The Court of Appeal has set aside a High Court order requiring Muckno Hotels Limited to pay Patrick McFadden’s costs of an interlocutory injunction application. It substituted an order that there be no order as to costs for the short-service application, the motion for interlocutory relief and the 22 June 2017 hearing.
The appeal concerned costs only. The Court of Appeal did not decide whether Mr McFadden would have been entitled to the injunctions he sought, or determine the merits of his underlying claims.
Mr McFadden had been employed as manager of the Glencarn Hotel. The company raised allegations concerning drinking on the premises and payments to musical performers, and appointed an investigator. The investigator’s report found conduct that breached the company’s disciplinary code and amounted to gross misconduct. Mr McFadden objected to parts of the investigation and report. Those were allegations and findings within the disciplinary process, not findings made in this appeal.
After his salary was not paid on 3 May 2017, Mr McFadden’s solicitors sought immediate payment and warned of urgent injunctive relief. The company agreed on 19 May to pay his salary while the disciplinary process continued, but stood over the investigator’s report and allowed seven days for a response on possible disciplinary action, including dismissal.
Mr McFadden issued proceedings on 23 May, seeking to stop the disciplinary process and prevent reliance on the report, among other relief. The company offered undertakings shortly afterwards. They were recorded by the High Court on 22 June, and the question of costs was reserved. The High Court later awarded Mr McFadden the costs of the short-service application, the interlocutory application up to 22 June and the costs hearing.
In the appeal, the Court of Appeal held that the 18 May letter had raised concerns but had not clearly asked the company to give specific undertakings against continuing the disciplinary process or relying on the report. The company’s response was received by Mr McFadden’s solicitors on 22 May, and there was no evidence of further contact before the motion issued the next day. The company had not been given an opportunity to consider a clear request for those undertakings before proceedings began.
The court concluded that issuing the motion was premature and that it was not necessary to pursue interlocutory relief after the undertakings were offered. It therefore found that the High Court judge had erred in awarding costs to Mr McFadden. The court expressly declined to assess the likely merits or outcome of the injunction application.
The judgment also noted that the recorded status of two purported permanent undertakings was not properly before the Court of Appeal. It did not rely on them in deciding the costs appeal.