Costs Differential Orders have gained greater traction on foot of the recent Court of Appeal decisions in Moin v Sicika & O’Malley v McEvoy1. The statutory basis for an award of costs and the growing onus on plaintiffs to ensure they issue cases in the appropriate jurisdiction is set out as follows.
Limitation of Awards of Costs
The courts’ jurisdiction to award costs to any party is limited by the provisions of section 17 of the Courts Act 1981, as amended by section 14 of the Courts Act 1991. As a general rule, if a party issues an action in the High Court, which could have been brought in a lower court, then that party, if successful, is entitled to such costs as would be allowable had the action been issued in the appropriate lower court.
However, until the passing of the Courts Act 1991, the High Court enjoyed full discretion to award costs on a High Court scale, even if the action could have been brought in a lower court, if it deemed it reasonable in the interests of justice to do so, owing to the exceptional nature of the proceedings or any question of law contained therein. This discretion was curtailed by the 1991 Act and may only be exercised if the Plaintiff is awarded damages in excess of €31,743.45.
The Impact of the Moin v Sicika & O’Malley v Evoy Decisions
The single Court of Appeal judgement of Justice Peart handed down in respect of both of these cases narrows this judicial discretion even further by making it incumbent on judges to make a Costs Differential Order unless there are good reasons for not doing so where an award is significantly within the monetary jurisdiction of a lower court.
What are Costs Differential Orders?
These orders act as a penalty to plaintiffs who receive an award which falls below the court’s monetary jurisdiction threshold by providing that they pay the difference between the costs actually incurred by the Defendant and those which would have been incurred if the proceedings were brought in the appropriate lower court. Judges can opt to measure the difference in costs themselves or elect for the Taxing Master to do so.
Take the example of a plaintiff who wins their High Court personal injuries claim against a defendant. Ordinarily costs follow the event so the plaintiff can recover their costs against the defendant. A €45,000 award of damages to the plaintiff would be within the Circuit Court’s monetary jurisdiction which, for personal injuries cases, is €60,000. Can they still recover their High Court costs against the defendant? The plaintiff can usually only recover Circuit Court costs from the defendant and, if a Costs Differential Order is made, must pay the defendant an amount equal to the difference between what the defendant’s costs would have been had the case been issued in the Circuit Court and what the defendant’s costs actually were in defending the claim in the High Court.
Key Points of the Decisions
- Justice Peart, in awarding a Costs Differential Order, referred to the fact that the Defendant’s Solicitor had sent a warning letter to the Plaintiff’s Solicitor 11 months before trial challenging the jurisdiction in which proceedings were issued. This illustrates the importance of a defendant’s solicitor sending such warning letters well in advance of trial and being aware of the courts’ power to award Costs Differential Orders where appropriate.
- The decisions also highlight that where a case is remitted or transferred to the Circuit Court from the High Court, the Circuit Court has jurisdiction to award damages above the monetary jurisdiction of the Circuit Court2. This acts as a safeguard to plaintiffs who are unsure as to which court they should issue proceedings in and heightens the onus on them to conduct proceedings in the Circuit Court rather than the High Court, where possible.
Differential Costs Orders are discretionary. However this recent Court of Appeal judgment demonstrates the courts’ willingness, particularly in cases where the plaintiff’s award of damages is well below the High Court jurisdiction, to penalise plaintiffs for issuing proceedings in a higher court than is necessary. Solicitors acting for both parties to litigation should therefore be alive to the impact of such orders on the question of costs and ensure to advise clients appropriately.
For further information please contact Fergal Mullins firstname.lastname@example.org at Hayes solicitors.
1 Jibran Moin v Veronica Sicika, & John O’Malley v David McEvoy  IECA 240
2 Section 20 of the Courts of Justice Act, 1936 (as substituted by section 16 of the Courts and Civil Law (Miscellaneous Provisions) Act 2013
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About the Author
Fergal Mullins is a solicitor on the healthcare team at Hayes Solicitors. He primarily advises clinical practitioners, hospitals and indemnity bodies on the defence of clinical negligence claims. Prior to joining Hayes, Fergal worked in a London firm in the area of clinical negligence, having trained and worked post qualification in a large Dublin firm in the same area.