On 15th June 2017, the Supreme Court gave a decision in the case of Isabelle Sheehan (a minor) v David Corr which has been described by the Law Society as a “landmark decision on legal costs”.
The matter arose on foot of a medical negligence action in which the costs were taxed by the Taxing Master, with the general instructions fee being the main item of contention. Same had been claimed in the sum of €485,000.00 and after an initial ruling in 2012 and a further ruling in 2014 on foot of objections raised, the instructions fee was assessed at €276,000.00.
The High Court
An application for review of the Taxing Master’s ruling was made to the High Court and was dismissed by the President of the High Court on 27th February 2015, who found that there were some errors on the part of the Taxing Master but none were such “to warrant any interference in the allowance made in respect of the solicitor’s instructions fee in this case.”
The Court of Appeal
The solicitors for the Plaintiff then appealed the matter to the Court of Appeal, with judgment given on 10th June 2016.
Seven grounds of appeal had been identified on behalf of the Plaintiff, with the Court upholding the appeal and on four of those grounds. In a judgment delivered by Mr. Justice Cregan, the Court held that the Taxing Master was incorrect in the methodology he had used. In assessing the instructions fee, he should have
“considered the time and labour expended by the solicitors and… assessed the number of hours spent, the seniority of the solicitor involved, the hourly rate for each solicitor and the appropriate professional charge for each element of the professional service.”
The Court held that the Taxing Master should not have taken “intangibles” such as the novelty, skill, complexity, specialised knowledge and responsibility into account at the start of his analysis, but rather at the end after he had examined the time spent on the case.
The Taxing Master had disallowed fees in relation to two senior solicitors attending the trial however the Court of Appeal found that there was a requirement for same and that it was an injustice not to allow those fees.
An issue also arose regarding the applicability of the economic downturn to the measurement of costs. Both the Taxing Master and High Court referred to same as a reason for reducing the professional fee, however the Court of Appeal held that this was an error in principle and it should have been applied to all levels of the assessment of the fees.
It was this judgment and in particular the following comments made by Mr. Justice Cregan which had the potential to significantly alter how costs are taxed and which also caused such alarm to plaintiff solicitors. He stated that every bill of costs must set out the “time and labour spent on…each element of the case” and only when a proper bill of costs is drawn up setting out the time spent on a case should the Taxing Master assess it in accordance with criteria set out by the Court. This approach would require time costing procedures to be applied by all firms in all cases, at an additional cost to those firms who did not already have such systems in place.
The Supreme Court
The Defendant to the action was then granted leave to appeal this decision pursuant to Article 34.5.3° of the Constitution. Such appeals are only permitted if the decision raises a matter of public importance or if it is in the interests of justice. The former applied in this instance.
The following four questions were put forward for consideration by the Supreme Court on appeal:-
“1. To what extent, if any, may considerations as to the amount of time actually spent on a case be elevated above the relevant criteria mandated by Order 99, Rule 37(22) for the fixing of costs?