Cafolla - v - Kilkenny Ors
High Court
Judgment was delivered by Mr Justice Seán Ryan on February 5th, 2010.
Judgment
The court directed that a different Taxing Master should assess costs in a case where the court found that the Taxing Master who had taxed the costs in this case was in serious error, because he had not properly examined the work done.
Background
The case concerns a review of taxation in respect of three major items of a bill of costs. The original case concerned a plan to acquire and develop Tolka Park in Drumcondra for residential purposes. The plaintiff had taken a derivative action as a minority shareholder in a company, Coneforth Trading Ltd, which was one of the defendants.
The case was admitted to the Commercial Court early in 2007. It did not go to a hearing because the defendants made a number of concessions before the trial date, leading to a settlement. “The case was unusual, complex and difficult, but it was concluded with great expedition,” Mr Justice Ryan said, with the plaintiff ultimately succeeding. The defendants agreed that the costs of the action should be taxed.
There was a hearing before the Taxing Master, an award, objections from the defendants, and a written ruling. The instruction fee claimed by the plaintiff’s solicitors was €620,000, which the master reduced to €550,000; the senior counsel brief fee was €100,000, reduced to €75,000; and the junior counsel brief fee was €65,000, reduced to €50,000.
The defendants were the paying parties, and they challenged the awards by the Taxing Master in relation to all three elements of the fees. They claimed that the Taxing Master did not examine the nature and extent of the work to justify the fees claimed and did not relate it to time, labour and expertise; that he overvalued the money and property in the case; that he did not make any reduction for the concession of liability made 2½ weeks before the date of the trial; and that the fees allowed were grossly disproportionate to those of the defendants’ solicitors and counsel.
Mr Justice Ryan pointed out that the jurisdiction to review taxation is in section 27 (3) of the Courts and Court Officers Act 1995. This limits the capacity of the court to interfere with a decision of the Taxing Master, except where the court is satisfied that he was in error, resulting in injustice.
This section of the Act spells out a new approach for Taxing Masters in assessing fees, he said, mandating him to examine the nature and extent of any work done, and assess the value of this work.
Previously, the main focus in taxation was on comparisons with other cases, while now the focus was work done in cases by solicitors, barristers and expert witnesses.
This section of the Act had been analysed in a series of cases and the law could be considered settled in this area, he said, citing Superquinn Ltd -v- Bray UDC , Mahony -v- KCR Heating Supplies [NO 2][2001], Landers -v- Judge Patwell Anor [2007], and CD -v- Minister for Health and Children Anor [2008].
The authorities say the Taxing Master must establish in sufficient detail the amount of work done and, obviously, the type of work done, and go on to put a value or cost on same by applying rational principles that have sufficient transparency to enable them to be examined on review, he said.
In this case, the biggest item in dispute was the instruction fee, because the Taxing Master did not call for and examine the time records of the plaintiff’s solicitors. Referring to the judgment of Mr Justice Herbert in CD, he said: “The different types of work have to be specified, and the time spent on them detailed.”
Mr Justice Ryan said that the Taxing Master “unfortunately . . . does not appear to have given the matter the serious consideration it required”.
Decision
“I cannot agree that the Taxing Master complied with the Act and the rules,” Mr Justice Ryan said. “In my view, the approach taken by the Taxing Master in this case represented a regression to the previous practice prior to the 1995 Act . . . I think that the Taxing Master fell into error, and serious error, in the way he approached this question, and particularly in the way he rejected the suggestion that he had to inquire as to the time that was taken to do the work and the different parts of the work . . .
“The master also fell into error in failing to provide a detailed analysis of the work that was done. Looking at the decision part of the report . . . it is not possible to understand how the Taxing Master arrived at this conclusion . . . these pages are replete with vague generalisations such as ‘considerable correspondence was entered into’ . . . This unfortunately is the very antithesis of what was specified by Smyth J, Kearns J, Herbert J in the cases above cited.”
Referring specifically to the instruction fee, he said it was impossible to understand either why he awarded such a high figure or why he reduced the amount from the €620,000 that was claimed.
He said he should have addressed the issue of the valuation of the property, though the fact that he did not do so did not mean that his allowances were wrong. He said there was room for debate on the question of making allowance for the concessions made before the case came to trial.
In relation to comparing the plaintiff’s costs with those of the defendant, he said the master was entitled to take into account the difficulty in proving his case where much of the relevant information was within the power or procurement of his opponents.
But the obvious starting point for an analysis of fees is what the other party charged their client. Instead, he rejected any such comparison more or less out of hand.
The principal criterion for assessing a case was the amount of work done. “It seems to me, therefore, that the Taxing Master was indeed in error in this case,” he said, adding that the error included all the disputed items. He misdirected himself and overlooked the cases that could have given guidance.
The injustice to the parties was of sufficient degree to warrant interference by the court.
He did not make a finding of his own estimation of the costs, instead directing that a fresh taxation take place, by a different Taxing Master.
The full judgment is on www.courts.ie
Andrew Fitzpatrick BL, instructed by O’Donnell Sweeney Eversheds, for the plaintiff; Declan McGrath BL, instructed by William Fry, for the defendants.