The importance of a cost effective approach to litigation

Introduction

A recent Commercial High Court decision in the case of Word Perfect Translation Services Limited v The Minister for Public Expenditure and Reform [2022] IEHC 219 highlights the need for parties to take a cost effective approach to litigation.

Facts

Word Perfect Translation Services (the Applicant) challenged the legality of a Request for Tenders for the supply of Irish Translation Services on a number of grounds. In its defence, The Minister for Public Expenditure and Reform (the Respondent) argued that the Applicant was not eligible to challenge the Request for Tenders as they did not submit a tender, amongst other defences.

 

The Respondent did not bring a preliminary application regarding the eligibility of the Applicant. The Respondent instead chose to deal with the eligibility issue at trial. The Court found in favour of the Respondent in that the Applicant was not an eligible challenger as they never submitted a tender. The issue in regards to the costs of the proceedings then arose.

 

The law in respect of legal costs is set out in section 169 of the Legal Services Regulation Act 2015 (the Act) which provides, inter alia, that the Court is to have regard "to the conduct of all parties before and during the proceedings" when making an award of costs for an entirely successful party.

 

The Applicant argued that the Respondent should have made a preliminary application regarding the eligibility point to the Court as the purpose of the facility to do so in the Rules of the Superior Court is to minimise costs, as well as saving Court resources. The Applicant also argued that as the eligibility issue only took up approximately 20% of the hearing time, it should only have to pay 20% of the Respondent's costs. The Respondent's view was that as it was entirely successful in its defence of the proceedings that costs should follow the event and accordingly it should be entitled to 100% per cent of their costs.

 

Decision

The Court was of the view that the Respondent should not be awarded its full legal costs and set out the following factors for deciding on the level of reduction in the legal costs to award:

• Was the winning litigant entirely successful?

If the winning litigant is entirely successful then this shall act as a positive factor.

• Were any adverse findings made against the parties?

The Court held that any adverse finding against either party is to act to the detriment of that party ie if the winning litigant has an adverse finding made against them, this may lead to a decrease in an award of costs.

• Latitude should be given to the winning litigant in light of the 'clarity of hindsight'

The Court noted the benefit of hindsight in analysing the litigation and while there may have been more effective ways to conduct litigation it should not be too harsh on the winning litigant. The Court also set out that the losing litigant should not have to bear the entire costs if the winning litigant ran the case in what turned out not to be the most cost effective way.

• Conduct of both parties are to be taken into account

Similar to above, the Court set out that it must take account of the conduct of both parties, not just the winning litigant. In this instance the Applicant could have sought to have the issue of eligibility dealt with as a preliminary point but also chose not to.

• Was there a failure by either party to mediate?

A Court must consider any acts or omissions by the parties regarding mediation. This would include whether mediation was proposed by a party and the response of the other party to that request.

• Did the losing litigant institute proceedings?

The Court found that regard is to be had as to which party issued the proceedings. In this case it was the losing litigant that brought the action meaning the winning litigant did not have a choice but to litigate the issue and this is to be reflected in the award of costs.

Taking all of the above into consideration, the Court found that the losing party (the Applicant) was to pay 50% of winning party's (the Respondent) costs.

 

Takeaways

Despite being entirely successful in their defence the Court held that as the winning party did not conduct the litigation in the most cost effective way possible they were only awarded 50% of their costs. This highlights the need for all parties to take a cost effective approach to litigation and how parties must, at each stage consider the most cost effective way of proceeding including the use of preliminary applications, mediations and any other available mechanisms.

 

For more information please contact Ed Lyons or your usual contact in Beauchamps.