Costs follow the event is the usual rule in legal proceedings-High Court awards costs to insurance company

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bank of ireland v o'malley

When you bring legal proceedings the question of costs should be at the forefront of your mind.

And the legal principle that ‘costs follow the event’. This could be put another way: winner takes all-that is, the loser will nearly always have to discharge the winner’s legal costs.

This February 2021 decision in the High Court in the case of Stephanie Moloney (Plaintiff) and Cashel Taverns Limited (in voluntary liquidation) (first defendant) and Liberty Insurance DAC (second defendant) is concerned with the costs of legal proceedings.

The Plaintiff in this case had lost the original action against the defendants, a decision delivered in December 2020, but this February 2021 decision deals with her application in respect of costs.

The original decision was that the insurance company was entitled to repudiate the insurance policy of the plaintiff and was entirely successful in its defence of the claim. 

As a consequence, and in accordance with the Legal Services Regulation Act, 2015 costs should follow the event and the insurance company should be entitled to an order for costs as against the Plaintiff.

The Plaintiff, if she wished to overturn this general rule, had the burden of proof to prove that in this case costs should not follow the event in the normal way. This applies to the original action and to appeals thereafter.

Section 169(1) of the Legal Services Regulation Act, 2015 provides:

Costs to follow event

169. (1) 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, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties, including—

(a) conduct before and during the proceedings,

(b) whether it was reasonable for a party to raise, pursue or contest one or more issues in the proceedings,

(c) the manner in which the parties conducted all or any part of their cases,

(d) whether a successful party exaggerated his or her claim,

(e) whether a party made a payment into court and the date of that payment,

(f) whether a party made an offer to settle the matter the subject of the proceedings, and if so, the date, terms and circumstances of that offer, and

(g) where the parties were invited by the court to settle the claim (whether by mediation or otherwise) and the court considers that one or more than one of the parties was or were unreasonable in refusing to engage in the settlement discussions or in mediation.

(2) Where the court orders that a party who is entirely successful in civil proceedings is not entitled to an award of costs against a party who is not successful in those proceedings, it shall give reasons for that order.

(3) Where a party succeeds against one or more than one of the parties to civil proceedings but not against all of them, the court may order, to the extent that the court considers that it is proper to do so in all the circumstances, that—

(a) the successful party pay any or all of the costs of the party against whom he or she has not succeeded, or

(b) the party or more than one of the parties against whom the successful party has succeeded pay not only the costs of the successful party but also any or all of the costs that the successful party is liable to pay under paragraph (a).

(4) Unless the court before which civil proceedings were commenced orders otherwise, or the parties to those proceedings agree otherwise, a party who discontinues or abandons the proceedings after they are commenced (including discontinuance or abandonment of an appeal) is liable to pay the reasonable costs of every other party who has incurred costs in the defence of the civil proceedings concerned until the discontinuance or abandonment.

(5) Nothing in this Part shall be construed as affecting section 50B of the Planning and Development Act 2000 or Part 2 of the Environment (Miscellaneous Provisions) Act 2011 .

The plaintiff argued that the conduct of the plaintiff should be given due recognition by the Court in not making any order as to costs against the plaintiff. The parties had agreed admitting many documents to the case without the need for formal proof.

The Court held that this agreement as to documents benefited both parties and it would create a manifest injustice if the second named defendant was deprived of costs as a result of this pre trial agreement.

The plaintiff also contended that the proceedings dealt with a novel and substantive point of law and that she had confined her case to a single substantive issue, thereby saving time and costs. The Court held that this was not enough to deprive the second named defendant of a costs order and there was no novel issue of law raised by the plaintiff.

The plaintiff argued that the judgment of the court will be of particular value to the insurance company. The High Court did not agree and held that the decision was based on the particular circumstances of the case before the Court.

The plaintiff also sought to rely on a ‘Calderbank’ type letter sent by the insurance company’s legal representative which offered that the insurance company would bear its own costs if the case was withdrawn by 2 pm on the same day. The Plaintiff did not withdraw as she believed there was not sufficient time to consider the offer.

However, the court held the plaintiff had decided to bring a case and chose not to withdraw it.  This was her decision and she must live with it.

Conclusion

The High Court held that there was not sufficient reason to depart from the general rule that costs follow the event and awarded the costs in favour of the insurance company. 

The defendant had been entirely successful in defending the case and having regard to all matters set out in Section 169(1) of the Legal Services Regulation Act, 2015 by which to make the decision, the Court held there was no reason to depart from the usual rule including legislative provisions and legal principles.
Read the full decision Stephanie Moloney and Cashel Taverns Limited (in voluntary liquidation) and Liberty Insurance DAC.[2021] IEHC99