By Tom Arden
The Supreme Court has rejected challenges to Revenue's arrangements for paying panel solicitors in two tax recovery cases involving approximately €2.4 million and €625,000.
Paul Howard and Úna McClean argued that Revenue's fee agreements were champertous. Champerty is an old legal rule aimed at preventing third parties from improperly funding or sharing in the proceeds of litigation.
The taxpayers challenged two features. One allowed solicitors to receive percentage-based fees depending on the tax and interest actually recovered. The other contained a form of “no foal, no fee” arrangement under which additional fees could depend on Revenue successfully recovering costs from the defaulting taxpayer.
Mr Justice Gerard Hogan, delivering the Supreme Court judgment, held that the percentage-based arrangement was lawful. Although such a fee would historically have been champertous at common law, section 149 of the Legal Services Regulation Act 2015 expressly permits percentage-based fees in proceedings seeking only recovery of a debt or liquidated demand. Revenue's tax recovery actions fell within that exception.
The court also addressed the wider legality of “no foal, no fee” agreements. Hogan J concluded that the balance of pre-1922 authority showed such arrangements were not regarded as unlawful in themselves and had become deeply embedded in the Irish legal system as a means of facilitating access to justice.
That part of the judgment was not necessary to decide the appeals because Revenue told the court it would rely only on the percentage-fee clause. The ruling on the broader “no foal, no fee” issue was therefore technically obiter, meaning it was not essential to the final result.
The Supreme Court did disagree with the lower courts on one point. It held that if proceedings were genuinely maintained under a champertous agreement, that could in principle provide a defence rather than leaving a defendant only with a later damages action.
However, because the Revenue arrangements before the court were lawful, both appeals were dismissed and the Court of Appeal orders were affirmed.