Costs Principles Reaffirmed

Introduction

The High Court has recently considered again the question of costs orders to be made in complex litigation. In Kelly v Kelly & Charles Kelly Limited,1 the court considered the general principles involved, particularly focusing on the decision in ACC Bank plc v Johnston,2 in which the court had revisited the principles approved in other authorities.3 It is clear from the application of those principles in this case that they represent the orthodoxy of Irish law on costs in complex litigation. Accordingly, an understanding of those principles is important for any party to such litigation, not least because they should be relevant to decision making with regard to the conduct of the litigation.

Background

The matter before the court was a Section 205 petition, in which the petitioner sought relief on the grounds that the powers of the directors of a company of which he was a member were being exercised in a manner oppressive to him. The proceedings took the form of a number of hearings in which particular elements of the claim were addressed. The court noted that the petitioner had to establish that:

he was a member of the company; the directors' powers were being exercised in a manner oppressive to him; and to bring an end to the matters complained of, the court should make the order as sought. Three principles

The court identified that the overriding principle from Johnston is that costs follow the event, but that difficulties can arise in determining what the 'event' is for the purpose of an award of costs. The court cited from Johnston in recording that: "There is a very great difference between the different elements that go to make up a cause of action, on one hand, and a series of entirely separate causes of action, potentially dependent on different facts, on the other hand." In Kelly, the court's consideration of the event necessarily involved this scenario. In such a case, the court acknowledged that there were various ways in which a party can narrow the scope of the issues before the court (eg, making a lodgement or sending a Calderbank – a 'without prejudice save as to costs' – letter) that can bear on determining the event. The first respondent sought to argue that the petitioner could have done more to mitigate costs. The court felt it necessary to address only one aspect of that argument, which was a reference to the first respondent's proposal for determining the price to be paid for his shares. This came at a...