SETTLING CASES - NEW COURT RULES CONCERNING COSTS
Statutory Instrument No. 12 of 2008
Rules of the Superior Courts (Costs) 2008
This Statutory Instrument provides for certain amendments to Order 99 of the Rules of the Superior Courts. These new rules provide for three key changes to the existing Order 99:-
- The awarding of costs of interlocutory applications;
- The consideration by the Court of offers in writing when awarding costs; and
- The Courts power to require the production and exchange of estimates of costs.
The general rule, subject to the court’s discretion, was that “costs follow the event”. If the costs of interlocutory applications are reserved to the trial of the action, it means that a party who may have succeeded on such an application but lost in the main action will usually be landed with the costs of the interlocutory applications. This necessarily led to a certain level of unfairness in the awarding of costs.
As a result of sub-rule (4A), (which arguably came about as a result of the recent approach taken in the Commercial Court), there is now an onus on Judges to determine costs at the interlocutory stage.
Sub-rule (4A) contains a caveat which means that in practice, Judges will have discretion not to award costs at this time if reasons exist that would render it unjust to do so.
Such an amendment may be designed to discourage frivolous, unreasonable interlocutory applications and therefore Solicitors will need to be more conscious as to how they should advise their clients in relation to possible costs risks.
The second amendment to Order 99 of the Rules of the Superior Courts states, inter alia, that the Court will have regard to the terms of any offer in writing sent by any party to any other party or parties offering to satisfy the whole or part of that other party’s (or those other parties’), claim when awarding costs. This amendment therefore gives effect to the Calderbank letter
The purpose of the Calderbank letter/offer is to promote the settlement of actions because of the parties’ consciousness of a potential costs penalty if a reasonable offer is refused. The acceptance of the concept of a Calderbank letter also brings to the Courts attention any unreasonable behaviour of parties and recognises the offeror’s willingness to reach a settlement.
This provision therefore isn’t introducing anything new or ground-breaking into Irish law, but it does place the concept of the Calderbank offer on a statutory footing and clarifies the position of this concept.
The third amendment to Order 99 of the Rules of the Superior Courts relates to rule 5 thereof. This provision may serve to ensure that the process in relation to awarding costs is as transparent between the parties as possible. This provision may be particularly relevant in Commercial Court proceedings or any case which is being case-managed, and where there is an emphasis on efficiency. If required, parties will now be on notice as to the costs which the other side have incurred, and there is a possibility that such awareness of costs may lead to parties considering settling their actions.
This provision therefore represents a potentially powerful tool to be used by Courts to monitor costs and to possibly warn parties of the risks of incurring high costs. It is also likely to avoid any unnecessary protracted litigation in relation to the awarding of costs.
