Deciding that it would not force the parties to incur further costs by asking for estimations based upon hourly rates, the court preferred the lowest figure of €250,796 per defendant (and thus a total of €501,592) as the estimated legal costs. 

Mr Justice Twomey did not agree that the legal costs involved should be higher because the proceedings were instituted in the Commercial Court, having regard to Bank of Scotland v Fergus [2019] IESC 91 which stated that the rationale underlying the Commercial Court was to ensure that proceedings could be determined in a just, speedy and efficient manner with the objective of minimising costs, and having regard to the fact that the purpose of the 2015 Act was to reduce the costs of litigation.

The judge also expressed that the courts themselves have an interest in incentivising litigants and their lawyers to be as efficient as possible with court time and “to do everything possible to either settle the case or, if it is to run, to ensure that it takes the absolute minimum amount of time by agreeing matters and concentrating on the key issues in the case”.

Conclusion

Accordingly, the High Court ordered that the plaintiff pay the lowest estimated figure of €501,592 as security for both defendants’ legal costs.

Beakonford Ltd v Stokes & Anor [2025] IEHC 22