Supreme Court of Ireland Decisions

Clarke CJ
O’Donnell J
McKechnie J
MacMenamin J
Dunne J

Between/

Judgment of O’Donnell J delivered the 27th day of February 2018

1 This appeal arises out of a heavily contested trial which occupied 12 days in the High Court. The essential facts have already been set out in detailed judgments in the High Court and Court of Appeal. For reasons which will become apparent, it is only necessary here to set out in simplified terms the essential issues which arose, which give rise to the specific issues which require to be determined on this appeal.

2 The plaintiffs had purchased a number of franchises from the defendant to operate a courier business in different territories in the broad Munster area. Subsequently two franchises were sold by the plaintiffs without incident, and no issue arises in relation to those transactions. The remaining franchise was terminated by the defendant company, lawfully it is accepted, by notice under clause 13 of the contract between the parties, which dated from the 22nd of December 1995. That unusual provision is central to the dispute between the parties. It provided either, that the defendant company would introduce a purchaser for the franchise, or alternatively pay an amount, to reflect the fact that it now in theory had recovered the franchise for the area and could sell it on. Either way it meant that the plaintiffs would recover something akin to market value for the franchise. The terms of clause 13 were as follows:-

“If Notice is given by the owner under Clause 2 hereof then the owner shall purchase or procure a purchaser of the business from the Operator at a sum equal to the purchase price set out in Schedule 3 hereto plus such further sum as is agreed between the parties to fairly reflect the turnover of the business carried on by the Operator as at the date of the Notice”.

Even though the clause appeared to have been operated on two prior occasions when a purchaser was introduced, it seems clear that the terms of clause 13 leave scope for considerable debate as to the precise manner in which it should be applied. The termination of the relationship between the plaintiffs and defendant was contentious. Two sets of proceedings were issued by the plaintiffs and subsequently consolidated. The plaintiffs’ initial claim sought in excess of €1 million damages and payments pursuant to the contract. A substantial component of this claim was an amount claimed in respect of clause 13, being the amount the defendant was obliged to pay in purchasing the franchise from the plaintiffs on termination. There was some additional claims for sums alleged to be due under the contract. In addition however, the plaintiffs also claim that the 18 month restraint of trade provision on termination was invalid, and claimed damages for breach of certain provisions of the contract, and furthermore claimed damages for fraud.

3 The High Court Judge (Gilligan J) delivered a careful judgment in which he rejected the challenge to the restraint of trade clause and also dismissed the claim for fraud. However, he awarded the plaintiffs a figure of €255,307 under clause 13, a further figure of €31,900 in respect of the under weighing of parcels known as the “Parcel Line” consignments (which figure had been agreed between the parties subject to a determination of liability to pay), and a further award of €8,680 in respect of the “Pulsar” account. The High Court dismissed certain other claims. The High Court Judge did not award interest observing that the parties had not provided for interest in their contract. At a further hearing it was decided that VAT was payable on the first two components of the award, that is the clause 13 payment and the Parcel Line payment, but was already included in the Pulsar amount. Accordingly, the total award came to €356,200 being €308,921 (the total including VAT in respect of clause 13), plus €38,599.50 (the Parcel Line claim including VAT) and €8,680 being the Pulsar amount which was VAT inclusive. The court also awarded the plaintiffs 60% of the costs applying the Veolia approach (Veolia Water UK Plc v Fingal County Council (No. 2) [2006] IEHC 240; [2007] 2 IR 81, Clarke J), which provides for apportionment of costs where if a winning party has not succeeded on all issues which were argued before the court, a court should consider whether it is reasonable to assume that the costs of the parties in pursuing the set of issues before the court were increased by virtue of the successful party having raised additional issues upon which it was not successful, and if so, may reflect that fact in the award of costs.

4 The total award as set out above was, therefore, €356,200. However the defendant had made a number of efforts to suggest a compromise of the claim. It had sent a “Calderbank” letter with certain offers. There had been a failed attempt at mediation. Most significantly for the present proceedings however, the defendants had on the 6th of January 2011 made a lodgement of €253,075 expressed to be “enough to satisfy all of the plaintiffs claims in these consolidated proceedings” together with a denial of liability. On the 4th of October 2011, the defendant lodged an additional sum of €109,168.23 again specified as “enough to satisfy all the plaintiffs claims in these consolidated proceedings” together with a denial of liability. The total lodgement at the date the hearing commenced in June 2012 was therefore €362,243.23. On its face therefore, the total award of €356,200 was just over €6,000 short of the sum lodged. Accordingly the defendants contended that the provisions of Order 22 Rule 6 of the Rules of the Superior Courts should apply, and that the plaintiff should recover its costs until the date of the topped up lodgement, and that the defendant should recover all the costs of the proceedings thereafter, which would of course have included all the costs of the trial. However, the High Court Judge accepted the plaintiffs’ submission that the lodgement had not complied with Order 22 Rule 1(5), in that the lodgement did not specify the causes of action in respect of which the payments were made and the sum in respect of each cause of action, and the court had not otherwise permitted a single lodgement. Accordingly, the High Court considered the lodgement to be a nullity. The outcome of the High Court case was that the plaintiffs recovered the sum of €356,200, with no interest thereon and 60% of their costs, the court having determined that the lodgement made was ineffective.

5 I have set out these facts briefly because this appeal is not concerned with the substantial and troublesome issues which concerned the High Court hearing such as the allegation of fraud, the true interpretation of the arrangement between the parties in respect of the Parcel Line consignments, the validity of the covenant in restraint of trade included in the contract, or the interpretation and application of clause 13 of the contract. There is moreover no appeal against the award of €356,200, nor any cross-appeal. What remains now in contention relates to the validity of the lodgement, the question of interest, and the related question of whether interest should be included in the calculation of a lodgement. The consideration of such ancillary issues are often dealt with speedily at the conclusion of a case and may appear like items of detritus in comparison to the major battle which had been fought. However, not only are the issues themselves of some complexity, they are also undoubtedly important, and deserve the same attention from the court and practitioners as matters of substance involved in the proceedings. The most important reason why this is so, is because of their impact on costs, which in a case such as this, can be very considerable indeed. If for example, the defendants succeed on their arguments on this appeal, the result would be that the defendant would recover all the costs of the proceedings after the date of the topped up lodgement from the plaintiff. Inevitably this would include all the costs of the trial. There seems little doubt that this would simply obliterate the award of damages which the plaintiff recovered, and mean that the proceedings which had ostensibly resulted in a substantial award in favour of the plaintiffs, would, in reality have been a financial disaster. The decision on these issues is therefore every bit as important in real terms to the parties, as the substantial issues of law and fact which occupied so much time in the High Court.

The Court of Appeal decision
6 Both parties appealed the decision of the High Court in respect of these matters. The defendants appealed the determination that the lodgement was ineffective, and the plaintiff for its part appealed the High Court’s refusal to award interest pursuant to the Courts Act. These questions raised a third issue, namely that if both parties were successful on the issues they had appealed, that is if the defendants succeeded in establishing that the lodgement made was valid and effective, but the plaintiff succeeded in establishing that the High Court ought to have awarded interest, whether such interest should be taken into account in determining whether the plaintiff had succeeded in obtaining more than the lodgement.

7 The Court of Appeal overturned the High Court’s exercise of it discretion in refusing to award interest. While acknowledging that the fact that the contract did not provide for interest may be a relevant factor in the exercise of that discretion, the court noted that s.22(2)(b) specifically precluded the court from making an order under s.22 where there is a contractual right of interest on the debt concerned. If therefore the absence of a provision fixing the interest to be paid precluded the award of interest pursuant to the Courts Act, it would mean that interest could never be recovered under the Courts Act in a contractual claim albeit that such claims appeared in principle to be an area in which it was most likely that interest should be recoverable. Having made some observations on the relative paucity of guidance as to the award of interest, the court decided firstly, that interest should only be awarded on the amounts awarded free of VAT. The court also decided that interest should be awarded under the Courts Act at the applicable rate of 8%, only from the date of commencement of the 2010 proceedings, on the basis that they had not really been pursued with any vigour prior to that date. In relation to the clause 13 payment, there was a distinction between the €95,000 purchase price repayable, and the sum to be calculated by reference to turnover. Nevertheless the court concluded that interest should be awarded on the total amount (excluding VAT) from the date of the 2010 proceedings. Accordingly, the court concluded that the trial judge ought to have awarded the plaintiff an additional sum for interest at 8% pursuant to s.22 of the 1981 Act so as to provide that the amount for which judgment was granted on the 30th of November 2012 was the sum of €413,525 being an increase of €57,325 attributable to the award of interest.

8 The court then had to consider whether that figure could be taken into account in considering the lodgement. The Court of Appeal referred to the decision of the Court of Appeal of England and Wales in Jefford v Gee [1970] 2 QB 130. There, Lord Denning MR had observed that a claim for statutory interest was not a cause of action in itself, and only arose on a substantive award being made by the court. Interest was more akin to something like costs, contingent and parasitic upon the outcome of the claim. It followed that a claim for statutory interest did not require to be pleaded. Lord Denning concluded that an amount in respect of interest could not be included in a lodgement, since it did not itself constitute a cause of action, and the relevant rules provided that a lodgement was made in respect of a cause of action. It followed that it could not be taken into account when considering if the plaintiff had beaten the lodgement. For that purpose the court should simply compare the amount of the lodgement with the amount awarded in respect of the cause, or causes of action. The Court of Appeal here however considered that the observations of Lord Denning were obiter, and that since statutory interest, if awarded, would form part of the award, accordingly it could be taken into account in considering if the plaintiff had “not been awarded more than the amount paid into court” for the purposes of Order 22 Rule 6. It followed from this conclusion that the issue as to the validity of the lodgement itself did not arise, since even if the lodgement was considered valid and effective, on this approach, the plaintiff had succeeded in being awarded more than the lodgement. However, the Court of Appeal did refer to the issue and voiced some concerns as to the true interpretation of Order 22 and recommended that the provision be reviewed by the Superior Courts Rules Committee.

9 This Court granted leave to appeal on all issues on the 30th of March 2017. The proper functioning of the rules of court in relation to these matters is a matter of general importance since they may arise in many cases, and in any event as this case shows, may have very substantial financial consequences. It is desirable therefore to attempt to provide some clarity. We have been greatly assisted by the extensive researches of counsel on each of the issues. However, it must be acknowledged that, having considered the extensive material submitted and the comprehensive arguments addressed, none of the questions are easy and there is much to be said on either side of the argument.

10 A casual observer might consider that when liability is determined and damages assessed or appropriate orders made, that the work of a court is substantially concluded. But there is now an almost bewildering array of rules, statutory provisions and court decisions that can come into play at the conclusion of a case all of which reflect the significant burden of costs, the need to ration the limited court resources available, and the desirability of encouraging a reasonable and responsible approach by litigants, not only in their own interests, but also in the interests of other court users. If for example the standard rule were merely that costs must follow the event, a plaintiff who has a strong claim in at least one respect has an almost perverse incentive to bring pressure to bear on a defendant by mounting as broad and expansive a claim as possible. A defendant knowing that he or she may be liable for their own costs and the plaintiffs’ costs will often find it easier to pay an increased amount in settlement to the plaintiff over and above what the plaintiff might be entitled to, rather than incur the costs of litigation. This in itself can be a real injustice. The lodgement procedure in Order 22 is one method of seeking to create a balance of risk between the parties. But in addition to this procedure which has been in existence for many years, there are now provisions dealing specifically with costs in personal injuries actions where offers are made between the parties, provisions relating to the effect of Personal Injury Assessment Board assessments, other provisions relating to mediation, and still others which provide for the allocation of costs where a claim fails to reach the jurisdictional limits of the relevant court. Finally, there is the Veolia jurisdiction, already discussed. It is important that these matters should operate in as coherent and consistent a way as possible in order to achieve the object of encouraging the resolution of disputes where that is possible, and where not, that time and costs are incurred only on issues which it is necessary to resolve.

Interest pursuant to s.22 of the Courts Act 1981.
11 It is rudimentary economic theory that money has a time value. The person who has a sum of money over a period can obtain a benefit either in interest on that sum if invested, (or other return on investment) or interest avoided because that sum does not have to be borrowed. By the same token a person who has not received money incurs a cost, in particular if they have had to borrow. By 1981 a decade of inflation had shown that in many cases an award of damages, particularly in commercial or contractual situations, could fall well short of a full remedy for a wronged party because the real value of the award at the conclusion of the proceedings could be substantially less than that monetary amount had been worth in real terms at the time of the breach of contract or the failure to pay. Accordingly s.22 gave a discretion to courts to make an award of simple interest at a rate fixed from time to time under the Debtors Ireland Act 1840. At the time of the introduction of the Act that rate was 11%. It was subsequently reduced to 8%, which was the applicable rate at the time of these proceedings, but has now been reduced to 2% by S.I. No 624/2016 Courts Act 1981 (Interest on Judgment Debts) Order 2016.

12 In the UK a similar provision had been part of the statute law since s.3 of the Law Reform Miscellaneous Provisions Act 1934, which was significantly amended by s.22 of the Administration of Justice Act 1969. However s.22 of the Irish Act did not simply reproduce the provisions of the UK legislation. First the UK legislation allowed the court to determine the appropriate rate of interest. Furthermore the UK provisions had initially permitted the award of interest in respect of damages for personal injuries. Indeed, the 1969 amendment made such an award of interest mandatory in such cases. By contrast, the 1981 Act specifically excluded the power to award interest on general damages and personal injuries. The thinking at the time may have been that awards in general damages had an inbuilt inflationary mechanism in that damages were awarded to reflect the present value of money, rather than that at the time of the accident. If so, this illustrates the extent to which the impact of inflation had influenced the thinking behind the introduction of the power to award statutory interest. But even in circumstances where damages are static, or even reducing, the logic that money has a time value should in theory be reflected in an award of interest. Interest is not simply awarded as a remedy against inflation, it reflects the fact that there is a cost in not having the money for a certain period. This thinking appears to be reflected in the UK legislation. On the other hand, there is perhaps something odd in the suggestion for example that a defendant in a personal injury action ought to have paid damages at the date of the accident when they could not reasonably have been assessed at that time, and were not assessed until the outcome of the case. One other important distinction with the regime in the United Kingdom is that interest is fixed by statutory instrument in Ireland, where as in the United Kingdom the interest rate can be fixed by the court, which leaves a certain flexibility in the award of interest which is not possible in Ireland, although the court in Ireland is at large as to the period in respect of which it can award interest.

13 The differences between the United Kingdom regime, and that established under the 1981 Act, and the fact that the statute has excited little comment or attention, illustrate the fact perhaps, that the award of interest has always been treated in a largely discretionary manner by trial courts, and the exercise of that discretion has rarely been interfered with at appellate level. One feature which has contributed to that ad hoc approach is the essential crudeness of the calculation permitted under s22. Whether an award of interest compensates a plaintiff for loss may depend upon the financial circumstances of the plaintiff, whether money was borrowed and if so at what rates. Even then the fact that the interest rate is fixed by statutory instrument, and the interest is simple rather than compounded, and the fact that a court can fix the period (but not the rate) of the interest all suggests that the assessment of interest is not a precise science, and there is an element of guesswork as to whether the award of interest over or under compensates the success of a plaintiff, or instead approximates to fair compensation. I suspect that trial courts have been aware of the range of variables involved, including the speed with which proceedings are advanced, and have attempted to award interest to make a crude, but as fair an assessment as possible, to the extent to which it is necessary to compensate the plaintiff, but not impose an undue burden on defendants. This has been particularly difficult in those periods when there has been a significant disparity between the rate of interest fixed under the Debtors Ireland Act, and commercial rates of interest available in the market. However, in the nearly 40 year’s lifetime of the provision, which has been regularly invoked in courts, it has been the subject of little extended judicial analysis. Given the broad discretion afforded to the trial judge, the blunt tools available, and the fact that the trial judge will necessarily have a much closer understanding of all the nuances of the case, I would be slow to interfere with an award of interest unless it clearly departed from sense or principle. The case for reticence may be particularly strong in a low interest environment, and when the rate fixed in relation to the 1981 Act is also low.

14 Here the High Court refused to award interest, but the Court of Appeal reversed that decision and awarded more than €50,000 by way of interest. The Defendant has appealed that decision. It is necessary therefore to consider the principles which should apply. Only two reported cases are of any assistance. In Mellowhide v Barry [1983] ILRM 152, Finlay P (as he then was) delivered a considered judgment on the operation of the Act, shortly after it had come into force. The key feature of the case was the determination that the terms of the Act meant that interest could only be awarded by a judge. Accordingly it was not possible for interest to be awarded on judgments entered in the Central Office in default or by the Master of the High Court. This was a serious flaw given the fact that many of the cases where interest should most readily be awarded, such as simple contract debts which were not denied, were often the type of case where judgment would be obtained in default. Finlay P observed that this was an injustice that ought to be addressed urgently, but as it happens it has not been dealt with. The learned judge also observed that the then rate fixed under the Debtors Ireland Act was 11%, and which it is noteworthy he stated was much less than the commercial rate of interest at the time. In terms of the operation of the section he considered that “where a debt is due as the result of an ordinary trading or commercial transaction it would appear to me that the debtor delaying the due payment of his liabilities is clearly and in a sense intentionally depriving his creditor of the use and value of the money concerned”. However, he recognised that a court had a discretion, and plaintiffs might be well advised to give evidence as to the effects and consequences of a failure or refusal of the defendant to pay, so as to justify a claim for interest. On the other hand, a defendant might be well advised to file affidavits concerning “the position and facts and merits of the case which might lead the court to refuse to exercise its discretion”. The reference in this judgment to “ordinary trading or commercial transactions” may be the source of the perception that in general, in commercial cases, interest should follow. However, it is apparent from the full judgment, and in particular the reference to the “facts and merits of the case” that in fact Finlay P considered that the discretion was much more wide-ranging.

15 In Concorde Engineering v Bus átha Cliath [1995] 3 IR 212, judgment had been obtained in proceedings by the plaintiff company whose property had been damaged by one of the defendant’s buses which had negligently collided with the property. At the time of the judgment no interest was sought or awarded. An application was made after perfection of the order for interest on the award. McCracken J refused to make an order because among other things he did not consider that it was appropriate to do so after the formal order had been drawn up. However, he made some general observations on the merits of the claim, and concluded that he did not consider that interest ought to be awarded. He observed that there was authority that in a purely commercial case interest should in general be awarded (I take this to be a reference to the passage in Mellowhide, just quoted). However, he did not consider that principle applied to the particular case. In the Court of Appeal in this case, Finlay Geoghegan J considered that the statement that in a purely commercial case interest should in general be awarded was overly broad, and if taken as a general proposition I would agree. However, the decision in Concorde in fact illustrates the breadth of the discretion which the court considered could properly be exercised in such cases. After all, where property damage has occurred, the plaintiff, or more probably its insurers, may have had to pay for the repair of the damage and will have incurred that debt and been at the loss of that money until the judgment. The fact that McCracken J considered however that interest should not routinely be awarded in such a case, is illustrative of a relatively broad discretion rather than a view that interest should be awarded in any particular class of case as a matter of course.

16 Here, the Court of Appeal considered that the trial judge had been in error in refusing interest because the trial judge had observed that it had not been provided for by the parties in the contract. The Court of Appeal pointed out, that the 1981 Act specifically precludes the award of interest where interest is provided for by contract. Therefore if the absence of such a provision meant that interest should not be awarded under s.22, then interest would never be recoverable, at least in contractual matters. However, I think it is possible that the trial judge meant perhaps no more than it was a relevant consideration in the exercise of the court’s discretion that the parties relationship was such that they had not otherwise provided that interest should accrue on payments not made. As the Court of Appeal recognised, this is indeed a relevant consideration.

17 As already set out, I would be slow to review the exercise of a trial judge’s discretion. A judge may have a very good sense of the manner in which the case has proceeded, how diligently it has been prosecuted, and indeed the extent to which the case can be said to be one which is clear cut. To the extent that any claim can be said to approximate to a claim for a price paid or a debt due, then interest might relatively routinely be awarded. In such cases however, it may still be appropriate to take account of how diligently the proceedings have been prosecuted. In this case for example the Court of Appeal directed that interest should only accrue from the date of the commencement of the second set of proceedings, and I would respectfully agree. In general therefore, to the extent to which it can be said that at the conclusion of a case a trial judge can conclude that the defendant ought to have paid the money earlier, then interest could properly be awarded. Thus if the defendant has refused to pay a contractual price, and in particular in those cases in which it has raised a counter claim for unliquidated damages, which has been dismissed, it would be appropriate to award interest unless other features are apparent. On the other hand, where there is a genuine dispute which requires to be resolved, and perhaps some merits on either side, it may be much more difficult to say that the sum awarded ought to have been paid at a much earlier date, and therefore that interest should accrue. I consider that this approach is broadly consistent with what is said in Mellowhide, and with what was done in Concorde Engineering.

18 I would distinguish therefore between the different amounts in this case. Here, the Parcel Line claim was in the nature of a commission which arguably should have been paid once the parcels were delivered. Similarly, the Pulsar claim appears a straightforward claim under the contract. The bulk of the claim for interest however concerns clause 13. That clause distinguishes between two amounts. The figure of just over €95,000, was a figure agreed as the portion of the purchase price attributable to the relevant franchise area, which was always obliged to be paid no matter what the final figure under clause 13 was. Interest could properly be awarded in all three of these items. Accordingly I would not interfere with the Court of Appeal’s decision to award interest in respect of these three items. However, the bulk of the complaints concern the amount assessed as due under clause 13. That clause is somewhat imprecise. The parties took very different views as to what it entailed. At a minimum I do not think it could be plausibly said that the defendant ought to have paid the amount assessed at a much earlier date, precisely because the amount due had not been assessed until the outcome of the High Court proceedings. Clause 13 called for an agreement between the parties, and that was not forthcoming. In default of agreement it called for independent assessment of the sum. To put it at its lowest, I do not think that that lack of agreement can be laid at the door of the defendant alone so that it would be appropriate to determine that it should be required to pay interest. Indeed, the defendant made a number of efforts to agree a mechanism for assessment of that amount, and it appears that the plaintiff among other things did not accept the method of assessment of the amount due as a multiple of an adjusted profit figure, which was the method the High Court ultimately adopted. In general, it is apparent that the plaintiff took a much more ambitious view of what should be paid under clause 13. Far from the sum being one that was ascertained or ascertainable at the date of termination, it was one which required a process of assessment and determination before it was, eventually, ascertained. In the circumstances, I think the trial judge was fully entitled not to award interest on this aspect of the claim, and I would accordingly set aside this aspect of the Court of Appeal decision. By my calculation this would mean substituting an award of interest of €26,004.26 for the award of €57,325, but I would give the parties liberty to apply in this regard should they agree that the amount should be different, or if there is any dispute as to the correct amount to be calculated under this heading.

Inclusion of Interest in Lodgement
19 In the circumstances of this case, the award made by the court is so close to the lodgement figure (€362,243.23) that even the reduced award for interest (€26,001.26), which I would allow, would have the effect of bringing the total amount awarded to (€382,201.26) and therefore over the lodgement figure. Accordingly, it becomes necessary to consider whether it is appropriate to take into account the amount awarded for interest for the purposes of the operation of Order 22. This in turn involves a consideration of the decision of the Court of Appeal in England and Wales in Jefford v Gee [1970] 2 QB 130.

20 Order 22 Rule 1 provides so far as is relevant:

“In any action for a debt or damages … the defendant may … pay into Court a sum of money in satisfaction of the claim or (where several causes of action are joined in one action) in satisfaction of one or more of the causes of action.”

Order 22 Rule 6 provides the key mechanism which applies when the lodgement becomes effective:

“If the plaintiff does not accept, in satisfaction of the claim or cause of action in respect of which the payment into Court has been made, the sum so paid in … and is not awarded more than the amount paid into Court, … then, unless otherwise ordered for special cause shown, the normal order made would be to allow the plaintiffs’ costs only until the date of the lodgement and moreover allow the defendant the costs thereafter.”

This is a very significant provision. It illustrates how where it is operated successfully, a defendant can alter the issue in the case (at least for the purposes of costs) from whether the plaintiff is entitled to succeed and for how much, to the question whether the plaintiff can recover more than the sum indicated in the lodgement.

21 In Jefford v Gee the Court of Appeal of England and Wales, was asked for guidance on the principles applicable to the award of interest shortly after the coming into force of the 1969 Act. In the particular case there had been a lodgement although the award made exceeded it without having recourse to the figure for interest. Nevertheless, one of the issues which arose was whether interest was to be taken into account in considering whether the plaintiff had not been awarded more than the amount paid into court for the purposes of the equivalent in England and Wales of Order 22 Rule 6. This in turn depended on whether the plaintiff could properly make a lodgement against the interest component of any proceedings. In giving the decision of the court Lord Denning MR relied in part on the fact, already mentioned, that a claim for interest need not be pleaded. (That it should be said, is also the position in Ireland. See: Mellowhide.) Lord Denning continued:

“It is plain that it is not itself a cause of action. It is no part of the debt or damages claimed, but something apart on its own. It is more like the award of costs than anything else. It is an added benefit awarded to the plaintiff when he wins the case.

Such being the character of interest, we do not think that the defendant, can, or should, make any payment into court in respect of it. It is not claimed by the plaintiff in the pleadings, the defendant cannot be expected to make a payment into court in respect of it … Even if it is claimed, it is no part of the cause of action. The defendant is only allowed to make a payment into court “in satisfaction of the cause of action: see RSC Order 22 Rule 1. Interest being no part of the cause of action, he cannot make a payment in respect of it.

The defendant should, therefore, in future make his payment into court in the same way as he always has done, namely, an amount which he says is sufficient to satisfy the cause of action apart from interest. If the plaintiff recovers more (apart from interest) he gets his costs. If he recovers no more (apart from interest) he does not get his costs from the date of the payment in and he will have to pay the defendant’s costs. The plaintiff will, of course, in either case, get the appropriate award of interest irrespective of the payment into court.”

Lord Denning went on to consider the problem which might arise where a plaintiff was willing to accept the amount of the lodgement in satisfaction of the claim but also contended that he or she was entitled to interest. In such a case Lord Denning suggested that the claim would go on unless interest was paid. It would therefore be in the interests of both parties to compromise on interest. A slightly more sophisticated version of this approach was suggested in Butler v Forestry Commission (1971) 115 Sol J 912. In that case it was suggested that the plaintiff could write a letter indicating a willingness to accept an amount and would accept the lodgement if the defendant would pay the appropriate interest. If the defendant refused to do so, and the plaintiff then recovered interest but the award in respect of the cause or causes of action failed to beat the lodgement, that would nevertheless be an appropriate circumstance for the court to “otherwise order” for special reason under Order 22 Rule 5, and depart from the rule requiring the defendant to recover the costs from the date of the lodgement, and instead allow the plaintiff the full costs of the proceedings.

22 In the Court of Appeal Finlay Geoghegan J observed that the portion of Jefford v Gee dealing with interest on lodgements could be said to be obiter since as already observed the award there exceeded the lodgement without considering the interest figure. As already set out, she concluded that interest was properly taken into account under Order 22 Rule 6. Interest certainly formed part of the “award” and therefore it could be said that the plaintiff in this case, after the award of interest by the court was taken into account, had been awarded more than the amount paid into court.

23 The matter was very fully argued in this Court. Counsel for the plaintiff brought to our attention two Canadian cases which had come to a different outcome from Jefford v Gee. In Legros v Evans (1977) 78 DLR (3d) 752, McDonald J observed that Rule 37(1) of the Supreme Court Rules in British Columbia now provided “at any time before the commencement of the trial a defendant may pay into court a sum of money in satisfaction of the whole or part of a claim for which the plaintiff sues”. McDonald J considered that “claim” in this context could not be equated to “cause of action” and on that basis distinguished Jefford v Gee. Counsel for the plaintiffs/respondents in this case urges that the same distinction may be made between the provisions of Order 22 Rule 1 of the Irish Rules and the provisions of the Rules of Court of England and Wales which applied in Jefford v Gee. In Kelner v Craig (1979) 103 DLR (3d) 244, the British Columbia Court of Appeal adopted the reasoning in Legros v Evans and disapproved of an earlier decision, Evans Products Limited v Crest Warehousing Limited (No. 2) (1978) 6 BCLR 177, which appeared to adopt the same approach as that of Lord Denning in Jefford v Gee. Counsel also referred to the report of the English Law Commission (Law Comm No. 88, on the Law of Contract and Interest (CMND 7229 June 1978)). The Law Commission had initially welcomed the approach in Butler v Forestry Commission as solving the potential problem for plaintiffs if interest was not included in the award for the purpose of considering whether the plaintiff had received more than the amount lodged in court. However, at paragraphs 194-197 of the report, the Commission reconsidered the problem and concluded that most if not all of the difficulties would be solved by a new rule of practice that a payment into court was to be construed as including interest unless the defendant indicated otherwise. In this regard it appears that the Commission was influenced by considerations of practicality rather than principle. It had been informed that notwithstanding the observations in Jefford v Gee, monies paid into court were usually calculated to include interest, and it seemed more convenient therefore to adopt a rule that payments into court should be inclusive of interest rather than exclusive of it.

24 For contrasting reasons I do not think any assistance is gained by considering whether the observations of Lord Denning are to be treated as obiter or not. First the case was one treated as a test case where the Court itself sought the assistance of an amicus curiae. Clearly the decision was a carefully considered one, intended to give general guidance. The observations in question were the subject of the same extensive deliberation and consideration as the other related aspects of the case. On the other hand the decision is clearly not binding on any Irish court and it is therefore strictly speaking irrelevant whether the observations are characterised as obiter or part of the ratio. The question is not therefore whether the observations are obiter rather it is whether the reasoning is persuasive. As I have already said, this question is a very finely balanced one. On the one hand the recovery of statutory interest is not a claim which requires to be pleaded and indeed does not even arise until the determination has been made in favour of the plaintiff on some cause of action. It is therefore not something which can be readily described as a cause of action or claim in terms of Order 22 Rule 1. On the other hand, once granted, it undoubtedly forms part of the “award” which is the word specifically used in Order 22 Rule 5. There is therefore a tension between Order 22 Rule 1 and Order 22 Rule 5. Either a broad interpretation of “claim” and “cause of action” under Order 22 Rule 1 must be adopted in light of the meaning of “award” in Order 22 Rule 5, or conversely, the concept of “award” for the purposes of Order 22 Rule 5 (which after all is only relevant for the purposes of considering whether the special rule on costs must apply) must be read more narrowly to extend no further than the claim or cause of action contemplated by Order 22 Rule 1.

25 Even if this issue is approached from a purely practical point of view there is again something to be said on either side. There is a potential injustice to a plaintiff willing to take the lodgement but who does not wish to be deprived of interest, to which, for these purposes it must be assumed the plaintiff is entitled. It is true however that that can be avoided but only by the mechanism of writing the form of letter contemplated in Jefford v Gee and Butler v Forestry Commission. On the other hand, there is a potential injustice on the part of a defendant if obliged to make a lodgement against interest. Since a lodgement is at least initially made at the time of delivery of the defence, such a lodgement if obliged to include interest ought to attempt to include interest for a period which has not yet accrued. If so, the defendant would be bound to lodge more than the plaintiff, on this hypothesis, was entitled to at the time of the lodgement, and a plaintiff who accepted such an amount would be unjustly enriched, and receive a windfall. Again it may be said that this is something less than a flagrant injustice, which may in any event be tempered by the topping up procedure. Furthermore as long as the interest rate is 2% and that is broadly in line with market rates, the amounts involved will rarely be critical. Nevertheless the issue raised is one of principle, which should be answered in the same way, whatever the rates of interest or the principal sum involved

26 Ultimately, I am influenced first by the unusual nature of the recovery of statutory interest. I think that Lord Denning’s approach is at least logically correct. More importantly, however, the essential function of a lodgement is to provide a mechanism to determine for the purposes of the allocation of costs, whether a plaintiff ought to have pursued the claim notwithstanding the offer implicit in the lodgement. The assessment of damages in most cases can be quite an imprecise exercise, but if a lodgement relates only to the cause or causes of action, that at least provides the same yardstick or datum which allows the court to compare like with like: the lodgement made against the cause of action and the court’s independent assessment of the amount to be paid in that regard. Introducing interest into that calculation necessarily skews the comparison, and obscures the exercise required to be adopted under Order 22. If a plaintiff failed to receive an award of damages that exceeded the amount of the lodgement in that regard, but nevertheless obtained a total award that did, simply because of the award of interest, some of which may have been for a period after the making of the lodgement, then at least prima facie, the plaintiff did not act reasonably in pursuing the claim in the face of the lodgement. Accordingly, and on balance I would somewhat reluctantly adopt the same approach as that advocated by Lord Denning in Jefford v Gee. It must only be rarely that the award of interest will be decisive, and rarer still that it is the feature which leads the plaintiff to refuse to accept a lodgement. In most cases, a plaintiff will refuse to accept a lodgement because he or she considers or is advised that they will likely recover more for damages than is lodged. In most cases where the argument that interest should be added when calculating the total award for the purposes of a lodgement arises, the award for damages must of necessity be very close to the lodgement amount, and this argument is deployed as a way of avoiding the somewhat draconian consequences of the order as to costs contemplated by Order 22 Rule 6. If this is indeed a consideration (and I think it is), I would prefer that it would be squarely addressed rather than dealt with indirectly and somewhat randomly by the happenstance that an award of interest might bring the award over the award figure

27 In my view the strongest argument against this interpretation is not one of principle or interpretation but rather one of practicality. As observed by the English Law Commission, it may just be simpler to lodge against interest. There may be so many variables in most cases that interest will rarely be a decisive component and in such circumstances, it may be easier to make the determination of the effectiveness of the lodgement a simple consideration of whether the total award exceeds the total lodgement. This however, involves a consideration of practice and practicality in many more cases than the present. It is accordingly something which may usefully be considered by the Superior Court Rules Committee which contains representatives of the practising profession, and may also receive submissions from interested parties. For the moment I would however adopt the same approach as that suggested in Jefford v Gee.

Lodgement
28 In those circumstances it is accordingly necessary to consider if Order 22 Rule 5 should take effect. Here, the High Court considered that the total award of €356,200 made, fell short of the amount lodged, €362,243.23. However, the High Court also found that the lodgement was void and ineffective. While the Court of Appeal did not have to decide this issue, given the conclusion it reached on the question of interest, it seems that the Court of Appeal was concerned that the implications of such a conclusion that a single lodgement was ineffective in this case, and recommended that the provisions of the rules be reviewed by the Superior Court Rules Committee. If so, such concerns are entirely understandable. Most lawyers would, I think, have considered that the lodgement here was perfectly appropriate and valid, and that there would be little practical benefit, and potentially confusion and worse, if a defendant was obliged to break an individual lodgement in to several parts and seek to allocate those lodgements against multiple causes of action which may have been pleaded. The lodgement here was plainly an amount offered to satisfy the plaintiffs’ claim and bring the proceedings to an end. This was clear from the context, but in any event was set out explicitly at the time the lodgement was made and topped up. On each occasion it was expressed to be “enough to satisfy all the plaintiffs’ claims in these proceedings”.

29 Whatever the logic in Victorian times when the distinctions between different causes of action was much more clearly defined, I find it difficult to imagine circumstances in which justice would be assisted now by a general rule requiring separate lodgements against separate causes of action. It is also difficult to see how this would work effectively. If in this case for example, the lodgement had allowed slightly less for the amount ultimately awarded under clause 13 and slightly more for the Parcel Line claim, how would the Court have approached the question of costs? Would the plaintiff be entitled to recover the bulk of the costs even though the total award was less than the total lodgement? The fundamental issue addressed by the lodgement rules is whether the case should have proceeded or should have been resolved. There might be exceptional cases where the defendant might wish to make a lodgement referable to separate causes of action and still others where a plaintiff could contend that they were genuinely disadvantaged by a single lodgement, but these are likely to be unusual cases in respect of which specific provisions should be made rather than establishing the norm. In any case, however an award is calculated, a single amount is payable, and if that amount or more was already offered, then prima facie it was unreasonable to proceed. But the making of separate lodgements might give rise to the possibility of some lodgements being accepted and others refused. Again, apart from the fact that this would not achieve the object of the lodgement procedure which is to encourage settlement of litigation as a whole, it might have a positively damaging effect. Whatever may have been the position in Victorian days, the law on causes of action contemplates more complex causes of action, and a significant degree of overlap between them, and pleadings nowadays are less precisely delineated: it is common place for facts to be pleaded and alleged that such facts give rise to a number of overlapping causes of action. If separate lodgements are required to be made, then a plaintiff could accept one lodgement and then maintain that he or she was still entitled to ventilate some or all of the facts alleged as giving rise to an entirely separate cause of action in respect of which the plaintiff had not accepted a lodgement. Such a scenario, if it were possible would defeat the purpose of the lodgement procedure, and might make defendants unwilling to lodge, at all. Again, this would be inconsistent with the objective of the process.

30 On a first reading of Order 22, I do not see anything that requires a court to hold that where more than one cause of action is pleaded a defendant cannot make a single lodgement (at least without leave of the court). On its face indeed Order 22 Rule 1 appears to contemplate a single lodgement. It provides that “in any action … the defendant may … pay into court a sum in satisfaction of the claim …” (emphasis added). The Rule continues that where there is more than one cause of action, the defendant may make a lodgement “in satisfaction of one or more of such causes of action”. This however suggests that in such a case (multiple causes of actions), a defendant may have two options: that of making a single lodgement against the claim or making a partial lodgement against some only of the causes of action. If this interpretation is correct, then Order 22 Rule 1(5) merely requires that when the latter option is taken the notice of lodgement should specify the amount in respect of each such cause of action unless the court otherwise orders. In other words, if a defendant elects for a partial lodgement only, it must indicate the causes of action in respect of which it is making that lodgement and the relevant amounts, unless the court otherwise orders.

31 In my view this interpretation accords both with common sense and practice to date. However it is argued that the Order has already been interpreted to mean that in any case where more than one cause of action is pleaded, then separate lodgements are required, unless otherwise ordered, so that even as in most cases, where the defendant wishes to make a single lodgement against the entirety of the claim, it cannot do so, unless it seeks and obtains a specific order from the court.

32 In fact counsels’ researches on this issue have only produced two Irish cases touching on the interpretation of Order 22 in this regard. Both are decisions of the High Court. In O’Neill v Ryanair (No. 2) [1992] 1 IR 160, Blayney J refused an order consolidating proceedings under s.205 of the Companies Act 1963 for oppression of a minority shareholder, and parallel plenary proceedings. The defendant had argued that one of the reasons why it wished to pursue that course was to make a single lodgement. Blayney J held that such consolidation was simply not possible, but in passing observed that Order 22 Rule 1(5) meant that such a single lodgement was not possible without the leave of the court, which he considered ought not to be granted in such a case. Blayney J’s observations on the interpretation of Order 22 Rule 1(5) are plainly obiter, since the principal ground for the decision was his conclusion that consolidation of such proceedings was not possible. I should say in passing that I am not convinced that there is any principled objection to consolidation in such a case. It is often the case that the factual allegations are intertwined and alleged to give rise to a remedy for oppression (which may involve a purchase of shares or a payment of money) and damages. Furthermore, to some extent the remedies are potentially interdependent. The damages to be awarded may be affected by the remedy awarded for oppression, and vice versa. In my view, there is something to be said for adopting procedures which attempt to permit all these interrelated matters to be resolved in a consistent fashion, and indeed the subsequent history of the Ryanair litigation might provide an illustration why this is so. In any event however, the only issue in the case was whether proceedings should be consolidated and the observations in respect of Order 22 are obiter.

33 The second decision, Norbrook Laboratories v Smithkline Beecham (Ireland) Limited [1999] 2 IR 192, was relied on by the High Court Judge in holding that the lodgements here were ineffective. Those proceedings were rather unusual in that they were defamation and slander of title proceedings, brought by one company against another. The defendant wished to make a lodgement against some only of the claims made. The matter is complicated by the fact that at the relevant time it was not possible to make a lodgement in a defamation action without an admission of liability. Taking the view that each separate meaning and innuendo pleaded constituted a separate cause of action, the defendant wished to lodge against some only of those claims, and in so doing, sought permission to make a single lodgement. Kelly J held that they were entitled to do so. Plainly the outcome of that case was correct, and shows the desirability of a single lodgement procedure. But the case did not decide the issue which arises here. It is true that that judgment proceeds on the assumption that Order 22 Rule 1(5) meant that where multiple causes of action were pleaded, the default position was that separate lodgements should be made unless otherwise ordered. However, that precise issue did not arise in that case and was not argued there. On the facts of the case indeed, it was a case which is consistent with the interpretation of the rule as set out above: the defendant was seeking to make a lodgement in respect of some only of the claims made here, which brought it prima facie within Order 22 Rule 1(5) and accordingly if it was to be permitted to make a single lodgement in respect of those limited claims it required the permission of the court to do so. Accordingly, I do not think that either O’Neill or Norbrook represents clear-cut authority against the interpretation of the rules set out above.

34 It is however the case that there are a number of cases in which the Courts of England and Wales prior to 1962 had held that the equivalent, indeed identical provisions of the then applicable Rules of the Superior Courts did have the meaning contended for. A good example is Emcee Limited v Sunday Pictorial Newspapers [1939] 2 All ER 384. There, two defamatory matters were complained of and a single lodgement of £50 was paid into court with the denial of liability. The plaintiff recovered a farthing damages in respect of each of the two defamatory matters. The parties were represented by distinguished counsel: Sir Patrick Hastings KC, and Norman Birkett KC. Singleton J held that since the payment into court was bad, it was therefore a nullity. This reasoning depended upon older cases which held that a payment into court of a single sum in respect of two claims was itself a bad plea. In consequence of this and other decisions, the rules in England and Wales were amended to reverse the position. Thus, since 1962 it has been provided that where two or more causes of action are joined, money can be paid into court in respect of all or some only of those causes of action in which case the notice of payment must state either that it is paid in respect of all of those causes of action, or specifies the cause of action and in such a case specifies the sum paid in respect of that cause of action. Order 22 Rule 1(5) of the 1962 revision provided however, that if the plaintiff was embarrassed by the payment of a single sum of money in respect of two causes of action, the court may order the defendant to amend the notice to specify the sum claimed in respect of each cause of action. As a result, the specific issue which arises in this case, has not arisen in that jurisdiction in the past 50 years.

35 The interpretation of the pre 1962 rules in England and Wales adopted by Singleton J in Emcee Limited (and which as I have said, were in the same terms as the present Irish rules) is itself dependent on an older approach to pleadings which is difficult to apply today. While I respect the learning shown in those early 20th century cases, I think the court should adopt an interpretation of the rules which promotes common sense and practicality, and is consistent with practice, if that is possible. It is, I think, common place for single lodgements to be made in almost all cases. Indeed, if Order 22 was routinely interpreted as suggested by the plaintiff in these proceedings, it would lead to a situation where lodgements are even less often deployed than they are at present. Here, the only purpose of adopting that interpretation would be to allow plaintiffs to escape from the consequences of their own decision to press on with these proceedings notwithstanding the lodgement. Yet in this case for example if the interpretation in the High Court is correct the plaintiffs might have received an award of say €50,000, while there was a lodgement of seven times that amount, without any consequence in costs. It is possible that the courts have adopted a strict approach to the validity of lodgements, as a way of mitigating the harshness of the rule. After all it only becomes necessary to address the question of the validity of a lodgement if it would otherwise be effective - i.e. if the lodgement figure exceeds the award. Again if consideration of the possibly harsh application of the rule is a valid consideration, and I consider it is, I think it is preferable to address that directly, rather than by adopting an unrealistically harsh approach to the validity of a lodgement. In this case for example, there is I think little doubt that at the time the lodgement was made the parties understood what was being offered. Here the defendants had gone to the lengths of lodging in court the sum of €362,000. Such an action should not lightly be treated as a nullity, particularly when it would involve adopting an interpretation of the rules that neither accords with practice nor achieves any desirable objective. For the reasons set out above, I would hold that the lodgement here was valid. Accordingly it is not necessary to address the issue debated in argument as to whether in any event the provisions of Order 124 Rule 1, which provided that non-compliance with the Rules does not render proceedings void, would operate to prevent the lodgement being treated as a nullity. However, it is now necessary to consider what effect the outcome set out above should have on the application of Order 22.

Application of Order 22 Rule 1(5)
36 The manner in which Order 22 Rule 1(5) has tended to be applied hitherto, has seemed almost mechanical. If the plaintiff fails to beat the lodgement, then in effect the defendant recovers the costs from the date of the lodgement onwards. In a case such as the present those costs can be ruinous. But if a successful plaintiff who failed to beat the lodgement was required in effectively every case to pay all the costs post lodgement (which would nearly always be the bulk of the costs) irrespective of the margin and the circumstances, then substantial doubts in my view would arise as to the validity of such a rule having regard to the possible disproportionality of such an order in some cases. There is a very stark difference between just beating the lodgement and recovering all costs, and just failing and being required to pay all the plaintiff’s own costs and the bulk of the defendant’s. In principle there should be a more graduated approach. In fact however, the order permits the court to “otherwise direct” and depart from the indicated order, but for special reasons recorded in the order of the court.

37 In my view, much of the dispute in this case, and in those cases to which we have been referred, arises because the margin is very small. Here not only is it less than €6,000 from a total award of €356,200, but that margin is in truth even smaller when regard is had to the number of possible variables in this case. Taking the substantial issue of the terminating payment under clause 13 alone, it must be apparent that a court could possibly have taken a slightly different view on a number of the components of the calculation such as the basic figure to be taken as representative of turnover (in this case profits); the nature of the add backs which should be allowed; and perhaps most crucially, the multiplier to be applied. If the outcome had varied by plus or minus 10% I doubt that either party could have plausibly complained or usefully appealed. The fundamental question in a case such as this, is whether the plaintiff acted reasonably in pursuing a claim notwithstanding the lodgement made. I do not think that in a case such as the present that question can be answered decisively in the plaintiff’s favour if the award was €100 over the lodgement, or equally decisively and catastrophically, against the plaintiff if the award was €100 less. In a number of the cases the court has adopted a generous interpretation on calculation of interest, and on the question of whether interest should be included in a lodgement. In such cases, it is difficult to believe the court is not influenced by the narrowness of the margin where an award of some interest can make the difference between achieving the figure of the lodgement or failing to do so. However, in my view it is preferable to address the fundamental question whether the presumptive rule under Order 22 Rule 1(5) should apply or not, rather than doing so indirectly by consideration of questions such as interest, or by ruling that a lodgement is invalid.

38 There may indeed be cases where the issues in a claim are so clear cut, and the monetary amounts so clearly fixed, that it can be said that failing to beat a lodgement by even a small amount is consistent only with having failed on the major and substantial issue in the case. However, in a case such as the present the calculation of damages is much less clear cut, and where an award is so close to an amount of a lodgement (98.3%) that even a small award of interest may make the numerical if not (on the approach taken above) the legal difference, and that such interest is payable then a court is entitled to consider whether it is necessary or just to apply the draconian consequences of Order 22 Rule 6, or to do so without qualification. I apprehend from the approach of the trial judge that he considered that it was not appropriate that the plaintiff should be fixed with all the costs of the proceedings from the date of the lodgement, but rather, that the question could be more fairly addressed by applying the Veolia principles, to deprive the plaintiff of some of the costs of the proceedings. In a complex case with a number of variables upon which parties and judges could reasonably differ, and where the assessment of damages is not a precise calculation of already ascertained, or ascertainable figures, I consider that if the plaintiff’s claim comes very close to the amount of a lodgement, and certainly within the range of 5%, the trial court is entitled to consider that in itself is a reason to otherwise direct, and is entitled to consider the broader question whether it was reasonable for the plaintiffs to pursue the claim notwithstanding the lodgement. If the difference was more than 5% it would require very weighty factors in an individual case to consider departing from the presumptive rule under Order 22 Rule 6.

39 In this case I would consider that the closeness of the ultimate award to the lodgement and the number of variables involved, together with the complexity of the case, and the award of interest constitute a special reason why the provisions of Order22 Rule 6 should not require that the defendant recover its costs against the plaintiff. Instead, I consider that the merits of the costs issue was most fairly and appropriately dealt with by the application of the Veolia principles which resulted here in the award by the High Court of 60% of the plaintiff’s costs. As set out, I suggest that where a case is not clear cut and where an award comes very close to the amount of the lodgement but does not exceed it, a court may consider that a sufficient reason to depart from the presumptive order under Order 22 Rule 1(5) in considering whether the merits of the case may perhaps be more fairly reflected in a reduction in the award of costs to the plaintiff. On the other hand, if the plaintiff barely beats a lodgement, then a court should still consider whether in all the circumstances of the case it was unreasonable not to take the lodgement and a court could be entitled in such marginal cases, to withhold some or all of the costs.

40 I appreciate that my colleague, Mr Justice McKechnie, dissents from this aspect of the decision of the Court. I fully understand his reasons for doing so, and the force of the argument which he makes. I accept that it can be argued that even if Order 22 Rule 6 operates mechanically, and in some cases can throw up anomalous, crude and dramatic results, that it can nevertheless have a beneficial operation. The very crudeness of the rule, and the possible disastrous consequences of breach may have the desired effect of getting the attention of obdurate and unrealistic litigants and thereby encouraging them to be more reasonable and realistic in relation to the value of the litigation. Experience unfortunately teaches that there are a number of litigants in this category. On this view, the rule has to be considered not simply from those relatively exceptional cases where it is applied, but where it has maximum largely beneficial effect, that is at the point at which a lodgement is made, or indeed during or just in advance of a trial, when it is apparent that it might come into play. On this view, any softening of the rule may have the unintended effect of providing comfort to unreasonable or unrealistic litigants and therefore lessen the beneficial effects of the lodgement procedure. I fully recognise the force of this argument and the rules making committee may adopt this view. For my part however, I would point out that what is proposed here is a relatively limited and minor adjustment of the practice. It seems possible to allow the lodgement rules to have a beneficial effect in focussing litigants’ minds, while at the same time avoiding extremely harsh operation of the rules at the margin. The lodgement procedure can be beneficial but it is important to recognise that the very substantial costs that can be incurred in modern proceedings means that as well as bringing a worthwhile sense of realism to cases where a plaintiff’s expectations are unrealistic, it can also have the effect of putting undue pressure on plaintiffs who are unwilling to run even a small risk of ruinous costs, to secure what might be the last 15-10 of the award to which they might be properly entitled . A lodgement should not be a mechanism for allowing a culpable defendant escape with a lower award than justice might require to be paid. Of course things are rarely as clear cut in the individual case but the application of the rules should, in my view, be capable of taking account of all these cases.

41 It is plain that a number of these issues while important, would merit from a broader consideration in the first place by the rules making committee, and if necessary with further interested parties. Pending any such authoritative review, I consider that the following position should apply in respect of the issues raised in this case:

(i) Interest under the Courts Act 1981 should be awarded when a court concludes that the amount it is awarding is clear cut, could, and should, have been paid earlier;

(ii) Where a claim is difficult and requires assessment and determination, it may be appropriate not to award interest;

(iii) Interest should not have to be included in a lodgement and accordingly should not be taken into account in considering if the plaintiff has received an award in excess of the lodgement;

(iv) A single lodgement expressed as one being enough to satisfy all claims made by the plaintiff, is a valid lodgement;

(v) Where a plaintiff fails to beat a lodgement, but falls short by a clear margin, and the matter is one of general assessment rather than precise award, a court may consider that a sufficient ground to depart from the presumptive costs order under Order 22 Rule 1(5) in which case a court may reflect the reasonableness of the pursuit of the claim by, if appropriate disallowing some element of the plaintiff’s costs, by reference to the Veolia principles where there are distinct issues or more generally;

(vi) Conversely where a plaintiff beats a lodgement but by only a small amount, a court may still consider if it was reasonable to have pursued the case, and may reflect that adjudication in its award of costs either under the Veolia principles where there are clearly distinct issues, or by extension of them.

Order
42 Accordingly, the Court will allow the defendant’s appeal to the extent of substituting the figure of €26,001.26 for the award of interest of €57,325 made by the Court of Appeal, and reverse the Court of Appeal’s conclusion that interest should be included in a lodgement, but would otherwise dismiss the defendant’s appeal.