Howley v. Howard and Another (No 2)

Little v. Chief Appeals Officer (No 2) [2024] IESC 53 test for public interest proceedings applied:

1. “claim against the State, or an organ or agency of the State (including a statutory body). … if unusually, such a claim may arise by way of defence or counterclaim in proceedings brought by the State.”
2. “relief in public law”;
3. “point of law of general public importance.”
4. “Although … there are decisions using this term to refer exclusively to proceedings brought solely for the purpose of vindicating a right or interest of the public generally, and not the advancement of the personal interests of the litigant, when I use these and cognate phrases in the course of this judgment, I am not so limiting them.” [9]

Conditions satisfied in substance: ‘They satisfy condition (a) in that the present case involves a claim against a statutory body. The case unquestionably raises a point of law of general public importance (condition (c)). While the claim was advanced in order to vindicate their own interests, the decision clearly affected the interests of the public as well (condition (d)).’ [10]

Public-law condition satisfied: ‘claim is not strictly a claim in public law (condition (b)). … Yet the identity of the plaintiff as Collector General is crucial. … The issue of whether he was entitled to exercise his statutory functions by bringing proceedings before the court while allegedly committing the tort of champerty is sufficient, in my opinion, to bring the matter within the concept of “public interest proceedings”.’ [11]

1. 4.1

   Tax linked to public law: ‘The defendants’ case can therefore fairly be described as a tort-based defence to a statutory claim (i.e., failure to pay tax). In that respect, it can be said that the tort-based claim is sufficiently connected to the public law aspect of the case in much the same way as, for example, a claim for damages for false imprisonment arising from what was said to be the unlawful detention of a plaintiff pursuant to a statutory provision would also equally amount to a public law claim in this sense.’ [12]

Little v. Chief Appeals Officer (No 2) [2024] IESC 53 guidance on exemption from costs applied:

1. “necessary, but not sufficient, condition to the exercise of the power not to award costs against an unsuccessful claimant in such proceedings that the proceedings involve a point of law of general public importance”;
2. “relevant, but not necessary, consideration that the proceedings are brought by the party in question in circumstances in which they obtain no personal advantage from the outcome of the proceedings, but in that regard it is relevant whether ‘the subject matter of the litigation is likely to have a significant effect on the category of persons affected by the legal issues’”;
3. “point of law must be stateable … The strength of the case for an exemption from costs is in proportion to the strength of the underlying claim.”
4. “The strength of the case for an exemption from costs is also in proportion to the systemic importance of the point.”
5. “Even a case that is weak … may merit an exemption from an order for costs where the point arises from avoidably unclear legislation.”
6. “where a case is a ‘test case’ in the true sense of the term … the Court may decide not to award costs against the claimant”;
7. “whether a given case falls into a category where 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 issue” [14]

Point of general public importance: ‘relevant statutory provisions were convoluted and difficult to follow. These provisions, taken together with the general common law principles governing the law of champerty and maintenance, gave rise to much complex and overlapping case-law, not all of which is easy to reconcile.’ [15]

ELG v. HSE (No 2) [2022] IESC 26 on effect on persons affected applied: ‘it is true that the defendants litigated for their personal advantage. … there is no question but that this decision has very considerable implications for the practice of litigation in this jurisdiction.’ [16]

Real and systemic issue: ‘issue raised by the defendants was one of real substance. As was frequently said in the first judgment and repeated already in this judgment, the relevant legislation was in many respects obscure – even obtuse – and the caselaw was not consistent. … It clearly was systemic and there were many observations in the first judgment to the effect that the “no foal, no fee” system plays a key role in providing access to justice within the legal system.’ [17]

Weak-case and test-case factors inapplicable: ‘contentions of the defendants could not in any sense be described as “weak” … and nor could it be said that the present case presents a “test case” (sixth condition) in the usual sense of that term.’ [18]

Deterrence neutral: ‘On one view it could be said that as the Collector General had already obtained large judgments against these defendants, a further award of costs was unlikely to have made any real difference to their decision to litigate this point. Yet on the other hand, the prospect of further costs being imposed by court order is likely to have a deterrent effect on many litigants.’ [19]

Criteria substantially met: ‘They remain that – judicial guidelines – and the language contained in the judgment – however helpful – cannot be regarded as if they were the equivalent of a statutory text. For my part, I consider that, for the reasons just stated, the defendants comply – or, at least, comply substantially – with the Little (No.2) criteria.’ [23]

Little v. Chief Appeals Officer (No 2) [2024] IESC 53 test for costs to losing party applied: ‘test governing even the partial award of costs against the State in favour of the losing party is even more elevated. As Murray J. said in Little (No.2) (at para. 62), the Court should only take this step “in cases of real substance, in which there is a clear and significant public interest on a matter of fundamental importance served by the clarification brought to the law by the suit”. In my view, the present case represents almost a paradigmatic example of the type of case contemplated by this test. As the first judgment attests, the issues were ones of real substance. The issues were fundamental to the operation of the legal system and the clarification of the law was, in many respects, both necessary and overdue.’ [20]

1. 12.1

   No order distinct from award to losing party: ‘there is, of course, a distinction between the decision to make no order as to costs on the one hand and to award some or even full costs to the losing party on the other’ [8].

2. 12.2

   Clarification benefits legal system: ‘resulting clarification is not a benefit enjoyed principally by these defendants. Indeed, in one sense it may be said that they derive little practical advantage from it. Rather, the chief beneficiaries of that clarification are litigants, legal practitioners and, ultimately, the legal system itself.’ [21]

3. 12.3

   Limited category: ‘present case falls into the limited category envisaged by Murray J. in Little (No.2) where the public interest served by the litigation transcends the private interests of the parties. … It would not, in my view, be just that the parties who have facilitated that clarification should bear the costs associated with securing it.’ [22]

No costs to Collector General; Compania General de Tabacos v. Collector of Internal Revenue 275 US 87 (1927) cited: ‘I do not believe that the Collector General should be awarded any costs. It is true that the defendants have defaulted in a grave fashion on their basic civic obligation to pay their taxes when lawfully and duly assessed. As taxes represent in Holmes’ famous words “what we pay for civilized society” … and are thus a basic obligation of citizenship, it may be that many might regard these defendants, having deliberately failed to discharge their tax obligations, as undeserving of any special indulgence in respect of costs.’ [24]

Some costs to Defendants/Appellants: ‘defendants have litigated an issue of real substance and complexity, the resolution of which has greatly clarified an important aspect of the law. It should be borne in mind that it was also necessary for the defendants to carry an appeal to this Court from the decision of the Court of Appeal so that a key aspect of the law of champerty – namely, whether the existence of a champertous contract was a defence to an otherwise valid set of proceedings – could be clarified. To that extent, it may be said that the defendants have narrowly satisfied the higher standard contemplated by Murray J. in Little (No.2) of showing that their case is sufficiently exceptional as to merit the exercise of discretion under s. 169(1) of the 2015 Act not simply as to justify no order as to costs, but also such as to merit the making of some order as to costs in their favour.’ [25]

No full costs: ‘They remain unsuccessful parties and the ordinary rule reflected in the language of s. 169(1) of the 2015 Act itself continues to carry substantial weight. As I have already indicated, regard must also be had to the fact that these proceedings arose from their own failure to discharge their tax liabilities. Those considerations preclude any award approaching a full order for costs. It must also be recalled that the defendants made wholly unsubstantiated allegations of fraud in both the High Court and the Court of Appeal and this is a further factor to which the Court must have regard.’ [26]

Half of Supreme Court costs: ‘appropriately reflects both elements of the case: their status as unsuccessful litigants and defaulting taxpayers on the one hand and the exceptional public value of the appeal on the other.’ [28]

Section 169(1) of the Legal Services Regulation Act 2015 on costs applied: ‘no order for costs in either the High Court or the Court of Appeal and that the defendants should have 50% of their costs in this Court, such costs to be adjudicated in default of agreement.’ [29]

Amici curiae by agreement: ‘both the Attorney General and the Law Society of Ireland (who both appeared as amici curiae in this Court) will bear their own costs.’ [3]