The High Court made no order as to costs after rejecting an accountant’s application to have the plaintiff pay the cost of defending an unsuccessful professional negligence action.
In an ex tempore judgment delivered on 15 November 2016, Mr Justice Twomey said the court should not reward one knowing participant in an unlawful scheme over another. The trial had lasted 10 days, and an order for costs could have involved a substantial sum.
The costs hearing followed an earlier judgment in *English v O’Driscoll* [2016] IEHC 584. In that decision, the court found that an investment scheme used to claim capital allowances from the Revenue Commissioners was designed around a sham and fraud. It also found that plaintiff Barry English and accountant Dan Murphy knew or should have known of the scheme’s illegal nature.
The court had refused to grant the orders sought in the professional negligence action on public policy grounds, saying that doing so would amount to approving the unlawful scheme. At the costs hearing, Murphy argued that English had failed in the litigation and should pay his costs because he should have known the transaction was unlawful.
Justice Twomey was not persuaded. He said the court had found Murphy had an active role in the scheme, and awarding him costs could appear to endorse participation in an unlawful arrangement to deprive the Revenue of tax.
The judge also noted that Murphy had not pleaded illegality in his defence or raised it with English on a without-prejudice basis. The judgment said either step might have prevented the case from going to trial. The court did not say that raising illegality in a Calderbank-type letter would entitle a knowing participant to costs.
The ruling was confined to costs: the court made no order, leaving each side to bear its own legal costs.