knowledge 26 January 2021 |

High Court gives Guidance on Awarding Costs in Cases of Public Importance with a Strong Commercial Element

Background

In the principal decision¹ Ryanair had unsuccessfully sought to challenge, by way of judicial review, the government’s COVID-19 related travel advice.  Ryanair argued that such advice amounted to, or would generate a perception of a legally enforceable travel restriction and that any such imposition on travel could only be introduced by the legislature and not the executive.  The court found on the facts that the government did not usurp the legislative power and that it had not exceeded its executive power.  It rejected Ryanair’s challenge. 

The present decision² concerned the award of legal costs following that principal decision.  In resisting a costs order against it, Ryanair argued that the case raised issues of general public importance such as to justify a departure from the normal rule that a successful party is entitled to its costs.

The Decision

In holding against Ryanair, Simons J acknowledged that traditionally, the courts had a discretion to award costs in favour of a party who, although unsuccessful in proceedings, had raised a matter of general public importance.  The issue for the court was whether this discretion had been carried over when the law on costs had been revised in Ireland?

Simons J said that now the allocation of costs for legal proceedings is governed by the Legal Services Regulation Act 2015 (the “LSRA 2015”) which was commenced in late 2019.  The default position under that Act is that a party who is entirely successful in civil proceedings is entitled to an award of costs against the losing party unless the court, in the exercise of its discretion, orders otherwise having regard to two potential considerations, namely “the particular nature and circumstances of the case, and the conduct of the proceedings by the parties”. 

Simons J said that there was no reference in these new legislative provisions to public interest litigation.  However, he was also satisfied that there was nothing in the LSRA 2015 which suggested that the discretion previously enjoyed by the courts had been removed.

He referred to the discretion on costs given to the court by the LSRA 2015 to have regard to “the particular nature and circumstances of the case”.  In his view, the types of considerations traditionally identified in the case law, such as, for example, whether the proceedings raised issues of general public importance and which were novel—continued to inform the exercise of the costs jurisdiction.  These considerations came within the rubric of this language used in the LSRA 2015.

Simons J was also satisfied that the pre-2019 case law continued to have relevance here and that the principles to be applied by a court when exercising its discretion in this regard were set out in the decision of Dunne v Minister for the Environment³ (“Dunne”).  The Supreme Court in Dunne stated that there are no predetermined categories of cases that fall outside the general rule that costs follow the event.  However, factors such as (i) whether the proceedings were seeking a private personal advantage, and (ii) whether the legal issues raised were of special and general public importance, are potentially relevant to, although not necessarily determinative of, the allocation of costs. 

Simons J noted that in exercising its discretion in respect of costs, the court must seek to reconcile two competing objectives.  The first is to ensure that individuals are not deterred by the risk of exposure to legal costs from pursuing unsuccessful litigation of a type which nevertheless serves a public interest.  The second is to ensure that unmeritorious litigation is not inadvertently encouraged by an overly indulgent costs regime.

In carrying out this balancing exercise, the court would have to consider factors such as (i) the general importance of the legal issues raised in the proceedings; (ii) whether the legal principles are novel, or, alternatively, are well established; (iii) the strength of the applicant’s case: proceedings might touch upon issues of general importance but the grounds of challenge pursued might be weak; (iv) whether the subject-matter of the litigation is such that costs are likely to have a significant deterrent effect on the category of persons affected by the legal issues; and (v) whether the issues touch on sensitive personal rights.

Simons J said that in the present case, a departure from the normal rule was not warranted.  The overriding reason was that Ryanair was a well-resourced company and initiated the proceedings in pursuit of its own commercial interests. 

However, he also clarified that having a personal or pecuniary interest in the outcome of judicial review proceedings does not necessarily preclude the making of a modified costs order in a challenger’s favour.  Indeed, an applicant must, as a first hurdle, be able to demonstrate that they have a sufficient interest in order to initiate proceedings.  Nevertheless, the existence of a significant commercial interest in the outcome of the proceedings was a relevant consideration in allocating costs. 

In addition, Simons J said that one other rationale for making a modified costs order was to ensure that the risk of having to pay the other side's costs did not deter parties from pursuing proceedings which were in the general public interest.  This rationale could not be applied to Ryanair who could pursue litigation here undeterred by costs concerns.

In any event, on the facts, the court also found that the proceedings did not satisfy the general public interest element for a modified costs order, as the outcome of the case had been obvious and entirely predictable.

Conclusion

This case demonstrates that the existence of matters of general public importance in proceedings will not, of themselves, be enough to satisfy a court that a modified costs order is warranted.  In particular, the existence of commercial imperatives for taking the case and the applicant’s ability to fund the litigation will be important considerations. 

Also contributed to by Hugh Dromey.