The Supreme Court has overturned a High Court order requiring three defendants to pay all of plaintiff Michael Larkin's legal costs to date as the price of being allowed to amend their defence in a long-running dispute over a house in Raheny.
The underlying proceedings were brought by Larkin in 1988 seeking specific performance of an agreement to purchase the Dublin property for £300,000, with damages claimed as an alternative. The defendants maintained that later agreements allowed the original sale agreement to be rescinded if £120,000 was paid under specified terms.
Their original defence pleaded that £90,000 had been paid and that the remaining £30,000 should be treated as set off against alleged disrepair while Larkin occupied the property as caretaker.
In November 2000, the defendants' solicitors made an offer of £130,647.89, including principal, penalties and interest. When it was not accepted, Whitony Limited, Peter Whyte and Myles Crofton sought permission to amend their defence to plead that the outstanding balance had been tendered and that this discharged the original sale contract.
The High Court granted permission, but on terms requiring those defendants to pay all of Larkin's costs up to the amendment. They appealed only that costs condition.
Mr Justice Geoghegan accepted that the proposed amendment came extremely late and that a severe costs order was open to the High Court. However, he held that the particular order did not account for the possibility that the defendants might ultimately win on grounds already contained in their original defence.
The Supreme Court substituted a conditional order. If the action is eventually dismissed exclusively because of the new amended defence, the three defendants must pay Larkin's costs up to delivery of that amended defence, excluding the costs of the amendment motion itself. If they win on some original ground, the trial judge will retain discretion over costs.
The ruling deals only with the costs consequences of allowing the amendment. It does not decide the underlying property dispute.