THERE SHOULD be no "windfall" in fees on big money cases, according to the Master of the High Court, writes CAROL COULTER
The issue of legal fees is one that has been referred to on a number of occasions by the Master of the High Court, Edmund Honohan SC. He did so again recently in hearing an application for judgment of €9.5 million with costs, warning that “there should not be anything added in the larger cases which might be characterised as a windfall, pure and simple.”
The issue arose as to whether he would measure the plaintiffs costs, or refer them to the Taxing Master. He commented: “Because of the recession there are many more cases brought to recover debts and the costs of this wave of litigation needs to be kept under constant review.”
He pointed out that there was a low-cost mechanism whereby a defendant in debt proceedings was not offering a defence. This easy-pay option would cap the creditor’s costs at €160, no matter what the amount of the claim, though this would only be available when the debtor was offering to pay the debt.
If the debtor was not in a position to pay the debt, he could opt for another fast-track procedure – by not entering an appearance at all. The plaintiff could then obtain judgment in the Central Office, and the costs were scale fees set out in the Rules of Court.
“Solicitors must advise the client that if he gives instructions to enter an appearance, he will be liable for the additional costs of a Motion and that these may be significantly heavier and even result in an application and hearing as to costs before the Taxing Master,” he said.
If there was no prospect of a real defence, “what exactly the tactic of entering an appearance?” he asked.
Master Honohan then went on to examine a costs ruling for Mr Justice Herbert in CD -v- Minister for Health , where he held that the Taxing Master had “erred in principle in basing his decision upon broad statements and conclusions unaccompanied by reasons and having only a very tenuous connection to the various items in the Bill of Costs”.
Mr Justice Herbert remitted the fee to a different Taxing Master. In his ruling he said: “The learned Taxing Master had an insufficient regard to the task of objectively assessing and forming an independent judgment as to what work was in fact done, and whether it was properly allowable . . . without such a careful and objective analysis of work actually done, special skill (if any) employed and degree of responsibility borne by the solicitors a valid exercise of discretion is simply not possible and amounts to an error of principle.”
Mr Justice Herbert went on to list the various evaluations that needed to be undertaken by the Taxing Master.
“The picture that emerges from the decision is of confirmation that ‘work necessarily done’ is the starting point for recoverable costs, but that comparator cases continue to provide the broad parameters,” Master Honohan said. However, instead the “going rate” seemed to be the yardstick.
However, if the “going rate” was what other solicitors had billed in previous cases, there was no possibility of inquiring whether some solicitors might charge less in the present more competitive environment, he said. There was no mechanism for public interest intervention in the taxation process.
“In the absence of progress of the costs reform agenda, is there not a case to be made for the Taxing Masters themselves to be permitted to inform themselves as to whether the rates quoted by the solicitor for the costs represent rates which might be available had the casework been the subject of some, even perfunctory, tender process?” he asked.
In the light of the CD judgment, he said he could only embark on a costs measurement where he was satisfied that he knew what was done and by what grade of lawyer.
“My inclination would be to measure costs on a €9 million judgment at not very much higher than on a €900,000 judgment, or indeed a judgment of €90,000. The paperwork is much the same for each such claim,” he said.
However, having regard to concerns about how much extra time should be allowed to the plaintiff in this case, and given the confusing signals from the Rules of Court, he was declining to measure costs and was ordering taxation.
“There should not be anything added in the larger cases which might be characterised as a windfall, pure and simple,” he said.