Only 'paupers and millionaires' can litigate, says judge after noting €460k legal costs of €228k case

A High Court judge said the case underlines the “disproportionate” level of legal costs in the court
Only 'paupers and millionaires' can litigate, says judge after noting €460k legal costs of €228k case

High legal costs have been a serious problem for years and regularly throw up the kind of anomalies that had occurred in this case, Mr Justice Michael Twomey said. File picture: iStock

The legal costs bill of deciding a dispute over ownership of €228,000 may run to over €500,000.

This, a High Court judge has said, underlines the “disproportionate” level of legal costs in the High Court and why the recent civil justice review has urged reform.

High legal costs have been a serious problem for years and regularly throw up the kind of anomalies that had occurred in this case, Mr Justice Michael Twomey said. This raised serious issues about how access to justice can be denied, including for citizens on average income in the State.

He made the comments when ordering an insolvent company, Tom McEvaddy Properties Ltd, trading as Nexus Homes (in liquidation) – Nexus - to pay €180,000 security of Nama's legal costs of defending the case, expected to run for four days in the High Court, over the €238,000 sum.

Nama disputes Nexus’ claims it holds the sum on trust for the company. The disputed sum relates to planning fees paid for the development of a property at Sandyford, Co. Dublin, owned by a couple who are the sole shareholders of the company.

While Nama's legal costs experts estimated its High Court costs at some €231,140, the judge said, in the absence of evidence from a costs expert for Nexus, he would order security for 80% of that sum.

Assuming the company would incur similar legal costs, the entire costs of the High Court proceedings could be some €460,000, he said. If the outcome was appealed, as most High Court cases are, the ultimate cost of this dispute over €238,000 could be more than €500,000.

He had no reason not to believe expert evidence from Nama as to the current ‘going rate’ for High Court litigation, including €80,465 as the professional fee for the solicitor, €75,020 (including a €36,300 brief fee plus VAT) for senior counsel and €55,962 for junior counsel.

The "disproportionate" legal costs issue

Noting the recent report of the Civil Justice Review group, he said a majority of the group believed high legal costs here could be addressed via non-binding guidelines while a minority, supported by the review group’s chair, former High Court president Peter Kelly, maintained a mandatory scale of maximum costs should be set by an independent committee established under statute.

Although Nexus is an impecunious corporate plaintiff and security for costs was granted against it, this case highlights how justice could be denied if a citizen on average income were sued by an impecunious individual plaintiff resident here unless security for costs was granted, he said.

The case also demonstrated the truth of Mr Justice Kelly’s remark that the only people who can litigate in the High Court are “paupers and millionaires”. The judge had previously ordered the company should provide security for costs of the proceedings and later heard submissions concerning the amount of security.

In his recently published judgment, he said the security should be for the full amount of those costs to avoid the risk of an “injustice” to Nama (of having to forego its legal costs if the company loses the case). He fixed the security at €185,000, including VAT.

While he had found in an earlier judgment the company did not have a prima facie case for the return of the €228,000 from Nama, that decision was reached on the basis of a preliminary hearing only, he said. It was possible, at the full trial, Nexus would establish it owns the money in dispute.

He stressed there is no suggestion the company would see to use its impecuniosity as an unfair tactic in the litigation or does not genuinely believe it has a good case for the return of the money.

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