Dispute between the parties
In the recent case of O’Reilly & Anor v Neville & Ors IEHC 228, the plaintiffs and defendants were parties to a building agreement for a dwellinghouse. The plaintiffs claimed various defects in the building works and ultimately sought damages for breach of contract. Following the hearing of the eleven day trial, Mr Justice Binchy delivered a judgment on the substantive issues on 31 July 2017. He made an order for specific performance of the building agreement and ordered the defendants to pay the costs of the plaintiffs’ alternative renting accommodation. This decision then related purely to the costs award of that case.
Normal rule: costs follow the event
Order 99, r.1(3) of the Rules of the Superior Courts lays down the “normal rule” that costs follow the event unless the Court, for special reasons, otherwise directs. The plaintiffs argued that as they had succeeded in the “event” in the proceedings they were entitled to an order for the costs incurred by them and that this was not a case which the Court should depart from the general rule.
Order 99, rule 1.A(1)(c): consideration of open offers
The defendants relied on various open offers made to settle the dispute (6 in total), to argue that throughout the litigation, the defendants tried, but failed, to engage with the plaintiffs to resolve the matters in dispute.
The defendants argued that Order 99, rule 1.A(1)(c) requires the Court, in considering the awarding of the costs of any action or application, and where it considers it just, to have regard to the terms of the offer in writing sent by any party to any other party offering to satisfy the whole or part of that other party’s claim, counterclaim or application.1
Decision – Parties should be encouraged towards early resolution of litigation
The High Court held that in particular, the February 2016 offer letter should have been accepted, and by their failure to do so, the plaintiffs caused almost all of the costs that followed. In awarding the Defendants’ their costs from February 2016 onwards, Binchy J. was emphatic that plaintiffs should not be free to refuse offers such as these “with impunity”. He held:
“Parties to proceedings are to be encouraged and not discouraged from putting forward proposals which will lead to an early resolution of litigation with all attendant benefits, including significant savings of costs and court time.”
Reminder to clients
Litigants should not presume that if they are successful at trial they will automatically obtain their party-party costs from the losing party. Parties should be mindful to properly engage with and consider any open offers made as the Court will assess the parties’ open efforts to settle when making an award of costs.
1 This rule does not apply to lodgements into Court or tender offers in lieu of lodgement which are dealt with in Order 22
Contributed by Richard Breen and Rebecca MacCann
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