Background
Bert’s Properties, a building contractor, issued invoices totalling €489,338.02 to GDL Management Group, a property company operating the Mortgage to Rent Scheme, for construction work performed in August and September 2025. A dispute arose over work quality, omissions, and invoice timing. After failed mediation and payment impasse in October 2025, Bert’s Properties issued a statutory demand on 7 November 2025, threatening a winding-up petition. When GDL Management did not respond adequately, Bert’s Properties presented a winding-up petition on 10 December 2025 seeking to wind up GDL Management.
On 6 January 2026, GDL Management commenced substantive proceedings claiming breach of contract and issued an interlocutory motion to restrain advertisement of the petition. The motion was scheduled for hearing on 15 January 2026, then adjourned to 22 January 2026. Critically, GDL Management’s affidavit disclosed that an initial public offering of its shares was imminent, making advertisement of a winding-up petition particularly damaging. Reporting restrictions were imposed on the injunction proceedings.
On 22 January 2026, minutes before the costs hearing for the injunction motion, GDL Management’s solicitors announced they would pay the demanded sum (as corrected to €405,750.60) while maintaining that the petition was an abuse of process and reserving the right to recover the sum in the ongoing substantive action. The payment was made, the petition was stayed, and the court was left to determine liability for the injunction motion’s costs.
The Court’s Holding
Justice Micheál O’Connell held that the costs of the injunction motion should be made “costs in the cause” — meaning the trial judge would determine their allocation based on the outcome of the substantive action. The judgment required careful analysis of when the principle that “costs follow the event” should not apply to withdrawn or conceded interlocutory motions.
The court established six categories of non-adjudicated cases: withdrawal, concession, procedural strike-out, default award, mootness, and compromise. Although the petition became technically moot once payment was made (since the defendant lost standing as creditor), the court treated this as a withdrawal by the plaintiff because the plaintiff’s unilateral decision to pay inexorably caused the mooting. The court applied the “Dubcap approach” — derived from older authorities — which holds that when an interlocutory motion involves core substantive merits likely to be revisited at trial, costs should be reserved or made costs in the cause rather than following the technical event of withdrawal or failure.
Justice O’Connell rejected the automatic application of the “costs follow the event” principle here because: (1) the injunction motion engaged the same breach-of-contract issues that would be tried in the substantive action; (2) a full adjudication of those merits did not occur; (3) different factual conclusions at trial could materially affect both the injunction motion’s merits and the ultimate allocation of costs; and (4) applying the Dubcap approach avoids creating a perverse incentive where litigants are forced to defend unwinnable motions to avoid costs orders, rather than withdrawing reasonably in the interest of expediting trial on the core issue.
Key Takeaways
- The principle that “costs follow the event” does not automatically apply to interlocutory motions that are withdrawn, conceded, or rendered moot when the motion engages core substantive issues that will be revisited at trial.
- The “Dubcap approach” — which reserves or makes costs “costs in the cause” in interlocutory motions involving revisitable merits — applies not only to motions that proceed to judgment but also to those that are withdrawn or conceded, provided the core issues are substantive rather than purely procedural.
- An interlocutory injunction motion should trigger the Dubcap approach if: (a) the underlying action’s merits are in issue in the motion; (b) a determination on those merits has been made on limited evidence; (c) different conclusions might emerge at trial with full discovery and evidence; and (d) such different conclusions could materially affect the motion’s outcome.
- The court may examine whether a withdrawn or conceded motion would have attracted the Dubcap approach without improperly adjudicating its merits, by identifying whether the core issue is one that will arise again at trial.
Why It Matters
This judgment significantly clarifies Irish costs practice for practitioners advising clients in commercial disputes involving interlocutory injunctions. By anchoring the Dubcap approach to withdrawn and conceded motions — not only to motions decided on the merits — the court removes a perverse disincentive to settlement. Without this protection, a party who reasonably concludes (after partial evidence) that an injunction motion may fail would face a stark choice: defend an unwinnable motion to avoid costs, or withdraw and pay the other side’s costs. The judgment instead permits withdrawal or payment without automatic adverse costs consequences, encouraging pragmatic resolution of interlocutory disputes while preserving the trial judge’s full opportunity to examine merits and allocate final costs fairly.
The judgment is particularly significant for statutory demand cases and winding-up petitions. It suggests that a company paying a disputed statutory demand to prevent a winding-up petition’s advertisement (while preserving its right to recover via counterclaim in ongoing proceedings) will not automatically be penalized in costs for the injunction motion. This may reduce the aggressive use of winding-up threats in commercial disputes, as creditors can no longer rely on an automatic costs windfall from defendants’ withdrawal of injunction applications.