Judgment: 2017-05-25 · Court archive

Court of Appeal upholds costs arrangement after receiver’s appeal

The court dismissed the receiver’s appeal, leaving in place an order that each side bear its own costs after the plaintiffs withdrew some claims and discontinued others.

Court of Appeal; High Court (Haughton J.) is the court below · [2017] IECA 163

Who, what, where, when and why

Who
  • John Flynn
  • Benray Limited (Plaintiff)
  • Michael McAteer (Defendant)
What

The court dismissed the receiver’s appeal, leaving in place an order that each side bear its own costs after the plaintiffs withdrew some claims and discontinued others.

Where

Places mentioned in the report

  • Blackrock Hospital Limited
When

Judgment:

Why

Reasons reported in the judgment

The dispute arose from claims concerning the marketing of the plaintiffs’ minority shareholding in Blackrock Hospital Limited. The plaintiffs alleged negligence and breach of duty, and also brought conspiracy claims against McAteer. They withdrew the conspiracy claims on the 11th day of the trial. The High Court described those claims as unmeritorious and said they should not have been brought. It awarded McAteer his costs of those claims on a party-and-party basis, but refused his request for solicitor-and-own-client costs, which would provide a fuller indemnity.

The Court of Appeal has dismissed an appeal by receiver Michael McAteer over the costs of claims brought against him by John Flynn and Benray Limited, leaving in place an order that the plaintiffs and the receiver bear their own costs between them.

The dispute arose from claims concerning the marketing of the plaintiffs’ minority shareholding in Blackrock Hospital Limited. The plaintiffs alleged negligence and breach of duty, and also brought conspiracy claims against McAteer. They withdrew the conspiracy claims on the 11th day of the trial. The High Court described those claims as unmeritorious and said they should not have been brought. It awarded McAteer his costs of those claims on a party-and-party basis, but refused his request for solicitor-and-own-client costs, which would provide a fuller indemnity.

The negligence and breach-of-duty claims were discontinued the following day after McAteer’s solicitors proposed a new marketing process: advertisements in two national newspapers and at least 14 days for expressions of interest. The proposal was expressly made without an admission of wrongdoing. The parties accepted it, and the High Court released McAteer from further involvement in the proceedings, leaving costs to be decided later.

The High Court treated the proposal letter as the event resolving those remaining claims and balanced the costs due to each side by making no order for costs between them. McAteer appealed, arguing that the costs rules were applied incorrectly, that he should receive solicitor-and-own-client costs for the conspiracy claims, and that the plaintiffs should not receive costs for the discontinued claims.

The Court of Appeal, in a judgment delivered by Mr Justice Michael Peart, held that the High Court had used the wrong procedural rule to assess costs. Because the claims were discontinued during trial with the court’s leave, the relevant question was what costs terms were just under Order 26, rather than which side had prevailed under the general “event” rule in Order 99. The event was the plaintiffs’ discontinuance; the letter provided its context.

Despite that error, the Court of Appeal upheld the result. It found the High Court had in substance weighed the circumstances and reached an outcome that was just. The proposed marketing changes reflected concerns raised in evidence, including the limited advertising and short response period. The court also left undisturbed the refusal to award McAteer solicitor-and-own-client costs, while noting that groundless allegations of dishonesty or conspiracy can expose a plaintiff to that risk.

The Court of Appeal affirmed the High Court costs order and dismissed McAteer’s appeal. It did not decide whether negligence or breach of duty had been established; those claims had been discontinued without an admission of wrongdoing.

Read the original court judgment

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