Shift in Courts’ attitude to differential costs orders

Section 17(5) of the Courts Act, 1981 (as amended) provides that, in cases where the damages that are awarded to a successful plaintiff are within the jurisdiction of a lower court, a trial judge may order the plaintiff to pay to the defendant the difference between the costs actually incurred by the defendant and those that would have been incurred had the proceedings been commenced and determined in the appropriate court.

The recent Court of Appeal decision in the cases of Moin -v- Sicika and O'Malley -v- McEvoy [2018] IECA 240, where both appeals were heard together as the issues that arose for determination on these appeals was identical and a single judgment was delivered. This judgement concerned two separate personal injuries cases taken in the High Court, where the plaintiffs were awarded damages of less than €60,000, i.e. within the monetary threshold of the Circuit Court. Both cases were assessment only cases, liability having been admitted by the defendants.  

The trial judge awarded the plaintiffs their costs on the Circuit Court scale and a certificate for senior counsel but refused the defendant’s application for a differential costs order. The defendants successfully appealed these costs decisions, the Court of Appeal finding that the High Court had erred in law in so refusing in both matters. 

Peart J noted that the onus is on the plaintiff to ensure that the proceedings are conducted in the lowest court that has jurisdiction to make an award in an amount that it is reasonable to expect. He stated:

“Where the level of damages that can be expected are professionally considered to be within the level of the Circuit Court jurisdiction, whatever the plaintiff himself/herself may think should be awarded, serious consideration must be given to an application to remit to the lower court, or else face the risk of a differential costs order. That is the clear legislative intention of the Oireachtas.”

While discretion is afforded to the trial judge under section 17, the Court of Appeal held that it is incumbent upon a trial judge in circumstances where an award is significantly within the jurisdiction of a lower court to make a differential order unless there is a “good reason” for not doing so.

It was observed by the Court of Appeal that both of the cases were not borderline cases. In addition to this, both defendants warned the plaintiffs a year or more, prior to trial, of their view that the claims fell within the Circuit Court jurisdiction and that they would seek a differential costs order if the cases were not remitted to the Circuit Court.  

Following this Judgment, it is incumbent on a plaintiff to commence/ remit their case in the appropriate court. This can be viewed as a caution to plaintiffs not to issue proceedings in the wrong jurisdiction as the costs implications for doing so could be significant.

The risk now ultimately lies at the plaintiff’s feet should their claim not “beat” the minimum jurisdiction of the Court in which the proceedings are determined. This does not, however, mean that defendants should not take issue and so, in appropriate cases, defendants should continue to write warning letters to plaintiffs in relation to jurisdiction.