Court: High Court of Justice in Northern Ireland
Judge: McAlinden J
Date: 8 November 2023
Overview of County Court Costs and Contentious Business Agreements
On 8 November 2023, the High Court handed down a game-changing judgment in the case of Christina Falls v LIDL Northern Ireland Limited. The decision provides critical clarification on the recovery of legal costs in County Court proceedings in Northern Ireland where a party has agreed to remunerate their solicitor under a contentious business agreement (CBA) for less than the prescribed scale costs under the County Court Rules (NI) 1981.
This ruling is of particular importance to both claimant and defendant practitioners, as it resolves longstanding uncertainty about whether a successful party can recover costs below scale where a CBA is in place.
Background
The case originated as a personal injury claim brought by the plaintiff, Christina Falls, against LIDL Northern Ireland Limited. The matter was heard in the County Court on 14 February 2022 and was dismissed on the merits. The plaintiff did not appeal the dismissal.
LIDL, had entered into a CBA with its solicitors, governed by the Solicitors (Northern Ireland) Order 1976. Under this agreement, the solicitors agreed to charge a percentage of the scale costs rather than the full amount. The defendant also incurred costs for counsel and an expert engineer.
Following the dismissal, the defendant’s solicitors initially submitted a bill of costs based on full scale fees. Upon realising the error, they amended the bill to reflect the reduced fees under the CBA. The plaintiff’s solicitors disputed the revised bill, arguing:
- The indemnity principle prohibited recovery of scale costs exceeding what the client was liable to pay.
- The County Court lacked jurisdiction to certify non-scale costs.
- The fees for counsel and the expert were excessive.
The defendant applied to the County Court to certify the costs. On 13 March 2023, the District Judge granted the application. The plaintiff appealed that decision to the High Court.
The Appeal
The appeal was heard by Mr Justice McAlinden on 19 October 2023. The central issue was whether the County Court has the power to certify a lesser amount than the scale fee where a CBA exists.
Judgment
McAlinden J dismissed the appeal, affirming the District Judge’s decision in all respects except one minor point (relating to Article 71F, which was deemed inapplicable). The matter was remitted for certification and taxation under Order 55 Rule 5A and Rule 6 of the County Court Rules.
The Judge held that:
- Order 55 Rule 2, which mandates scale costs, must be read in conjunction with Rule 5A, which allows for taxation where a CBA exists.
- Article 66 of the 1976 Order permits third parties (such as an unsuccessful litigant) to challenge the costs arising from a CBA.
- The County Court has jurisdiction to certify or tax costs below scale where a CBA is in place.
- The disclosure of the CBA is required to enable proper scrutiny and fairness in cost assessment.
McAlinden J rejected the plaintiff’s argument that solicitors can only recover scale costs or nothing. He clarified that the Rules provide a mechanism for taxation in such cases, ensuring that the indemnity principle is upheld while allowing successful parties to recover appropriate costs.
Key Excerpt from the Judgment
“… ordinarily solicitor’s costs are as set out in the scales in Appendix 2 to the Rules. However, in county court proceedings where a contentious business agreement under Part V of the Solicitors (Northern Ireland) Order 1976 exists and an unsuccessful party in the proceedings is liable to pay the costs of a successful party in the proceedings who is also a party to a contentious business agreement, then the unsuccessful party can dispute the costs claimed and can seek taxation of the said costs and the taxation of the said costs will be carried out under the provisions of Order 55 rule 5A…”
Commentary on County Court Costs and Contentious Business Agreements
This decision is a landmark for Northern Ireland litigation and County Court Costs and Contentious Business Agreements. It:
- Clarifies the scope of cost recovery in County Court proceedings involving CBAs.
- Reinforces the indemnity principle, ensuring parties cannot recover more than they are liable to pay.
- Empowers unsuccessful parties to challenge costs through taxation.
- Prevents windfalls for unsuccessful litigants and ensures that successful parties are not unfairly penalised.
The ruling provides a balanced and practical framework for resolving cost disputes and will help avoid procedural deadlocks where costs are contested. It also affirms the County Court’s ability to perfect its own orders in a manner consistent with fairness and statutory authority.
Should you wish to speak with a member of our team, use our online contact portal and we’ll get back to you immediately.
