Background
Revenue sought summary judgment against Paul Howard and Úna McClean for unpaid tax assessments, principally concerning rental income and capital gains arising from a property portfolio. The assessments dated from 2015, had been unsuccessfully challenged before the Appeals Commissioners, and had become final and conclusive. After final demands issued in 2021 were not met, Revenue commenced debt-recovery proceedings.
The appellants did not advance a substantive defence to the tax liabilities. Instead, they contended that Revenue’s arrangements with its solicitors, including a conditional uplift fee and a “no foal no fee” arrangement, were champertous or otherwise unlawful. They also made fraud allegations against Revenue, which the High Court dismissed as unstateable and the Court of Appeal described as hopeless.
The Court’s Holding
The Supreme Court rejected the challenge to Revenue’s solicitor-fee arrangements and upheld Revenue’s entitlement to judgment on the tax debts. Section 149(1) of the Legal Services Regulation Act 2015 answered the challenge to the conditional uplift fee. The Court also confirmed the settled position that “no foal no fee” arrangements are permitted in Ireland.
The judgment excerpt records a disagreement on costs. Collins J dissented from the majority’s proposed costs orders, reasoning that these were ordinary debt-collection proceedings rather than public-interest litigation and that the appellants’ conduct, including their persistence in groundless fraud allegations, strongly supported the ordinary rule that the successful party recover its costs. He would have left the High Court and Court of Appeal costs orders undisturbed and made no order as to the Supreme Court appeal costs because Revenue had offered to bear its own costs.
Key Takeaways
- A debtor cannot avoid a final tax liability by advancing an unsuccessful challenge to the creditor’s lawful solicitor-fee arrangements.
- Section 149(1) of the 2015 Act permits the conditional uplift fee challenged in these proceedings.
- “No foal no fee” arrangements remain lawful in Ireland.
- Groundless fraud allegations may weigh heavily against a litigant when costs are decided.
Why It Matters
The decision confirms that challenges to litigation funding or fee arrangements do not, without more, provide a defence to an otherwise established debt claim. It also reinforces the continuing legality of “no foal no fee” arrangements, an issue with wider consequences for litigation practice.
The costs discussion illustrates the limits of public-interest costs principles where litigants pursue a personal financial objective and engage in unmeritorious or improper litigation conduct.