Treasury Holings & Ors -v- The National Asset Management Agency & Ors [2012] IEHC 237 (12 June 2012)

Judgment Title: Treasury Holings & Ors -v- The National Asset Management Agency & Ors

Neutral Citation: 2012 IEHC 237

High Court Record Number: 2012 55JR

Date of Delivery: 12/06/2012

Court: High Court

Composition of Court:

Judgment by: Finlay Geoghegan J.

Status of Judgment: Approved

Neutral Citation Number: [2012] IEHC 237

THE HIGH COURT

JUDICIAL REVIEW

IN THE MATTER OF SECTION 193 OF THE NATIONAL ASSET MANAGEMENT AGENCY ACT, 2009

[2012 55 J.R.]

BETWEEN

TREASURY HOLDINGS, SPENCER DOCK DEVELOPMENT COMPANY LIMITED, SDDC (No.1) LIMITED, SDDC (No.2) LIMITED,

SDDC (No. 3) LIMITED, SDDC (No. 4) LIMITED, FAXGORE LIMITED, REAL ESTATE OPPORTUNITIES PLC., COOLRED LIMITED, TENDERBROOK LIMITED,

WINTERTIDE LIMITED, TWYNHOLM LIMITED, RIGOL LIMITED, RUSHRID LIMITED, IREO IRISH REAL ESTATE OPPORTUNITIES FUND PUBLIC LIMITED COMPANY, CARRYLANE LIMITED,

CALLSIDE DEVELOPMENTS LIMITED, RADTIP PROPERTIES LIMITED, SENCODE LIMITED, LORNABAY LIMITED,

BALLYMUN SHOPPING CENTRE LIMITED, MONTEVETRO II LIMITED

AND TREASURY HOLDINGS CHINA LIMITED

APPLICANTS

AND

THE NATIONAL ASSET MANAGEMENT AGENCY AND NATIONAL ASSET LOAN MANAGEMENT LIMITED

AND BY ORDER, IRELAND AND THE ATTORNEY GENERAL

RESPONDENTS

AND

KBC BANK IRELAND PLC,

IRISH BANK RESOLUTION CORPORATION LIMITED LUKE CHARLTON AND DAVID HUGHES

NOTICE PARTIES

JUDGMENT of Ms. Justice Finlay Geoghegan on Costs delivered on the 12th day of June 2012

1. In a judgment delivered on 22nd March, 2012, I granted leave to the applicants ("Treasury") pursuant to ss. 182 and 193 of the National Asset Management Agency Act 2009 ("the Act") and 0. 84 of the Rules of the Superior Courts to seek orders of certiorari of two decisions of the first and second named respondents ("NAMA") on the majority of the grounds advanced. I refused leave on grounds of alleged improper purpose and bad faith.

2. This judgment is given on the subsequent applications for costs following the hearing and determination of the leave application.

3. What I refer to as the leave application was originally both an application seeking leave to issue judicial review proceedings and an application for interlocutory relief, primarily an injunction restraining the receivers appointed by NAMA and the first named notice party, KBC Bank Ireland plc. ("KBC") from acting pending the determination of the proceedings.

4. The initial history of the proceedings is of some relevance to the application for costs. On 25th January, 2012, in an ex parte application, Treasury was granted leave to issue a motion returnable for 26th January, 2012, seeking leave to issue the judicial review proceedings and for interlocutory relief. In the initial papers, the only respondents were the first and second named respondents, NAMA. On 26th January, 2012, an order was made joining Ireland and the Attorney General as respondents. Treasury had included amongst the reliefs sought in the statement of grounds a declaration of unconstitutionality of sections of the Act of 2009.

5. On 26th January, 2012, KBC appeared before the Court, and at its request and without objection from Treasury, it was joined as a notice party. Similarly, Irish Bank Resolution Corporation Ltd. ("IBRC"), David Hughes and Luke Charlton, the receivers appointed, also appeared, and without objection of Treasury, were joined as notice parties.

6. Treasury, NAMA, the State, KBC and IBRC all delivered affidavits in advance of the hearing of the leave application. All except IBRC also delivered written submissions in advance of the leave application.

7. At the commencement of the leave application, counsel appeared for IBRC, Mr. Charlton and Mr. Hughes and indicated that they did not with to participate in the hearing of the leave application. The remaining parties participated, though counsel for the State did not ultimately require to substantively address the Court.

8. The leave application lasted six days. There are a number of particular features which are relevant to the determination of the applications for costs. These are:

(i) The leave application is governed by ss. 182 and 193 of the Act and also 0. 84 of the Rules of the Superior Courts.

(ii) Those provisions permit the application to be made ex parte. Treasury, in its initial application, applied to make it on notice to NAMA. It is not now suggested by any party that this was inappropriate, and even it had not done so, the Court had a discretion to require the application to be on notice and given the complexity of the issues involved, might well have done so.

(iii) The application for interlocutory relief was included in the same motion. Counsel for NAMA opened the application upon the basis that it was being pursued. On the fourth day, counsel for NAMA informed the Court that it was not pursuing the application for interlocutory relief.

(iv) The statement of grounds upon which the application was grounded included declarations of unconstitutionality of certain sections of the Act of 2009, albeit on an "if necessary" basis. It also included a claim for damages for breach of statutory duty and/or breach of contract. No application for leave in respect of those reliefs were pursued at the oral hearing; neither were they expressly abandoned. They were not considered in the judgment delivered and no order granting or refusing leave was made in respect of same.

(v) On 31st January, 2012, Treasury delivered an amended statement of grounds in which they included grounds of improper purpose and bad faith relating to the challenged decisions.

9. At a directions hearing before the High Court (Kelly J.), the parties were invited to consider a 'telescoped hearing' and NAMA declined to agree to such a hearing.

Costs' Applications
10. Treasury seeks an order for its full costs of the leave application against NAMA and KBC. Whilst no formal concession was made, it submitted that if there were to be a reduction by reason of it not pursuing the interlocutory application and its failure on the grounds of improper purpose and bad faith, there should only be a reduction of approximately one-fifth. This figure was submitted upon the basis that it was a five-day hearing as stated by all counsel on the costs application. However, on a reconsideration of the transcripts, it is clear that there were six days, albeit the sixth was only a half-day hearing.

11. The primary submission of NAMA is that there should be no order for costs of the leave application between itself and Treasury. It also made the following alternative submissions. The Court should reserve Treasury's costs of the leave application; failing that, insofar as Treasury was to be entitled to any costs of the leave application, it should be an order for costs in the cause. NAMA did not seek any order for its costs of the leave application.

12. KBC submitted that there should be no order for costs as between itself and Treasury and did not seek any order in respect of its costs.

13. The State applied for its costs against Treasury and did so on the basis of a four-day hearing. It submitted that it had been required at the leave hearing primarily by reason of the application for an interlocutory injunction and the reliance by Treasury, in its legal submissions on the principles in Pesca Valencia Ltd. v. Minister for Fisheries [1985] IR 193.

Applicable Law on Costs
14. Section 189 of the Act provides:

"(1) At the conclusion of each interlocutory application in any legal proceedings to which this Chapter applies, the court concerned shall make orders as to costs in respect of the application and, having received submissions from the parties as to the levels of those costs, the court shall measure those costs.

(2) Costs measured under subsection (1) shall be enforceable against the party directed to pay those costs. If the party fails to discharge those costs within 30 days of the court order measuring those costs, the court may on the application of any party to the proceedings or of its own motion impose terms as to the continuation of the proceedings pending the discharge of the costs."

15. The parties were agreed that the leave application was an interlocutory application in a legal proceeding to which Chapter III of Part 10 of the Act of 2000 applied, and hence, s. 189(1) applies.

16. The obligation imposed on the Court by s. 189 is to make now "orders as to costs" in respect of the leave application. Apart from expressly imposing that obligation, s. 189 does not seek to interfere with the nature of the costs order which may be made by the Court. Counsel for NAMA, in my judgment, correctly analysed the potential orders as to costs which the Court may make and therefore should consider as being:

(i) The Court may award some or all of the costs of the leave application to any party against another party or parties.

(ii) The Court may determine that it would make no order as to the costs of one or more of the parties of the leave application. That is 'an order as to costs' insofar as it determines that that party will not recover the costs of the Application against any other party.

(iii) The Court may determine that the costs of one or more of the parties of the leave application would be "costs in the cause". This means that such costs form part of the costs of the proceedings and ultimately will be dealt with in accordance with any order made in relation to the costs of the proceedings.

(iv) The Court may make an order that the costs of the leave application be reserved until the determination of the substantive proceedings.

17. The only uncertainty in relation to the proper construction of s. 189(1) is whether it does permit the Court to make an order that the costs of the application be reserved to the determination of the substantive proceedings. On balance, all counsel were agreed that it did so permit the Court. I have accepted that construction for the purpose of this application. However, I do not propose exercising my discretion to reserve costs as I have formed the view for the reasons stated below that I should make a different order. My tentative view on the proper construction of s. 189(1) is in accordance with the submission of counsel, whilst recognising the clear intent of the Oireachtas, that the Court should determine the issue of costs of an interlocutory application at the time of deciding the application. Nevertheless, it does appear to me that if a Court took the view that the justice of the situation required the costs for stated reasons to be reserved for determination at a later date, that the Court does retain a discretion to do so. The inclusion of applications for leave within s. 189(1) reinforces my view. Nevertheless, I would leave open the possibility of reconsidering this issue if, in another case, submissions were made that the section did not permit of such a construction.

18. The parties, in submission, also relied upon the general provisions as to costs in 0. 99 of the Rules of the Superior Courts and my judgment on the leave application in USK and District Residents Association Ltd. v. The Environmental Protection Agency [2007] 4 I.R. 157, and that of Clarke J. on the substantive hearing of the same case at [2007] IEHC 30, to which I refer below.

Conclusions
19. The application seeking leave formed the greater part of the application the subject matter of the present application for costs. An application seeking leave to issue judicial review proceedings including one to which ss. 182 and 193 of the Act apply raise different considerations to those applicable to the costs of interlocutory applications after the granting of leave. A person who wants to bring proceedings by way of judicial review is obliged to seek the leave of the Court pursuant to 0. 84 of the Rules of the Superior Courts and may also have meet statutory criteria in this instance ss. 182 and 193 of the Act. It is not an interlocutory application which is made as a matter of choice. It is a mandatory step in the proceedings. An applicant who obtains leave pursuant to 0. 84 and to which no other statutory scheme applies will normally have done so on an ex parte application and the long practice of the Court has been to reserve the costs of the application to the ultimate determination of the judicial review proceedings.

20. My understanding of the reasoning behind this approach is that in obtaining an order granting leave, an applicant merely meets the threshold to commence proceedings against the respondent. The Court does not determine an entitlement to substantive relief. Whilst the Court reserves the costs, it almost invariably follows that if an applicant is ultimately successful, it will obtain a full order for costs of the judicial review proceedings, including the reserved costs applicable to the leave application. In practical terms, the order reserving costs is the same as an order that the costs be costs in the cause. If the applicant succeeds substantially, it obtains those costs as part of the costs of the proceedings. Where the application is made ex parte, there is, of course, no question of a respondent's costs of a leave application. If the applicant fails at the substantive hearing, it will probably result in an order for costs against the applicant, but those costs do not include any costs of the respondent to the leave application.

21. Hence, where applications for leave to issue judicial review are brought ex parte, the applicable principle appears to be that an applicant who is successful on the application for leave does not there and then obtain an order for costs against the respondent, but rather, the costs become costs in the cause, although normally expressed to be reserved. This appears a just general principle as leave is a mandatory step required in the proceedings and a successful applicant on the leave application, does not obtain any substantive relief. Its entitlement to costs of this mandatory step in the proceeding should normally depend upon the outcome of the substantive judicial review proceedings.

22. The position becomes more complicated where the application for leave is brought on notice to the potential respondent and the respondent unsuccessfully opposes leave. The Planning Acts make it mandatory to put an intended respondent on notice of a leave application. The application in USK and District Residents Association Ltd. was such an application. On the facts therein, the applicant sought leave on an extensive number of grounds and was only granted leave on limited grounds. I stated in my judgment on the application for costs of the leave application at [2007] 4 I.R. p. 160:

"[11] ... The statutory schemes which require applications on notice for leave to issue judicial review may give rise, on occasion, to an unnecessary double contested hearing with consequential delay and costs for the parties. I accept in principle the submission that where a respondent requires a full leave hearing and leave is granted then in certain circumstances it may be appropriate to award the applicant its costs of the leave application independently of the full outcome of the judicial review proceedings. It may also be particularly appropriate in judicial review proceedings admitted to the commercial list, the purpose of which is,

inter alia

, to provide for effective, speedy, fair and efficient justice whilst avoiding the incurring of unnecessary costs to the parties."

23. The application for the costs of the leave hearing, irrespective of the outcome of the substantive judicial review proceedings was primarily based upon a refusal by the respondent and notice party to accede to a telescoped hearing. The above observations were made in part in response to that application.

24. On the facts in USK, I determined not to make either an order in favour of the applicants or to make the costs, as requested by the respondent, costs in the cause. The facts in USK were very special by reason of the relativity between the large number of grounds included in the original statement of grounds and the limited grounds upon which leave was granted.

25. Clarke J., at the substantive hearing, dismissed the application for judicial review. On the subsequent costs determination, he expressly agreed with the principles I had set out as recorded above. On the facts of the case, he made an award of costs in favour of the respondent and notice party to include the costs of the leave application.

26. The relevant facts herein distinguish themselves from those in USK in three material respects. Firstly, NAMA and KBC are not making any application for the costs of the leave application. Hence, I am only dealing with an application by Treasury for its costs of the leave application. Secondly, whilst Treasury was refused leave on two grounds, it was granted leave on the principal grounds advanced and the relativity between the grounds upon which leave is granted and refused are almost precisely the opposite to those in USK. Thirdly, the application was not only a leave application, but also an application for interlocutory injunctive relief which was not ultimately pursued.

27. I should add to the above that I have taken into account that, under the statutory scheme of the 2009 Act, it was not mandatory to put the respondent on notice of the Application. However, counsel for NAMA and KBC correctly did not lay any emphasis on the fact that they had been put on notice. Given the complexity of the matter, this appears to have been appropriate.

28. Similar to the facts in USK, the respondents were invited to agree to a telescoped hearing. They declined to do so. Counsel for NAMA laid much emphasis on their inability to do so by reason of the grounds of bad faith and improper purpose. I am not convinced by this submission. Those grounds were only added in the amended statement of grounds and also, if the respondents and notice party had wished to participate in a telescoped hearing, they could, for example, have offered to do so on the basis that such grounds were dropped. The Court was not made aware of any such open offer.

29. In relation to Treasury's application for costs, my determination is as follows. The starting point, it appears to me, must be that where an applicant is required by Statute and/or the Rules of Court to obtain the leave of the Court to commence proceedings, then, even if successful in that application, it should not, at that stage, be entitled to an order against the respondents for the costs associated with the mandatory leave application. This appears to me to be correct, even if the application is either required to be made on notice to the respondent or by choice made on notice to the respondent.

30. However, a respondent on whom an application for leave is served does have a genuine choice as to how it will react. It can decide to fully contest the leave application; it can, at the other end of the scale, decide not to object to the leave application and simply let the applicant satisfy the Court that it is entitled to leave in accordance with the relevant scheme, or it can agree to a telescoped hearing.

31. Where a respondent decides to contest a leave application and is unsuccessful in that contest, then, insofar as there have been increased costs due to the respondent's contest, it may be that the Court should make an immediate order for costs (irrespective of the ultimate outcome of the proceedings) in favour of the applicant against the respondent for those additional costs.

32. Where, as in this instance, the applicant, Treasury, decides to also bring an application for interlocutory injunctive relief and then determines not to pursue it or is unsuccessful, then the normal principles in relation to "costs following the event" are the starting point and will normally apply.

33. On the facts herein, it appears to me that the Court should divide Treasury's costs of this application into four parts:

(i) The costs likely to have been incurred even if NAMA and KBC did not oppose the leave application.

(ii) The costs associated with the interlocutory injunctive aspect of the leave application not pursued.

(iii) The costs associated with the additional work required by reason of the contest of NAMA and KBC.

(iv) The costs associated with the unsuccessful grounds of improper purpose and bad faith and those not pursued in relation to damages and alleged unconstitutionality.

34. Further, in determining what order, if any, I should make in their favour against NAMA and KBC, I must take into account the fact that NAMA and KBC incurred some costs in relation to the interlocutory injunctive aspect of the Application and, in the case of NAMA, in relation to the grounds of improper purpose and bad faith.

35. Taking all of the above into account, and to make an order that is workable in practice it appears that the order which I should now make is an order that Treasury is entitled to 50% of its costs of the leave application as costs in the cause against NAMA and KBC. This means that if it is ultimately successful in the proceedings that they will be entitled to include 50% of the costs of the leave application in any costs that it is awarded against NAMA and KBC. If it is unsuccessful in the proceedings, there will be no order for costs against it in respect of the leave application as NAMA and KBC have not sought any order against it.,

36. My reason for the 50% figure is that for the reasons already stated, it appears to me that there would have had to have been in any event a very substantial application to the Court to obtain leave, having regard to the statutory scheme and the complexity of the issues and facts. It appears to me that, insofar as there were additional costs by reason of the opposition of NAMA and KBC, looking at the matter in the round, those additional costs should, on the facts herein, be offset by the costs incurred by NAMA and KBC in relation to the interlocutory injunctive application and the grounds upon which Treasury were not successful.

37. In relation to the State's application for costs, I have determined that Ireland and the Attorney General must be entitled to an order for costs in their favour against Treasury in relation to the defence of the interlocutory application and of the application for leave insofar as it related to the declarations of unconstitutionality of certain sections of the Act of 2009 sought. Treasury ultimately did not pursue either to the end of the leave hearing. The application for the interlocutory injunction was pursued at the opening of the leave hearing and only given up on the fourth day. Counsel for the State has sought an order for costs in its favour upon the basis of a four-day hearing. Whilst, undoubtedly, those issues would not require four days, there is always the difficulty that where a party is involved in only one aspect of the case, it is very difficult to compartmentalise and minimise cost and no one suggested that the State should not be present from the outset and remain during the hearing. In such circumstances, it appears to me that there must be an order in favour of Ireland and the Attorney General against Treasury for their reasonable costs of defending the interlocutory application and the application for leave insofar as it related to the declarations of unconstitutionality based upon a four day hearing. Section 189(2) appears to require this Court to ultimately measure those costs having heard counsel and I will give the parties an opportunity of attempting to agree the quantum of the costs, and if not, to make submissions prior to determining same.

Relief

1. An order that Treasury is entitled to 50% of its costs of the leave application as costs in the cause against NAMA and KBC

2. An order in favour of Ireland and the Attorney General against Treasury for their reasonable costs of defending the interlocutory application and the application for leave insofar as it related to the declarations of unconstitutionality based upon a four day hearing.

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Treasury Holings & Ors -v- The National Asset Management Agency & Ors [2012] IEHC 237 (12 June 2012) URL: http://www.bailii.org/ie/cases/IEHC/2012/H237.html Cite as: [2012] IEHC 237

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