Irish High Court warns new costs provisions may limit inherent jurisdiction to grant protective costs orders
The Irish High Court has stated, obiter, that the new costs provisions in the Legal Services Act 2015 may limit the inherent jurisdiction of the court to grant protective costs orders.
Tearfund Ireland Ltd. (TIL) is a faith-based organisation which facilitates individual Christians and churches to actively engage in responding to extreme poverty and injustice overseas. TIL had sought exemption from rateability for its office in Dublin. The annual rates bill for the Dublin office is in the region of €4,000 in the absence of an exemption.
The application was rejected as, while the organisation was considered a ‘charitable organisation’ under section 3 of the Valuation Act 2001, the advancement of religion was not deemed to be a charitable purpose under the same Act.
This was challenged by TIL on appeal, resulting in the Commissioner of Valuation stating a case to the High Court asking whether the Valuation Tribunal was correct in law to hold that the meaning of ‘charitable purpose’ intended by the Oireachtas included the advancement of religion and whether the advancement of religion is a charitable purpose for the purposes of the Valuation Act 2001.
TIL therefore sought a protective costs order (PCO), using the “inherent jurisdiction” of the Court, to protect it from costs should its case fail.
Judge Tony O’Connor in the High Court noted that the Section 168 of the Legal Services Regulation Act 2015 is silent on the jurisdiction to make a PCO and indicated, obiter, that these new provisions might limit the instances for invoking an inherent jurisdiction of the court to grant such an order. This is in contrast to the old Rules of the Superior Courts which allowed “costs to be dealt with by the courts”.
Judge O’Connor cited case law emphasising that the court is ever ready to invoke its inherent jurisdiction. He also noted the difference between inherent jurisdiction and inherent power maybe relevant whenever the courts are asked to consider this rare type of application in the future. As counsel were not asked to address whether the court may now have a more limited inherent jurisdiction to grant PCOs than before the change of rules in December 2019, the Court could decide the application without making a conclusion on the question which could arise again.
Judge O’Connor, however, ultimately declined to grant the PCO on the grounds that the case did not raise an issue of general public importance and interest. He was not persuaded that there is a large group of charities with an interest in advancing religion that would benefit from the decision. The applicant was also deemed to have a private interest in the matter and is not leading a group of charitable organisations having the advancement of religion as one of its objectives. If it was leading such a group, the risk of an adverse costs order could be reduced by an agreement to share that contingent liability.
Furthermore, TIL had rejected an offer similar to that in Veritas Company DAC v. Commissioner of Valuation where it was agreed that neither side would seek their costs from the other if their positions at the hearing do not prevail in the High Court or in any appeal therefrom. The Court found that it was instead “holding out for what might be described as an each-way bet so that it can apply to recover its costs if its position prevails” and this rejection “detracts from the merit of the application”. The application for PCO was refused.
Click here for the judgement in full.