The High Court has refused an application to make Niall O’Dowling personally liable for costs awarded against Used Car Importers of Ireland Limited after the company lost a long-running challenge to the vehicle registration tax system.
The defendants asked the court to add Mr O’Dowling as a fifth defendant so they could recover their costs from him personally. The application followed a 33-day trial in which the company sought, among other reliefs, changes to how Revenue published vehicle values, declarations challenging the VRT legislation and damages of about €131 million. In March 2013, the court refused the company’s claims and awarded costs to the defendants against the company.
The application concerned those costs, not the merits of the company’s VRT claims. The court considered whether it was appropriate to use its jurisdiction to make a non-party personally liable for costs where that person had funded litigation through a company and might benefit from a successful outcome.
The defendants submitted that the company could not meet the costs, that Mr O’Dowling had funded the case and stood to benefit financially, and that the proceedings were pursued unreasonably. They relied on his trial evidence that he had paid litigation expenses and had an agreement to return as a shareholder if the company succeeded. They also pointed to the scale of the damages claim and findings in the trial judgment.
Mr O’Dowling’s counsel argued that the order was exceptional and unwarranted. The company had paid some costs, much of the legal work was on a “no foal, no fee” basis, and Mr O’Dowling had a prior connection to the company as a director and shareholder. Counsel said the case raised substantial issues, was supported by expert evidence and was reasonably pursued. The company had appealed the trial judgment to the Supreme Court.
The court accepted that the company could not pay the defendants’ costs and that Mr O’Dowling had funded some of the litigation and could have benefited if it succeeded. But the evidence did not establish how much he contributed; the court considered it reasonable to conclude that his funding was not substantial. He was not a professional funder without a prior connection to the case, and he was not shown to be its main potential beneficiary.
The judge also concluded that the proceedings had been pursued reasonably and that their failure did not make them unreasonable. Mr O’Dowling received notice that a costs application might be made by letter during the trial in March 2012. After weighing the circumstances, the court found the defendants had not met the burden required for the exceptional order. It refused to join him as a defendant and refused to make him personally liable for the costs awarded against the company.