The High Court has upheld a €285,000 solicitor instruction fee and the recovery of VAT in legal costs awarded to Michael Kenny after litigation against Ireland ROC Limited.
Mr Justice Brian McGovern refused Ireland ROC's application to review decisions made by the Taxing Master following taxation of Kenny's bill of costs. The underlying Commercial Court action concerned Kenny's claim that he was a commercial agent and raised questions about the application of the European commercial agents directive.
The case settled on 10 October 2006 for €66,000 and costs after a finding in Kenny's favour. His solicitors later claimed an instruction fee of €425,000. Ireland ROC argued that €125,000 was appropriate. The Taxing Master allowed €285,000.
The High Court stressed that a costs review is not a fresh taxation. Ireland ROC had to show both that the Taxing Master made an error and that the resulting decision was unjust.
On the instruction fee, the court noted that Kenny's case had been selected for the Commercial List because similar issues arose in four other listed cases and another 12 cases. It was also the first Irish case to consider the applicability of the relevant European directive. The Taxing Master had properly taken those features into account, the judge held.
Ireland ROC also challenged the inclusion of VAT on Kenny's legal costs. The issue was whether Kenny could otherwise recover that VAT through his taxable business. Correspondence from the Revenue Commissioners initially appeared conflicting, but a later Revenue letter clarified that the general entitlement to deduct VAT on business legal fees did not apply in Kenny's circumstances.
The court held that Ireland ROC had not proved that the Taxing Master's decision on VAT was wrong. It also noted that the clarifying Revenue correspondence should have been brought fully to the Taxing Master's attention.
All reliefs sought by Ireland ROC were refused.