ACC Bank plc v Hanrahan [2014] IESC 40 (26 June 2014)

Judgment Title: ACC Bank plc v Hanrahan

Neutral Citation: [2014] IESC 40

Supreme Court Record Number: 145/14, 146/14

High Court Record Number: 2011 4471 S, 2011 4470 S

Date of Delivery: 26/06/2014

Court: Supreme Court

Composition of Court: Clarke J., Laffoy J., Dunne J.

Judgment by: Murray J.

Status of Judgment: Approved


Judgments by	Link to Judgment	Result	Concurring
Clarke J.	Link	Appeal allowed	Laffoy J., Dunne J.

Outcome: Allow

THE SUPREME COURT

[Appeal No: 145/2014]

Clarke J.
Laffoy J.
Dunne J.

Between/

ACC Bank plc

Plaintiff/Appellant

and

Margaret Hanrahan and Michelle Sheeran

Defendants/Respondents

[Appeal No: 146/2014]

Between/

ACC Bank plc

Plaintiff/Appellant

and

Margaret Hanrahan

Defendant/Respondent

Judgment of Mr. Justice Clarke delivered the 26th June, 2014.

1. Introduction
1.1 The appropriate way for a court to deal with the costs of a hard fought summary judgment application, which results in the proceedings being remitted to plenary hearing, lies at the heart of both of these appeals. In both cases the plaintiff/appellant ("ACC") commenced proceedings claiming liquidated sums arising out of lending transactions. In both cases appearances were entered by the respective defendants and, in accordance with ordinary procedure, motions for judgment were brought initially before the Master of the High Court. Replying affidavits were filed which led to the motions being transferred into the judge's list. As a matter of logistics and because it was anticipated that the motions were, because of their likely length at hearing, unsuitable for being deal with in the ordinary way as part of a Monday list, the motions were further adjourned for a full hearing. The hearing of the motions was estimated to take between half a day and a full day but, in the events that happened, approximately one and a half days were spent in considering the question of whether, as ACC proposed, judgment should be entered against the respective defendants/respondents in both proceedings or whether, as those parties suggested, the proceedings should be allowed to go to plenary hearing.

1.2 In the end the High Court (Barr J.) decided that the admittedly low threshold for establishing an arguable defence had been met in both cases and remitted both sets of proceedings for plenary hearing. There is no appeal against that aspect of the decisions made by Barr J.

1.3 In the light of those decisions an application for costs against ACC was made in relation to both of the summary judgment motions. On the basis of the documents available to this Court Barr J. concluded that, in his view, costs should follow the event and awarded the costs of the two motions against ACC on that basis. ACC has appealed to this Court solely against those orders for costs. It is, of course, the case that appeal courts, quite properly, require good reason to depart from the exercise of an adjudication by a court of trial on the question of costs alone (i.e. where the appeal court is asked to vary the order for costs made by the Court of trial even though the substance of the trial court's decision is not sought to be interfered with or where any appeal on the substance of the case is dismissed).

1.4 Therefore, two interrelated questions arise on these appeals. One is as to the proper approach, at the level of principle and in the circumstances of these cases, to an award of costs in respect of a motion for summary judgment which results in the case being remitted to plenary hearing. The second concerns the extent to which it might be considered appropriate for this Court, in the light of those principles, to interfere with a decision of the trial judge on the question of costs when no challenge is brought as to the correctness of the trial judge's substantive decision to remit both proceedings to plenary hearing. I propose to touch on that latter question first.

2. Interference with the Trial Judge's Adjudication on Costs
2.1 It was not disputed by counsel and the Court accepts that in general an appeal court should be slow to interfere with the way in which a trial court deals with a question of costs when there is either no challenge to the underlying substantive order made in the proceedings on the application in question or where any such challenge is unsuccessful. A trial judge is in a good position to take into account all relevant factors in determining where the justice of the case in respect of an award of costs lies. It follows that, in order for an appellate court to interfere with a trial judge's determination on costs in such circumstances, it is necessary that it be established either that the trial judge made an error in principle in the manner in which the question of costs was approached or that there was a clear and material error in the way in which the trial judge applied the appropriate principles in the adjudication of the question of costs in all the circumstances of the case. In other words, either the overall approach must have been wrong in some material respect or there must be a clear and material error in the way in which a proper approach was executed. It seems to me that the case law of this Court on appeals against costs orders is consistent with that broad approach.

2.2 I will return to the question of whether, applying that criterion, there is any basis for interfering with the order for costs in these cases. Against that background it is next necessary to turn to the proper approach to be adopted in the case of summary judgment applications.

3. Summary Judgment Applications
3.1 In that context a useful starting point is a passage from Civil Procedure in the Superior Courts, Delany and McGrath, 3rd Ed. at para. 26-87 where the authors state the following:-

"Where the motion for judgment is unsuccessful and the defendant obtains leave to defend, the court's discretion is circumscribed by Order 99, rule 1(4A) which requires the court, upon determining any interlocutory application, to make an award of costs save where it is not possible justly to adjudicate upon liability for costs on the basis of the interlocutory application. It can be argued that a defendant should be entitled to costs on the basis that he has been successful in defeating the motion for summary judgment. However, given that an application for summary judgment is an integral part of the summary summons procedure, that the threshold for being granted leave to defend is relatively low and that the plaintiff may well succeed at the full hearing, it would seem that the best courts of action in most cases is to make the costs of the application for summary judgment costs in the cause."

In my view the authors have correctly stated the legal position in the passage just cited. It is, of course, correct, as the authors point out, that matters such as this are now affected by O.99, r.1(4A) of the Rules of the Superior Courts which is mandatory in terms and requires the Court to separately decide on the costs of each interlocutory application unless it is not possible to adjudicate in a just fashion on liability for costs at that stage.

3.2 The reason for the introduction of that rule seems to me to be clear. While, historically, there had been a tendency to reserve the costs of most motions to the trial judge, a view has been taken that this can lead to injustice for, at least in very many cases, a judge who has heard a motion is in a better position than the trial judge to consider the justice of where the costs of that motion should lie. This will especially be so in cases where the trial court will not have to revisit the merits or otherwise of the precise issue that was raised by motion. For example, if there is a dispute over discovery then that dispute will have been resolved before the case comes to trial. Of course, discovered documents may well be relied on at the trial and, indeed, in some cases may turn out to be decisive. But, at least in the vast majority of cases, the fact that the documents, with the benefit of hindsight, have turned out to be either very useful or of very little use, will not add very much, if anything, to an assessment of whether the positions adopted by the parties on a discovery motion were reasonable or appropriate. A judge hearing a discovery motion will, therefore, in almost all cases, be in a better position than the trial judge to decide where the costs of such a motion should lie. Like considerations apply to many other cases such as motions for further and better particulars.

3.3 It is, of course, the case that such motions are very much "events" in themselves. There are issues as to the appropriate scope of discovery or particulars. They are decided once and for all on the motion. The merits of the results of those motions are not, in the vast majority of cases, in any way revisited at the trial.

3.4 Slightly different considerations seem to me to apply in cases where, at least to a material extent, some of the issues which are before the Court at an interlocutory stage arise or are likely to arise again at the trial in at least some form. As I noted in Allied Irish Banks v. Diamond [2011] IEHC 505, and as approved by Laffoy J. in Tekenable Limited v. Morrissey & ors [2012] IEHC 505, somewhat different considerations may apply in cases where the interlocutory application will, to use language which I used in Diamond and which Laffoy J. cited in Tekenable "turn on aspects of the merits of the case which are based on the facts". It is true that both of those cases concerned the costs of an interlocutory injunction. One of the issues which, of course, arises on an application for an interlocutory injunction is as to whether the plaintiff has established a fair issue to be tried and, indeed, whether the defendant has established an arguable defence. In many cases the argument for both plaintiff and defence on those questions is dependant on facts which will not be determined at the interlocutory stage save for the purposes of analysing whether the facts for which there is evidence give rise to an arguable case or an arguable defence.

3.5 However, the point made in Diamond is that those facts may well be the subject of detailed analysis at trial resulting in a definitive ruling as to where the true facts lie. In substance a plaintiff may well secure an interlocutory injunction by putting forward evidence of facts which, if true, would give him an arguable case and by succeeding on the balance of convenience test thereafter. However, if the facts on which the plaintiff's claim is predicated are rejected at trial, then the justice of the case may well lead to the conclusion that the interlocutory injunction was wrongly sought. It may be that, on the basis of the evidence before the Court at the interlocutory state, the injunction was properly granted. However, with the benefit of hindsight, and after the trial, it may transpire that the case for the granting of an interlocutory injunction was only sustained on the basis of an assertion that the facts were other than the true facts finally determined by the Court at trial. It follows that in such cases there may well be good grounds for not dealing with the costs at the interlocutory stage for the trial court may be in a better position to assess the justice of the costs of an interlocutory hearing when it has been able to decide where the true facts lie. It is not necessarily just that a plaintiff who secures an interlocutory injunction on the basis of putting up false facts should get the costs of that interlocutory injunction even if it was fairly clear that an injunction would be granted on the basis of the facts as asserted.

3.6 It seems to me that like considerations apply in respect of the summary judgment procedure. In many cases a defendant puts forward evidence of facts which, if they were to be established at trial, might well provide an arguable defence. But when the case goes to trial that evidence may well be rejected after careful analysis by the trial court. By a parity of reasoning to that adopted in the injunction cases it may well not be just that a defendant should get the costs of a summary judgment motion (even if it was clear, on the basis of the affidavit evidence, that the matter would have to go to plenary hearing) if, with the benefit of hindsight after trial, it was clear that the facts asserted as providing a defence were not correct.

3.7 For those reasons it seems to me that, certainly in cases where a material part of the defence put forward is based on an assertion of facts which are contested by the plaintiff, there will be many cases where it will not be possible to justly determine the costs of a summary judgment motion for a trial judge may be in a much better position to reach a judgment on such matters in the light of the ultimate outcome of the case on the facts.

3.8 There are, however, other factors which can properly be taken into account in my view. Part of the reason for the introduction of new costs regimes such as those contained within O.99, r.1(4A), is to discourage parties from bringing unreasonable applications or resisting reasonable ones. It is true, of course, as the authors of Delaney and McGrath point out, that a motion for summary judgment is, as they put it, "an integral part of the summary summons procedure". But there will be motions for summary judgment, and these motions come into that category, which take on something of a life of their own and require a separate allocation of court time and a consequent incurrence by the parties of significant additional costs. It seems to me that it is in accordance of the principle behind the rule that the Court should retain, in an appropriate case, an entitlement to impose some or all of the burden of the costs of the motion for summary judgment on an unsuccessful plaintiff if the Court is satisfied that the plaintiff acted unreasonably in the way in which the motion was approached including any unreasonable failure to agree to a matter going to plenary hearing in the light of affidavits filed. In such a case a plaintiff who acts unreasonably in that manner must be at risk that any additional costs incurred by virtue of a lengthy and disputed summary judgment application (which becomes a centre of costs in itself) may be awarded against them.

3.9 In summary, it seems to me, for those reasons, that the principle is that, in the majority of cases, the costs of a summary judgment motion as a result of which the proceedings are remitted to plenary hearing should either be reserved or become costs in the cause. Costs in the cause may be the appropriate measure unless it may be the case that the judge adjudicating on the summary judgment motion feels that it is possible that the detail in which the trial judge determines the ultimate issues in the case could have a bearing on the justice of where the costs should lie. In those circumstances a reservation of the costs may be more appropriate.

3.10 However, there may be circumstances where the Court remitting the matter to plenary hearing is satisfied that a plaintiff has acted in a particularly unreasonable manner in not agreeing to the matter going to plenary hearing. In those circumstances the Court should consider whether the justice of the case requires that some or all of the costs of the summary judgment motion should be borne by the plaintiff who has acted in such a manifestly unreasonable way. In the light of those principles it is necessary to turn to the question of whether they provide a basis for disturbing the order for costs in this case.

4. Application to the facts of this case.
4.1 First it seems to me that an error in principle has been identified. The trial judge appeared to take the view that costs followed the event in the sense that a failure on the part of ACC to obtain summary judgment amounted to an "event" on which ACC lost which necessarily ought lead, in the absence of special or unusual circumstances, to the grant of costs against ACC. For the reasons which I have sought to analyse it does not seem to me that such is the proper approach. Rather the proper question to be asked is as to whether it can be said that ACC acted in a manifestly unreasonable way in failing to agree that the matter should go to plenary hearing, at least when all of the replying affidavits had been filed, thus leading to a lengthy and costly hearing on the question of whether summary judgment should be granted. It does not appear that the trial judge considered this question at least in that fashion. In those circumstances it seems to me that the proper course of action to adopt is for this Court to ask itself the question. Is there a sufficient basis on which it can be said that ACC acted in a manifestly unreasonable way so as to displace what might be considered to be the normal position of costs in cases such as this being directed to be costs in the cause or being reserved to the trial judge?

4.2 Having reviewed the affidavit evidence and the ruling of the trial judge on the question of whether a sufficiently arguable defence had been established to require that the case be remitted to plenary hearing, I cannot conclude that there is any legitimate basis for suggesting that ACC acted in a manifestly unreasonable way. It is true that ACC failed to secure summary judgment. However, that failure falls quite a distance short of establishing that ACC acted so unreasonably in putting forward argument on the matter that costs should be awarded against them. It seems to me to follow that the trial judge was incorrect to award costs against ACC and that the trial judge should, instead, have ordered that the costs be costs in the cause. It is unlikely that there will be anything in the detail of the final judgments which would influence the proper disposition of the costs of the summary judgment motions so that reserving costs to the trial judge would not be appropriate in this case.

5. Conclusions
5.1 For those reasons I am satisfied that there was an error in principle in the approach to the award of costs of the summary judgment motions in these cases.

5.2 On that basis I would allow the appeal and substitute for the orders of costs made by the trial judge orders that the costs of both motions be costs in the cause.

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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> ACC Bank plc v Hanrahan [2014] IESC 40 (26 June 2014) URL: http://www.bailii.org/ie/cases/IESC/2014/S40.html Cite as: [2014] IESC 40

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