Background
The Collector General (Joseph Howley) brought proceedings to recover confirmed tax liabilities of approximately €2.4 million from Paul Howard and approximately €625,000 from Úna McClean, both amounts having been affirmed as final and conclusive by the Tax Appeals Commissioner under s. 949(3) of the Taxes Consolidation Act 1997. In defending the proceedings, the taxpayers raised a single issue: that the contractual fee arrangements between Revenue and its panel of nominated solicitors were champertous and therefore void, rendering the proceedings unenforceable.
The challenged contract contained two distinct features. First, Clause 5.3 provided for a conditional uplift fee — an enhanced percentage commission calculated on the sums actually recovered from the defaulting taxpayer (ranging up to 7% of tax and interest collected at the enforcement stage). Second, Clause 5.2 provided for a “no foal, no fee” structure under which the solicitors’ higher fee entitlement was contingent on Revenue obtaining and recovering a costs order against the taxpayer. The Attorney General and the Law Society of Ireland participated as amici curiae given the case’s implications for fee arrangements across the legal profession.
The High Court (Quinn J., Howley v Howard [2024] IEHC 15) and the Court of Appeal (Binchy J., Howley v Howard [2025] IECA 77) both rejected the champerty defence and entered judgment for Revenue. Both courts also held that champerty could not in any event be deployed as a defence, confining a successful defendant to a separate action in tort. The Supreme Court granted leave to appeal, noting that aspects of the law of champerty — particularly regarding conditional uplift fees — were “somewhat unclear.”
The Court’s Holding
Delivering judgment, Hogan J. first departed from the lower courts on the procedural question, holding that a champertous agreement is a valid defence to proceedings. To hold otherwise would effectively require defendants to participate in champertous litigation with their only remedy being an uncertain separate tort action — an outcome irreconcilable with the rationale of the rules on champerty and with the Supreme Court’s own decision in Persona Digital Telephony Ltd v Minister for Public Enterprise [2017] IESC 27. The Court therefore assessed the validity of the fee clauses as they stood at the time the proceedings were commenced.
On the conditional uplift fee in Clause 5.3, the Court held that while such a fee structure would unquestionably have been champertous at common law, that common law rule has been superseded in debt recovery cases by statute. Section 149(1)(a) of the Legal Services Regulation Act 2015 — replicating the earlier s. 68 of the Solicitors (Amendment) Act 1994 — expressly prohibits percentage fees in contentious business save in matters seeking only to recover a debt or liquidated demand. Since Revenue’s proceedings fell squarely within that statutory exception, Clause 5.3 was lawful. The Court further rejected the argument that the exception should be narrowly construed to exclude “mixed” fee arrangements combining a flat commission with a percentage uplift, holding that such a construction would contradict the Oireachtas’s deliberate policy choice.
On the “no foal, no fee” structure in Clause 5.2, the Court noted that at the hearing Revenue confirmed it would claim costs only under Clause 5.3, rendering the Clause 5.2 issue technically obiter. The Court nonetheless addressed the issue in the public interest, given the centrality of such arrangements to litigation funding across the profession. Tracing the law from s. 11 of the Attorneys’ and Solicitors’ Act 1870 through the pre-1922 English authorities — including Jennings v Johnson (1872–73) LR 8 CP 425, which held that a promise not to charge costs is not champerty — the Court began an analysis that the text of the judgment addresses in detail, with Hogan J. expressing some doubt about the reasoning in Jennings while acknowledging it formed part of the law received in 1922. The appeals were dismissed and the judgments for Revenue upheld.
Key Takeaways
- Champerty is a valid defence to civil proceedings in Ireland — a defendant need not await a separate tort action but may raise a champertous fee arrangement to resist the plaintiff’s claim directly.
- Conditional uplift fees (percentage commissions on sums recovered) are lawful in debt collection and liquidated demand cases by virtue of s. 149(1)(a) of the Legal Services Regulation Act 2015, including “mixed” arrangements that combine a flat commission with a percentage element.
- The common law rule against champerty remains in force for all contentious business outside the statutory exception, and the 2015 Act’s carve-out for debt recovery is to be read consistently with that broader prohibition.
- The legality of “no foal, no fee” arrangements under Irish law remains to be definitively resolved; the Supreme Court’s analysis in this judgment is obiter, but signals that the pre-1922 English authorities treating such arrangements as lawful are not beyond question.
Why It Matters
“No foal, no fee” and conditional uplift arrangements are ubiquitous in Irish litigation — personal injuries, clinical negligence, judicial review — and the case is the first Supreme Court examination of their lawfulness in the modern statutory context. By confirming that champerty is a defence to proceedings (not merely the foundation for a separate tort claim), and by clearly mapping the boundary between the statutory exception for debt recovery and the residual common law prohibition, the judgment provides the most authoritative guidance to date on how solicitors may structure their fees in contentious matters.
The Revenue context gives the decision particular practical significance: state and institutional litigants that use panel solicitors on incentivised fee structures now have express Supreme Court authority that percentage-based commission arrangements in debt recovery proceedings are valid under the 2015 Act. At the same time, the Court’s reservations about the pre-1922 authorities on “no foal, no fee” — flagged as obiter but plainly considered — put practitioners on notice that the full legality of such arrangements may be ripe for authoritative reconsideration in a future case where the point is squarely in issue.