In the recent High Court case of The Personal Insolvency Acts 2012-2015 and in the Matter of Thomas Finnegan (a Debtor), delivered on 4 March 2019, McDonald J set a clear statement about the approach the court should take with regards to the issue of costs in Legal Aid cases (not necessarily limited to Ahaile cases).

This case related to whether an application under Section 115A of the Personal Insolvency Act 2012(as amended) could be said to have been made to the Court within the 14 day period where it had been lodged in the Circuit Court Office within the 14 day period but not served on the notice parties until after that period had expired.  The Circuit Court Judge granted in favour of the creditor and dismissed the Section 115A application.  The practitioner then appealed to the High Court where the case came before McDonald J. A significant number of appeals on the same set of facts were also made to the High Court.

McDonald J held in favour of the practitioner and concluded that the relevant application had been made within the prescribed 14 day period in circumstances where it had been lodged in the Circuit Court office within that period.

McDonald J then heard submissions from both the creditor and practitioner in relation to costs. The creditor argued that this was a test case and it would be appropriate not to made an order as to costs. The creditor also argued that the present case was similar to the case of Cork County Council v Shackleton [2011] and argued that the practitioner’s legal costs had been met by the Legal Aid Board which is a body funded by the Minister for Justice.

The practitioner relied on Section 33(2) of the Civil Legal Aid Act which states that the issue of costs in proceedings involving a legally aided party are to be treated the same way as a case where all parties had retained legal advice at their own expense.

McDonald J noted that there was nothing to suggest that the issue raised by the creditor in relation to the interpretation of Section 115A(2) had given rise to doubt or concern in a significant number of cases or that it had given rise to debate among practitioners and lawyers. The Court held that the practitioner was not funded directly by the Minister for Justice and all that had happened is that under the Abhaile scheme certain costs had been made available by the Legal Aid Board. McDonald J held that he did not believe that he could properly have regard to the fact that the Legal Aid Board was involved in funding the practitioner’s costs in any way. McDonald J was of the opinion that there might be an exception for certain test cases where the Minister responsible for the legislation is a party and where the legislation is determined as being opaque or ill thought out but that this was not the case here and the fact that the Legal Aid Board was funded by the Minister for Justice did not make it so.

McDonald J. noted that the costs in Section 115A applications should be considered by reference to the ordinary principles, and on the particular circumstances of the case, in particular the manner in which the issue was pursued by the creditor. McDonald J. was of the opinion that it called for the application of the ordinary rule that costs follow the event.

McDonald J. noted that where the issues were pursued with the vigour of normal inter partes proceedings this justified making an order for costs. However, on the particular facts of the case McDonald J. made an adjustment to the normal order for party and party costs to reflect the fact that the submissions on behalf of the practitioner were delivered just one week before the date of the hearing of the Appeal which could have lead to serious ramifications for the court list had the Appeal not been heard.  Accordingly, McDonald J. held that an order should be made whereby the creditor should pay to the practitioner, the party and party costs of the Appeal in so far as it relates to the Section 115A(2) issue but with no order as to the costs of the written submissions.

As a result of the above case and McDonald J’s very clear statement about the approach to costs orders, which should be made in Section 115A applications where the practitioner’s fees are covered by legal aid, practitioners and creditors will be paying close attention to cost applications and the reasons given for refusal of costs applications in favour of a practitioner after a successful Section 115A application.

Breda Sheahan is an Associate with FitzGerald Legal & Advisory, 6 Lapps Quay, Cork

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