Background
This ruling concerns the issue of costs following a substantive appeal heard by the Court of Appeal on 25 February 2026 ([2026] IECA 20). The original appeal was brought by Thomas Farrell and Thomas Farrell and Sons (Garages) Limited against the Revenue Commissioners, seeking, among other things, the rescission of two settlement agreements from 1995, restitution of significant sums paid, and damages for various claims including negligence and misrepresentation. The High Court had refused the relief sought, and the Court of Appeal subsequently dismissed the appellant’s appeal, finding the Revenue Commissioners to be entirely successful in resisting it.
Following the dismissal of the appeal, the Court of Appeal indicated that the Revenue Commissioners were presumptively entitled to their costs. The appellant, however, sought an “alteration” to this proposed costs order, specifically a 30% reduction in the costs payable to Revenue. This application for a reduction was based on several arguments concerning the conduct of the proceedings by Revenue, including alleged failures to furnish documents, mischaracterization of the Notice of Appeal regarding “fraudulent concealment,” and Revenue’s supposed failure to unilaterally seek a preliminary issue determination on whether the proceedings were statute-barred.
The Court’s Holding
The Court of Appeal ruled in favor of the Revenue Commissioners, awarding them the full costs of the appeal, including the costs of the submissions on costs. The court found no basis to depart from the default position that “costs follow the event,” as established by sections 168 and 169(1) of the Legal Services Regulation Act 2015. The court reiterated that where a party is “entirely successful,” they are entitled to costs unless the court orders otherwise, and the burden rests with the unsuccessful party to demonstrate a valid legal basis for such deviation.
The court systematically rejected each of the appellant’s arguments for a reduction in costs. Regarding the alleged failure to furnish a file, the court noted that it had explicitly rejected this argument in its substantive judgment. Concerning Revenue’s preliminary observation that the Notice of Appeal did not adequately raise “fraudulent concealment,” the court found that while the Notice “just about” encapsulated the argument, the appellant’s claim of fraudulent concealment was emphatically rejected on its merits in the substantive judgment, and Revenue’s point had no significant impact on the appeal’s length. Finally, the court found “absolutely no merit” in the appellant’s contention that Revenue should have unilaterally initiated a preliminary issue trial on the statute-barring question, characterizing it as the appellant’s litigation strategy and noting it did not reflect negatively on Revenue or add to the hearing’s length. The court also clarified that its prior judgment did not note a “failure” by Revenue to seek an agreed statement of facts, as alleged by the appellant.
The Court concluded that none of the matters set out in s. 169(1)(a)-(c) of the 2015 Act were engaged, and there was no reasonable basis to depart from the indicative order that costs should follow the event. Justices Hyland and Collins concurred with Ms. Justice Faherty’s ruling.
Key Takeaways
- In Irish appellate proceedings, the default rule is that “costs follow the event,” meaning the entirely successful party is presumptively entitled to their costs.
- The burden lies with the unsuccessful party to demonstrate a valid legal basis for the court to deviate from this presumptive position.
- Arguments for deviating from the default costs rule based on a successful party’s conduct during proceedings must be substantial and directly impact the fairness or efficiency of the litigation, not merely minor procedural points or unsuccessful preliminary arguments.
- An appellant cannot typically secure a reduction in costs by alleging the respondent should have taken certain procedural steps (e.g., initiating a preliminary issue) that the appellant chose to take instead.
- Even if a party does not prevail on every single discrete issue, if they are “entirely successful” in the overall appeal, that status is generally maintained for costs purposes.
Why It Matters
This ruling reinforces a fundamental principle of litigation in Ireland: the “loser pays” rule for costs, particularly when one party is entirely successful. It clarifies that merely raising procedural grievances or minor disagreements over the course of litigation is generally insufficient to displace the presumption that the successful party should recover their costs. For legal practitioners, it highlights the high bar for obtaining a reduction in costs against an entirely successful opponent. Unsuccessful parties seeking to avoid full cost liability must present compelling arguments that fall squarely within the exceptions outlined in the Legal Services Regulation Act 2015, focusing on significant conduct issues that demonstrably prejudiced the proceedings or impacted their length and complexity.
The decision also underscores that litigation strategy, such as who initiates a preliminary issue, typically falls to the parties themselves, and a court will not ordinarily penalize a successful party for not proactively taking steps that the unsuccessful party eventually pursued. This encourages parties to carefully consider their arguments for costs relief and ensures that the financial consequences of litigation remain predictable when there is a clear victor on the merits.